The ACT government has rejected Hilton's unsolicited proposal for a $200 million hotel development at City Hill, noting the land should be "competed" for.
The pitch, presented to the government on May 7, called for a 253-room luxury hotel and a so-called "World Trade Technology Centre" in the precinct.
The Hilton Canberra would be attached to a hotel school and child care centre, designed to host diplomatic services, technology and trade-related providers, an earlier statement said. It would also include a nursing academy.
The proposal "did not progress past stage one", according to the ACT government website.
"The proposal would bring significant benefits to the ACT economy, including employment, tourism and public amenity," a government spokeswoman told The Canberra Times.
"However, the government determined that a competitive process is appropriate for the lease of the relevant land and hence not to consider the proposal further under the Guidelines for Unsolicited Proposals."
In order for an unsolicited proposal to satisfy the necessary criteria, it needed to justify grounds for direct negotiation with the government, including that it was in the "public interest" to do so, the spokeswoman said.
Hilton was contacted for comment and did not respond. It was unclear whether the hotel giant intended to make a second bid for the project's development.
The company confirmed it was eyeing City Hill for the project in early September.
The rejection comes after the ACT government refused to release documents relating to the future of City Hill, which is set to undergo a major transformation in the coming decades.
Land earmarked for a total of 1050 dwellings is scheduled to be released progressively in the next four years, while the City Renewal Authority's 30-year plan has projected 2800 dwellings will be built around City Hill by mid-century.
The authority has been scoping out the site's future ahead of the first land release, and government records show consultant Ernst & Young was paid $70,500 earlier this year for work on a "Precinct Renewal Program".
The Times applied under freedom of information laws to access documents related to the consultant's work, which included a "London Circuit Business Case", a social housing sensitivity study and a section 63 "bus plan".
Access to all 22 documents was denied.
In refusing the application, the authority's information officer, Craig Gillman, said public disclosure of the documents was not in the public interest.
Hilton's development proposal was being pushed by a consortium - Hilton Canberra WTTC - which includes Hilton's Australian arm, as well as two Sydney-based entities, Ledrae Hotels Pty Ltd and M20 Pty Ltd.
Hilton last year announced it was partnering with Ledrae Hotels on a new 245-room hotel in Parramatta.
Ledrae Hotels and M20 are headed by Michael Kyriacou and Lionel Chen respectively, according to company records.
If the project went ahead, the hotel would be five-star, full service, and include "signature" restaurants, bars, pools, a health club and a grand ballroom, a summary of the development proposal said.
The ACT government's rejection was handed down in September.
- with Dan-Jervis Bardy and Daniella White