London hotels had a cracking start to 2007, with the top occupancy, room rates and room revenue per available room (revpar) in Europe, according to market analyst TRI Consulting.
The monthly Hotstats report on the top 10 European cities in January showed the UK capital was €10 ahead of its nearest rival Paris with revpar at €144.10 (£98.90) compared with €132.45 (£90.90).
TRI Director David Bailey said: "London is continuing the strong showing it made in 2006 into 2007. A more accurate picture will not emerge until after Easter but the early signs are that this will prove another bumper year for hotels in the UK capital."
The main threat to London's pole position remains Moscow, which saw higher rate growth of 27.3% compared with London's 19%.
The Russian capital also had the lowest cost of labour, with Moscow, payroll just 24% of turnover in January, while London, the only other city below 30%, came in at 28.7%.
This was despite Moscow having the second worst occupancy during January of just 51%, compared with London's robust 74.9%.
The main challenges for Moscow are finding a year round business and building a stronger leisure market," said Bailey.
Budapest had the roughest start to the year, after a surprise drop in occupancy left the city with a huge rise in labour costs, up 10 percentage points to 44.4%.
A significant drop in occupancy in Budapest during January hit hotels hard and left them unable to flex their workforce quickly enough," said Bailey.
By Emily Manson