A recommendation on next steps for the Hilton Hotel project at Fletton Quays will go before Cabinet members on Thursday 2 October.
As the council is the primary secured creditor to the company that is in administration (Fletton Quays Hotel Ltd), the recommendation to Cabinet will be to direct the administrators, Teneo, to market and sell the Hilton Hotel site and to commit them to ensuring that any sale of the site achieves best value.
The recommendations are a result of the latest independent advice the council has received and investigations that have been carried out, including the estimated costs for completion, the financial risks for the council in completing the hotel, and the specialist skillsets that would be required to develop and maximise such a specialist asset holding.
This was last reported to Cabinet at a meeting in October 2024 when the decision was made to support the administrators selling the site to a third party, if this was more economically advantageous to the council than purchasing the asset. It was also agreed that if such a sale could not be completed the council should complete the acquisition of the hotel itself.
A preferred bidder came forward as part of the soft market testing exercise last autumn and the administrators, appointed by the council, took steps to sell the asset however this fell through in early 2025.
Since then, the council has taken time to carefully consider its next steps. A feasibility study carried out by Willmott Dixon accessed through the SCAPE procurement framework estimates significant costs to complete this would bring a high level of financial risk for the council, in an area where it does not have specialist expertise and when the Council’s priorities lie elsewhere.
Completing the hotel would also mean significant additional borrowing for the council, which raises its debt level further and would involve repayments plus interest on the additional borrowing.
As a result of this latest position, the recommendation from officers is for Cabinet to direct the marketing and sale of the asset by the administrators.
Councillor Mohammed Jamil, Cabinet Member for Finance and Corporate Governance, said: “The Hilton Hotel project is one of a number of complex issues that were the making of previous administrations which we have been working hard to seek to address. We know that this is a project that people feel passionately about because of the amount of money that was originally loaned by the council to this company, however, what is important now is that we look to the future.
“When interest from a potential buyer fell through at the start of the year, we asked for a thorough investigation to be carried out to determine next steps, evaluating all the options available. What became clear is that we would need to approve significant additional borrowing and accept a high level of risk if we opted to build and operate the hotel. It is also clear that the council does not having the skills and expertise in house to manage the operation of such a specialised asset.
“There is significant interest in the site, which is reflected in the extensive number of approaches that have and continue to be made directly to the council, so we hope Teneo move forward as quickly as possible.
“It remains our priority to achieve the best possible outcome for residents.”
The council agreed to provide funding for the construction of the 168 room Fletton Quays Hilton Hotel in 2017, this was by way of a loan facility of up to £15m to the development company for the hotel.
The hotel development was significantly delayed due to a slowdown in the construction industry during and following Covid and Brexit. Work on-site slowed in May 2023 and then stopped and the company (Fletton Quays Hotel Ltd) was put into administration on 17 October 2023.