Considerable investment in hotels has a left a "powerful legacy" for 2012 and beyond, according to PricewaterhouseCoopers.
The accountancy firm said that the London hotel market had improved significantly since London won the bid to host the Olympic Games, with the luxury market growing 33% over that period, and the budget sector increasing room supply by 60%.
But Liz Hall, head of hospitality and leisure research at PwC, did strike a note of caution about the increased supply:
"Such a large supply spike against an uncertain economic and travel environment is likely to mean a tougher competitive outlook," she said.
"Many operators are positive about London's prospects after the Games, encouraged by the global awareness of the Capital as a destination and the ongoing improvements in infrastructure. Others, however, have voiced concerns about the supply spike and how it will be absorbed. If there is a post-Games travel dip, trading could get very difficult - especially in East London.
"The challenge for London's hoteliers after the Games will be how to differentiate themselves in such a competitive market off the back of the Games feel good factor.
"London does however, have a highly profitable hotel sector and most cities around the world would love to have even a fraction of its success!"
By Neil Gerrard
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