Culture Secretary Jeremy Hunt has urged operators to price fairly and make the most of the business opportunity presented by London 2012.
Addressing hoteliers and tourism bodies at the British Museum as part of his national 2012 tour, Hunt said the country had the chance to get noticed by the world.
"I don't want to underestimate the challenges involved for the tourism industry but I also want to make sure we embrace the opportunities we have," he said.
"It is impossible to underestimate the scale of what is going to happen in London this year. It will be the first time in our lives that we've hosted a live sporting event that's watched by more than half the world's population."
Hunt said that on any given day of the Olympic and Paralympic Games there would be an extra one million people in the capital.
He also urged operators to sign up to the 20.12% discount scheme to make the games as accessible as possible to domestic tourists, who are to be targeted in a £5m ad campaign launching next month.
Hunt added: "It's not just about running TV ads. It's also about giving people a hook, a call to action. That's why we're encouraging restaurants, attractions and hotels to offer discounts or equivalent offers of 20.12% or more to encourage families all over the country to go to London this summer."
VisitEngland confirmed that hotel group De Vere was the latest hospitality firm to sign up, joining Travelodge and Best Western among the operators supporting the discount scheme.
Hunt said that if London 2012 was managed successfully it would be the moment when the domestic tourism industry competed properly with the rest of the world.
"The inevitable moans and groans in the run-up to an Olympics must not cloud the scale of the opportunity - including our biggest-ever tourism marketing campaign to make sure we get a lasting benefit from being in the global spotlight," he said.
By James Stagg
E-mail your comments to James Stagg here.
If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to www.catererandhotelkeeper.com/tabletalk
Looking for a new job? Find your next job here with Catererandhotelkeeper.com jobs