Cash-strapped Peterborough City Council looks set to sell unfinished Hilton Garden Inn

The partly finished Hilton Garden Inn could be sold to a private bidder as cash-strapped Peterborough City Council battles a budget crisis.

Council chiefs say a private bidder has now expressed an interest in buying the unfinished £30 million hotel at Fletton Quays and selling the building will ensure costs to the council are kept to a minimum.

Selling the nine storey hotel will also enable the council to recover about £17 million – made up of a £15 million loan plus interest - that it provided the original developer in 2017.

The local authority is desperate to keep all costs down and recoup all the monies possible from assets that are not providing value for money as it seeks to reign in a feared 11 million overspend this year.

Members of the council’s ruling Cabinet will be asked on October 15 to consider approving the sale to the unnamed private bidder.

The council took the developer, Fletton Quays Hotel, into administration, in October last year after months in which no construction work was carried out.

The council took control of the hotel in June after submitting a £17 million credit bid to the administrators. The preferred option had been for the local authority to set up its own company to finish the building works and oversee its trading for a few years before selling it.

But members of the cabinet will be told: “Given the rising costs and the risks around self-developing the hotel it is recommended that the council sells the hotel to a third party.

"The administrators have agreed that the hotel can be sold directly to the preferred third-party if the council, as the preferred creditor, wants to do that.

It adds: “The costs to complete the hotel within the council have increased from the £14.4 million forecast and presented to Cabinet on 11 March 2024.”

Councillor Mohammed Jamil, Cabinet Member for Corporate Governance and Finance, said: “The council has been very honest from the point the administrators were appointed that it would act in the best interests of taxpayers.

"This is why we have been exploring in tandem both the option to acquire the hotel ourselves, or to sell it to a third party who can see it through to completion.

“Selling to a third party will not only allow the hotel to be completed as soon as possible, but also means that we will not have to incur the additional costs to complete the hotel.

"This is really important at a time when we are facing huge financial pressures including an £11m in-year overspend and a budget gap which could be as high as £24m next year.

“It remains our overriding priority to protect the investment made by the council so far and to see the hotel open as quickly as possible.”

The council says that for commercial reasons it cannot comment on the value of the bid that has been made or provide details about the bidder.