Hotels (Commonwealth Union)_ What was once envisioned as a high-end hotel with a rooftop bar and terrace overlooking the River Nene has turned into an ongoing saga for Peterborough City Council. Seven years after lending £15 million for the construction of the Hilton Garden Inn, the project remains unfinished. So, what went wrong?
Peterborough City Council reports that the hotel is about 80% complete. The building’s skeleton is in place, and some rooms are partially fitted out. However, significant work remains, including the installation of lifts and a fully equipped gym. Cecilie Booth, the council’s executive director of corporate services, remains optimistic: “The hotel will be fantastic. We have had site visits and can see the vision of how nice it will be. It’s a good reminder of how much potential there is in Peterborough.”
In 2017, the council loaned £15 million to a developer for the hotel’s construction, envisioning it as a cornerstone of the £120 million redevelopment of Fletton Quays. This area, once derelict, is now home to the new Passport Office and city council headquarters. The Hilton was expected to open by July 2019, offering a restaurant and sky bar with views of the river and cathedral, and drawing business to the area.
However, the project timeline has repeatedly shifted, with construction stalling since early 2023. The council attributes delays to a slowdown in the construction industry, exacerbated by Covid-19 and Brexit. Consequently, in October, the council placed the latest developers, Fletton Quays Hotels, into administration.
While it may seem puzzling that a council facing financial pressures would invest in a hotel, the funding did not come from council tax. Instead, it was sourced from the Public Works Loan Board, a ringfenced pot of government money that must be repaid. The council’s loan now stands at an outstanding balance of £17 million, including interest. To recoup this investment, the council plans to buy the hotel, complete construction, and open it to generate income.
The hotel’s administrators could not sell it to another developer outright, as they must act in the interests of creditors. They determined that Peterborough City Council’s offer to buy the hotel was the best option. The council submitted a “credit bid,” matching the debt secured against the hotel.
Despite the challenges, the council remains committed to completing the project. They estimate that finishing the hotel will cost an additional £10 million. The next steps involve cabinet approval for the acquisition and the establishment of a new company to oversee the project. The council aims to resume construction before winter, hoping to finally realize the vision of a luxurious Hilton Garden Inn and leverage its potential to benefit the community and repay the loan.
