Speculation continues to mount over the future of Carayol as he enters the final year of his contract at the League Two club.
Hill admits he tried to bring the 22-year-old to Oakwell in January but having been spurned then, he has decided against making a new bid.
"We were interested in Mustapha Carayol but we have not made an approach since the season finished," Hill told the Barnsley Chronicle. "We tried to jump the queue and sign him in January because that is what we have to do to get the best players.
"We were very, very close to signing him but could not quite agree a deal and I don't think we can get him now.
"He is destined to be playing at the top of the Championship in the near future. We won't be able to compete with the other clubs that want him."