New research from TRI Hospitality Consulting show London's hoteliers enjoyed double-digit growth in revenue per available room (revpar) in the first two months of 2007.
The market analyst's Hotstats Report found that while occupancy stayed fairly static, the main cause was a huge hike in average room rates, which had soared by 11.6% to £104.60.
Occupancy remained steady with a 0.9 percentage point rise to 75.8% taking overall revpar growth to 13%.
Jonathan Langston, managing director of TRI, said: "While not high compared with peak times of the year, the occupancy rate at the start of this year is strong and where hoteliers have made the most progress."
The UK provinces market was positive but still lagged behind the capital. Occupancy improved by 0.5 percentage points to 63.4%, rates were up by 3.2% to £70.15 and revpar climbed 4%.
Langston added the reasons for trade body UKInbound's figures showing visitor arrivals up by 17.1% on the previous year were unclear but warned that the fragility of the US economy was a major concern.
By Emily Manson