London's hoteliers could see occupancy levels across the capital reach 'record' levels next year, according to PricewaterhouseCoopers' (PwC) latest UK Hotels Forecast.

Research found that the improved economic conditions and a return to growth in business travel sector should see the London rate grow by 7 per cent for the current year. Continued growth heading into 2011, including a 4.1 per cent increase in occupancy, is expected to ensure the recovery of the London sector continues apace.

Robert Milburn, UK hospitality and leisure leader at PwC, said: "If inflation were stripped out, average room rate would still have some way to go to hit historic peaks but, on current trading, occupancies are already breaking records." "In fact, we are forecasting record highs for each quarter in 2011, topping out at 90 per cent in Q3."

However, PwC also issued a warning that the 2012 Olympics could have a "depressing effect" on occupancy levels during 2011 as more rooms are provided to meet demand. Liz Hall, head of hotels research, said: "The expected demand for hotels due to the Olympics will spike in the summer of 2012, but the supply will increase beforehand. This could lead to a depressing effect on occupancy and average room rates in London hotels in 2011.

"It is unclear whether all planned rooms will be built, postponed or cancelled, but in a maximum construction scenario, the forecast for London RevPAR growth for 2011 could drop."