Why hasn't Peterborough's Hilton hotel been built?

It was meant to be a high-end hotel with a rooftop bar and al fresco terrace overlooking the River Nene. Nearly eight years after Peterborough City Council lent £15m to build the Hilton Garden Inn, it is still not finished. What happened?

Work started in 2020, but stalled in 2023, with the council saying the 160-room hotel was about 80% complete.

The skeleton of the building is complete and a handful of rooms are fitted out.

It still requires major work, such as putting in lifts and a kitted-out gym.

Cecilie Booth, the council's executive director of corporate services, said: "The hotel will be fantastic, we have had site visits and we can see the vision of how nice it will be.

"It's quite a good reminder of how much potential there is in Peterborough."

In 2017, Peterborough City Council lent £15m to the developer Fletton Quays Hotel Limited (FQH), so it could build and own the hotel, which would be operated as a franchise using the Hilton brand.

The council wanted it to form part of a £120m redevelopment of Fletton Quays - an area previously derelict.

The idea would be for local people to use the Hilton's restaurant and sky bar, which would have views of the river and cathedral, and attract business to the area.

Fletton Quays is already home to the new Passport Office and city council headquarters.

The council initially offered the loan on a 24-month basis, under the impression the hotel would be built by about July 2019.

This was later pushed back, with boarding around the hotel currently saying "coming summer 2022".

Little or no progress has been made on construction since early 2023.

Ms Booth said: "The hotel should have been up and running by 2020. We had Covid, we had Brexit and the construction industry just dried up."

The council put FQH into administration in October 2023 after repeated delays to the project.

It was able to do this due to powers granted to it as part of the original loan agreement.

It may seem surprising that a council now selling off and repurposing public buildings to make cash would invest in a hotel.

But this money did not come from council tax, which is spent on services.

Instead it came from a ringfenced pot of government money known as the Public Works Loan Board - and must be paid back.

The council's loan has an outstanding balance of £17m including interest and the authority believes the best way to pay this back is to buy the hotel.

It submitted what is known as a credit bid, where it offers the same amount as the debt secured against the hotel.

After three to five years of the hotel being in operation, the council would then either sell it on, or continue to run it, using those profits to pay back the loan.

Peterborough City Council struck a deal with a developer to buy the hotel in December 2024, but the buyer walked away.

The authority said although other bidders were interested, their offers were not good enough.

Ms Booth said the hotel's status as a distressed asset meant that "everybody want[ed] a bargain", but the council needed to ensure it would get its money back.

No, but the company that owes the money was put into administration.

So the loan is unlikely to be paid back unless the hotel is built and starts welcoming paying guests.

Now that the council has decided to buy the hotel, it will begin a procurement process to get developer to build it.

The build is expected to take between 12 to 18 months depending on how quickly workers can get on site.

The council would hire a Hilton-approved operator to run the hotel, which is expected to be open "at some point" in 2026.

The cost of finishing the hotel is not known yet, but was estimated to be £10m just before it was put into administration in 2023.

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