The hotel industry is on the up. So says a report released last week by the business advisory firm Deloitte. It confirms that demand for hotel rooms across Europe has risen since last October, with a 3.3 per cent increase in January compared with the same month in 2009.

Alex Kyriakidis, global managing partner of tourism hospitality and leisure at Deloitte, does temper the findings with a note of caution, saying: "No strong rebound in European tourism and hotel performance is expected in 2010 ...." Though it's his next comment that is of most interest to leisure travellers. "Further declines will now be city specific rather than the norm," he adds.

Deloitte identifies two favourite short-break destinations, Barcelona (pictured below) and Prague, among the worst-performing cities. Barcelona's average room rates have dropped from €105 per night in January 2009 to €91 in January 2010. Prague's rates dipped from CZK2,127 (£75) to CZK1,824 (£64) in the same period. Budapest, Copenhagen, Dublin, Helsinki, Madrid, Moscow and Rome are among the other favourite cities that performed poorly.

So are they the places to go to for a bargain break? That all depends on how you define "bargain". One good place to discover more about best value is the Hotel Price Index compiled by the hotel booking website twice a year. The latest, comparing 2008 and 2009, was released this month and is on the firm's website ( hotel-price-index.html).

Nigel Pocklington, global marketing director at, points to a useful chart in the Hotel Price Index which reveals what star rating you can buy for under £100. "Berlin offers cheap prices for good quality hotels – we quote an average price per night of £77. It's a hidden gem because your money goes far and it's an interesting destination," he says. He also advises city-breakers to head east. "Talinn and Riga have room rates under £60."

London, it seems, is one city that has bucked the trend, according to Deloitte's report. "Hotels in London are an exception," it says. "It had the advantage of an inexpensive currency compared [with] the US dollar and the euro throughout the downturn, and it had limited new supply, so it did not experience the massive tourism drop-off that some European cities did."

Good news for British business, but not perhaps for city-breakers. "Hoteliers [in London] have been able to push up average room rates since November 2009," continues Deloitte, predicting that prices may increase by £10 per room per night.

But don't despair if your budget's too tight to fork out for a flight because the rest of Britain's hotel scene hasn't fared as well as the capital's. Deloitte names Aberdeen, Edinburgh and Cardiff as British cities that have seen room rates drop. But which city is the cheapest to stay the night in? has the definitive answer about where to send you – Coventry.

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