Buyer of Peterborough's partly built Hilton Garden Inn pulls out of multi-million pound deal at 'last minute'

The potential buyer for the partly-completed Hilton Garden Inn in Peterborough has pulled out of the deal at the ‘last minute’, it has been revealed.

The company, which has not been named, withdrew from the negotiations with Peterborough City Council over the purchase of the nine-storey building at Fletton Quays, just days before Christmas.

It means the council, which is the effective owner of the building, now has to begin talks with two other parties that had previously expressed an interest in buying the hotel, which sits on the bank of the River Nene, empty and vulnerable to the weather.

The collapse of the deal, which would have seen the completion and opening of the 160-bedroom hotel after an eight year wait, has been described as a ‘huge disappointment’ by Cecilie Booth, the council’s executive director of corporate services and Section 151 officer.

It also means the hotel building, which does not have heating and is not completely watertight or weatherproof, is likely to deteriorate further during another winter and which will only add to the cost of completion.

Ms Booth said: “It is a huge disappointment because we had a credible buyer offering a good price who would have stepped in and completed the hotel as quickly as possible.

“But the buyer pulled out just before Christmas.

"They pulled out at the very last minute. The only thing I have been told is that they had a better investment opportunity elsewhere and the deal was off – quite abruptly.

Mrs Booth added: “On a very positive note, I had a meeting with Hilton Hotels officials yesterday (January 7) and they have confirmed very clearly that they are still committed to being in Peterborough and see a great future for a Hilton hotel in Peterborough.

"And they have confirmed that they want to support us in making sure the hotel is completed.”

It was eight years ago when the council lent the hotel developer £15 million to start construction work. With interest the amount now owing to the council is £17 million.

Building work began in 2021 but after a lengthy period during which no construction work had taken place, the council took the developer, Fletton Quays Hotel, into administration in October 2023.

As the primary preferred creditor, the council’s £17 million credit bid for the hotel was accepted last year by administrator Teneo and council officers began looking at ways to complete the construction of the hotel.

In October last year councillors agreed to begin talks with a potential buyer. The company’s name has never been disclosed but has been described as a ‘big player’ in the hotel industry.

Ms Booth said: “The deal that we have lost would have repaid the council in full.

"This has set us back quite considerably.”

What happens next?

Ms Booth said:“I want to get that hotel finished one way or another as soon as we can.

"Either we move it on to a third party or the council steps in and we build the hotel to completion ourselves.

She said: “We are now talking to two interested parties that we are still in negotiation with and i’m hoping to get a definite answer by the end of January at the very latest when we will be able to determine if the deal is good enough for the council and if the parties are able to deliver.”

One is local/national business and the second is an international company.

Ms Booth said: “But the offers we get might not be as good as the previous one. This is a concern for us.

"If we cannot get an agreement, the council will take over the asset and get a developer to complete it on our behalf.

"This would not be unchartered territory as other councils have done this before.

She added: "If the final offers are not good enough, the only option is that we go down this route, which was the plan until we had this buyer.”

"I’m hoping by the end of January we will know whether we will be able to sell the building as it stands now or if we will have to step in and see it to completion.

"It will take about a year or so to get the hotel absolutely completed.”

What is the condition of the hotel?

Ms Booth said: “The building is not completely watertight and weatherproof so the building is deteriorating standing there empty over another winter.

"Remaining empty during bad weather means the asset is going to be worth less and the costs to complete will increase.

“But for the council to abandon the hotel would mean the costs we have already incurred will be picked up by taxpayers.”

Why can’t the cash be spent on other services?

Ms Booth has previously explained: “People say we are pouring all this money into a hotel whereas we could use it on social care, street cleansing, the regional pool and so on

“But this isn’t tax payers money that we are using to prop up the Hilton.

“The money to lend to the developer has been borrowed by the council from the Government’s public works loan board.

"That loan will have to be repaid by the council whether the hotel carries on or not.”

She said: “The hotel is not taking money from anything else."