Why hasn't Peterborough's Hilton hotel been built?

The hotel on Fletton Quays is currently about 80% finished

It was meant to be a high-end hotel with a rooftop bar and al fresco terrace overlooking the River Nene. But seven years after Peterborough City Council lent £15m to build the Hilton Garden Inn, it is still not finished. What happened?

The hotel now

The council says the hotel is about 80% complete.

The skeleton of the building is complete and a handful of rooms are fitted out with items such as kettles and bedsheets.

However, it still requires major work, such as lifts and a kitted-out gym.

Opening dates for the Hilton have been repeatedly pushed back

Cecilie Booth, the council's executive director of corporate services, said: "The hotel will be fantastic, we have had site visits and we can see the vision of how nice it will be.

"It's quite a good reminder of how much potential there is in Peterborough."

Why did the council pay for the hotel?

In 2017, Peterborough City Council lent £15m to a developer so they could build and own the hotel, which would be operated as a franchise using the Hilton brand.

The council wanted it to form part of a £120m redevelopment of Fletton Quays, an area once full of derelict land and empty buildings.

Fletton Quays is also home to Peterborough's new passport hub

The idea would be for local people to use the Hilton's restaurant and sky bar, which would have views of the river and cathedral, and attract business to the area.

Fletton Quays is already home to the new Passport Office and city council headquarters.

What went wrong?

The council initially offered the loan on a 24-month basis, under the impression the hotel would be built by around July 2019.

This was later pushed back, with boarding around the hotel currently saying "coming summer 2022".

Little or no progress has been made on construction since early 2023. The council says this is because of a slowdown in the construction industry, and the impact of Covid and Brexit.

The council took the latest developers Fletton Quays Hotels into administration in October after repeated delays to the hotel's completion.

How did the council afford it?

It may seem surprising that a council now selling off and repurposing public buildings to make cash would invest in a hotel.

But this money did not come from council tax, which is spent on services.

Instead it came from a ringfenced pot of government money known as the Public Works Loan Board - and must be paid back.

Why does the council want to buy it?

The council's loan has an outstanding balance of £17m including interest and the authority believes the best way to pay this back is to buy the hotel.

It wants the Hilton to start welcoming guests and generate an income to pay the ongoing costs of the loan.

After three to five years the council will either sell it on, or continue to run it, depending on the business.

Why didn't another developer take it on?

The council says the hotel will be a place for local people to socialise and have meetings

The hotel's administrators could not just sell it to another developer because they have to act in the interests of the creditors (those still owed money).

They decided that Peterborough City Council's offer to buy the hotel was the best option above a rival bid.

The council submitted what's known as a credit bid, where it offers the same amount as the debt secured against the hotel.

Is the council's loan written off?

No, but the company that owes the money was put into administration by the council.

So the loan is unlikely to be paid back unless someone steps in to build the hotel.

Another option is if the incomplete hotel is sold "as is", but the council might not get all its money back.

What happens next?

The cost of finishing the hotel is not known yet, but was estimated to be £10m just before it was put into administration in 2023.

The next step is for cabinet members to agree to the acquisition and for a new company to be set up.

The council is keen to get construction up and running before the winter.