The UK hotel industry is enjoying its best year since 2000 according to a new report by PricewaterhouseCooper LLP (PWC).
The consultants, in their Hospitality Directions Europe - UK Hotel forecast also predicted "steady growth" over the next three years.
The PWC report said a better than expected economic growth, a sustained recovery in both business and leisure travel and few over-supply problems had contributed to an expected annual growth in the Revenue Per Available Room (RevPAR).
This was expected to grow by 5.5% in 2006, by 4.5% in 2007 and by 4.9% in 2008.
The report said that London had seen a "healthy" demand for luxury hotels and the return of major events like the International Motor Show had helped push occupancy rates up by 8.7% to 82% for 2006.
By 2007 and 2008, London occupancy is forecast to reach 83%.
Edinburgh, the report said, is also "performing strongly" with RevPAR growth of 6.6% in 2006, 5.2% expected in 2007 and 6.3% in 2008.
Occupancy is expected to reach nearly 80%.
Manchester is expected to see a small drop in RevPAR this year because of several new hotel openings in the city.
But it is expected to start growing again in 2007 by 2.1% and in 2008 by 4%.
Birmingham, despite the loss of the International Motor Show to London, is expected to see a 7% RevPAR growth this year, dipping a little to 5% in 2007 and to 4.4% in 2008.
Liz Hall, head of research and editor of Hospitality Directions Europe at PWC, said: "The hotel sector has had to work hard over the last few years to sustain its recovery.
"The current boom is very much a case of London having the year it should have had in 2005.
"London is the engine driving the UK at the moment with occupancies at their highest for almost 10 years and robust room rates growth pushing RevPAR to 12.9% in 2006 or 9.9% stripping out inflation."
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