Sale of partly built Hilton Garden Inn to help lower Peterborough City Council's half a billion pounds debt

The unfinished nine-storey hotel building at Fletton Quays is set to be placed on the open market as the council attempts to get best value from the project, which has already been eight years in the making.

The council’s finance chief says any money from the sale of the 160-bedroom hotel will be used to reduce the local authority’s £500,000,000 debt, which in turn will free up money currently paid in interest to be used on services..

The council lent £15 million to the hotel developer in 2017 to kickstart construction which eventually started in 2022 but came to a halt the following year following the Covid pandemic and the soaring prices of construction materials.

It prompted the council to take the developer into administration and earlier this month members of the local authority’s ruling cabinet voted to instruct the administrator, Teneo, to sell the building.

While the council has not revealed how much of the £15 million it expects to recover some estimates have put it around the £4.5 million mark.

However much the sale raises, the money can only be used to cover the cost of the administration and to pay off debt or even put towards other capital projects.

But Councillor Mohammed Jamil, deputy leader of the Labour Group and Cabinet Member for Finance and Corporate Governance, said: “It is much more likely that we will use any money from the sale of the Hilton Garden Inn to pay off some of the council’s debt.

"We pay annual interest of £20 million servicing our debt and that debt stands at half a billion pounds.

"We are allowed to use money that we save in interest to help pay for council services.”

Cllr Jamil said much of the local authority’s debt accumulated in 2010/11 when the council partly rebuilt schools in Peterborough but was then later forced to let those schools go to become academies.

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

"But I am hopeful at the moment with the amount of interest we have received in the hotel building, including from some companies already involved with Hilton hotels elsewhere.

"Hopefully we might see a bit of a bidding war over the Hilton Garden Inn.

He added: “There is no chance of any of the proceeds from the hotel sale being used for the new £36 million swimming pool.”

• The cabinet’s decision to sell the Hilton Garden Inn is subject to a decision by the Sustainable Future City Council Scrutiny Committee which meets on October 20. It follows a move by three councillors to call in the cabinet decision for review.

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 to meet to review decision to sell the hotel.