Council considers selling unfinished Hilton hotel

The 160-bedroom hotel in Fletton Quays remains unoccupied

A council said it planned to consider proposals to sell an unfinished Hilton Garden Inn hotel to recoup some of the money it invested in the project.

In 2017 Peterborough City Council borrowed £15m from the government to loan to developers for the project in Fletton Quays.

Construction stalled in 2020 and Fletton Quays Hotel Ltd, the company responsible for building the Hilton, went into administration in 2023.

The council said for it to complete and operate the 160-bed hotel it would require "significant additional borrowing", so its cabinet will be asked to approve selling the asset through administrators on 2 October.

The authority said it aimed to secure the best value for taxpayers.

A bidder came forward as part of a soft-market testing exercise last autumn and the council-appointed administrators took steps to sell the asset, but the deal fell through earlier this year.

The council - which is the primary secured creditor to Fletton Quays Hotel Ltd - said it had carried out a feasibility study, which found the project could bring a high level of financial risk for the authority, in an area where it does not have specialist expertise and when its priorities lie elsewhere.

The ambition for the new hotel was to form part of a wider redevelopment of the Fletton Quays area

Mohammed Jamil, a Labour councillor and cabinet member for finance and corporate governance, said there was a "significant interest in the site".

"The Hilton Hotel project is one of a number of complex issues that were the making of previous administrations which we have been working hard to seek to address," he said.

"We know that this is a project that people feel passionately about because of the amount of money that was originally loaned by the council to this company, however, what is important now is that we look to the future.

"What became clear is that we would need to approve significant additional borrowing and accept a high level of risk if we opted to build and operate the hotel.

"It is also clear that the council does not have the skills and expertise in house to manage the operation of such a specialised asset.

"It remains our priority to achieve the best possible outcome for residents," he added.

Previously, in its audit plan for the year ending 31 March, accountancy firm EY highlighted concerns over "governance arrangements in relation to the Hilton hotel loan".

It said there was a risk the sale of the hotel would not be sufficient to cover the cost of the loan.