Hilton Hotel set to come under Peterborough council's ownership as it prepares bid for freehold

The unfinished Hilton Hotel at Fletton Quays is set to come under council ownership.

Peterborough City Council (PCC) says it plans to bid for the freehold of the hotel on East Station Road, meaning it would own the building and the land it’s built on.

It insists no “new money” would need to be spent on this as its bid would be up to the value of the amount it’s owed for the loan it provided to developers for the project in 2017.

This was initially around £15m, but due to the accumulation of interest, now stands at £17m.

But it may need to invest further in the hotel’s completion and has already earmarked an extra £10m for this.

PCC says it would take on a “suitable development partner” to ensure the completion of the hotel before appointing an operator to run it as a part of the Hilton franchise if plans go ahead.

It would then have the option of selling the hotel, it says, likely after three to five years.

The council’s cabinet will be asked to approve these plans at a meeting on Monday, 11th March, provided no other route to completion is found before then.

PCC took developers Fletton Quays Hotels into administration in October last year after repeated delays to the hotel’s completion.

As part of this process, companies involved in the hotel project were asked if they could help identify a way to open the hotel. This will come to an end on Monday, 4th March.

Deputy leader of PCC, Cllr John Howard (Peterborough First, Hargate and Hempsted) said the council’s decision to bid for the hotel’s freehold is partly about money, but also partly about protecting the regeneration of the Embankment.

“We’d be taking control of the building and the land, effectively, if we make this decision,” he told the Local Democracy Reporting Service (LDRS). “The strongest argument is that if we lose control of that asset, there’s a massive financial implication, but we also lose control of what it becomes.”

Council leader Cllr Mohammed Farooq (Peterborough First, Hargate and Hempsted) added the move will help protect the council’s investment, which is otherwise at “huge risk”.

“Having a Hilton hotel in the city would be a huge asset and therefore I am pleased that Hilton remains committed to the development and to Peterborough,” he said in a statement.

“They are supportive of the council’s approach and are helping us to plan the next stages.”

When PCC provided developers of the Hilton Garden Inn – as it’ll be known on completion – with its loan in 2017, it became preferential creditor, meaning it has always been at the top of the list for repayment of its investment. Several other companies also invested in the £40m hotel.

But repayment isn’t guaranteed and the council would stand to lose its investment if it walked away from the empty nine-storey building now.

Asked what would happen if estimates for completion of the hotel greatly exceed the £10m the council has effectively budgeted, a spokesperson said: “The fact is, we don’t know entirely how much it’ll cost to complete the hotel, but what’s behind all of this is the ambition to see that hotel completed and get our investment back and that will require putting in what we need to to make that happen and then we will operate the hotel to the point we get that money back.”

The hotel’s setbacks have variously been attributed to the effects of Brexit, the Covid pandemic and the war in Ukraine impacting on workers and materials.

An opening date is still not yet in sight.