Fears Peterborough City Council will fail to recover £15 million investment in the partly-built Hilton Garden Inn reinforced by new report

The warning comes from administrator Teneo in its annual update on the progress being made in the battle to salvage a future for the nine-storey unfinished hotel at Fletton Quays.

The council agreed a £15 million loan to kickstart construction of the 160 bedroom hotel in 2017 but the project collapsed five years later when developer Fletton Quays Hotel ran out of money, work stopped and the council called in the administrators.

After months of discussions about the best way forward, the council, as the primary preferred creditor, eventually agreed to instruct Teneo to sell the building to the highest bidder.

Cllr Mohammed Jamil, the council’s cabinet member for finance and corporate governance, said he thought it was unlikely the council would recover its loan.

He said: “I am resigned to the fact that we will not get all our money back with the sale of the hotel.”

Now that downbeat verdict has been supported by Teneo.

In its progress report, the administrator states: “Peterborough City Council was owed about £17 million at the date of the administration. Interest continues to accrue on this balance.

It warns: “The level of dividend available to the council is dependent on asset realisations (primarily realisation of the property).

"However it is not expected that sufficient funds will be realised to repay the council in full.”

The sale of the freehold of the Hilton Garden Inn began last month and is being handled by commercial agents CBRE.

But in its sale brochure CBRE warns potential bidders that to complete the building of the hotel will cost about £14 million.

The deadline for bids to buy the Hilton Garden Inn ends on January 16.

However, there is good news for the taxman in the administrator’s report.

It states that the HMRC has submitted a claim for about.£13,000.

Teneo states: “On present information, we anticipate (this) creditor will be paid in full within the next one to two months.”

But the news is not so bright for numerous unsecured creditors.

Teneo states: “We have received 27 claims to date for a total of about £4 million which is lower than anticipated when compared to the statement of affairs figures of 88 unsecured creditors with estimated unsecured claims totalling about.£6.3 million.

"On present information, it is unlikely that sufficient funds will be realised to enable a distribution to be made to unsecured creditors.”

Hilton timeline:

This timeline highlights the route to the tough decision now facing the council’s new Labour-run administration.

September 25, 2017: A two year £15 million loan advanced for hotel with first drawdown in May 2020. (Pay back due April 2022) The loan was agreed for Norlin Hotels Holdings. A council reports states the hotel is expected to be completed in 2019.

October 2018: Councillors voice alarm as it’s revealed ownership of Fletton Quays Hotel has switched from Norlin to Propiteer Hotels. The loan to be paid out over 48 months from the time of first payment to Propiteer. The hotel is now due to be completed in 2020.

December 2019: Start of Covid-10 pandemic in UK

March 2020: UK goes into lockdown

May 2020: Construction work is due to start but cannot because of lockdown

Mid-July 2020: Construction staff on site. Completion of hotel is expected by November 2022.

March 2022: City council agrees FIRST extension for loan with term extended to 31st March 2023. Developer says it had not been possible to start work as planned.

April 2022: Topping out ceremony at Hilton Garden Inn. Hilton Hotels managing director says he expects hotel to be open by January.

February 2023: Website bookings being taken from July 17.

March 2023: Appointment of a head chef and a food and drinks manager is announced. Website bookings being taken from December 17, 2023.

13 March, 2023: Council agrees SECOND extension to loan taking it to the end of 2023.

May 2023: Work on site slowed and then stopped

July 2023: Website bookings now being taken from July 2024.

October 17: 2023: Peterborough City Council announces it has taken developer into administration.

March 2024: Councillors told council has earmarked £10 million in case further investment needed in hotel’s completion. Says if council takes control it would then have the option of selling the hotel after three to five years.

May 22, 2024: Council announces it is to seek approval from extraordinary cabinet meeting on May 30 to submit credit bid to assume ownership of hotel.

October 2024: Administrator Teneo seeks a year long extension to administration period.

January 9, 2025: Sale of hotel fails as would-be purchaser pulls out at 11th hour

September 8, 2025: Spokesperson for Hilton Hotels says the company is still committed to operating at the Fletton Quays building when completed

September 26, 2025: Council leader Cllr Shabina Qayyum says needs of residents must be prioritised over ‘vanity project’ Hilton Garden Inn

October 2, 2025: Council’s ruling cabinet to be asked to approve marketing and sale of uncompleted Hilton Garden Inn to highest bidder

October 20, 2025: Council Scrutiny Committee approves decision to sell the hotel.