Kennedy is the only out-of-contract player at Spotland yet undecided on his future after being offered a new deal and Hill believes the 26-year-old will move on.
"I've spoken with Jason and it's highly unlikely that he's going to be signing," Hill told the club's official website.
"It was important for me as a manager when I came back to the football club that I retained Jason for the 18 games that I was here.
"I'm glad he stayed because he did have an opportunity to possibly leave. He was tremendous for me when I came back and I'm happy for him to be signing for another football club, whether it is in this division or a league above.
"As long as his family is happy and the location is suited to him and his family.
"Jason knows I'm in a position where I'm looking to recruit a central midfielder this week and if I do then the situation with Jason will have evolved and taken care of itself."
Kennedy has made nearly 200 first-team appearances for Dale since arriving on a free transfer from Darlington in August 2009 and was a virtual ever-present in the side last season.
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