Sir John Egan claims hotel prices threaten London's tourist trade

Inflation-busting price increases over the last three years by hoteliers in the capital could result in the loss of business to other European cities, warns Sir John Egan, chairman of the London Tourist Board.

In a private letter sent to hoteliers in London, Sir John wrote: "I simply ask you, when setting prices, to recognise the danger that London faces of once again creating the perception of being expensive.

"I fully appreciate you have many needs to satisfy, including those of shareholders and employees, but the recent oversall outstaning success of London appears to be in jeopardy."

London hotel prices have continued to rise this year with supply still outstripping demand. A recently published survey by Arthur Andersen showed that the average London room rate was pounds 91.24 in 1996 up from pounds 80.49p in 1995 - a rise of 13.4 per cent.

The London Tourist Board calims that hotel room rates in the capital have soared by 31 per cent over the three years to the end of 1996, considerably above inflation of 9 per cent. Sir John also warned that, the continued appreciation of sterling meant that anticiapted room rates for this year in mark and franc terms would be 70 per cent above 1993 prices.

Research by the London Tourist Board found that tour operators were reporting London had dropped from being the most popular European city destination to the number three slot because of higher prices. London was rated as the second most expensive city in Europe for hotels, after Rome in the survey.