UK chain hotels are struggling with the rising costs and flat occupancy rates, according to the latest HotStats from TRI Hospitality Consulting.
In contrast, the survey found that hotels in ten European cities were enjoying increases in profits.
The survey of UK chain hotels found that they suffered a drop in profits during May despite occupancy staying the same.
Average income before fixed charges (IBFC) – gross operating profit - fell by 1.5% to £46.27 per available room with occupancy static at 76.7%.
TRI said the fall was due to a weak room rate with its consequent affect on revenue per available room (revPAR).
But London hotels in the survey showed a rise in occupancy of 1.4% to 82.9% and a small increase in IBFC of 2% to £65.95.
On in the major European cities, TRI said Budapest was the city showing the greatest rise in profits.
IBFC in the Hungarian capital rose by 34.5% to an average 62.54 per available room.
Amsterdam emerged as the second most profitable city after London.
The Dutch city overtook Paris with a 9.5% increase in IBFC to 102.18 per available room and an occupancy rate of 83.8%.
Jonathan Langston, managing director of TRI, said of the UK survey: "Although increasing, neither room nor total sales growth is keeping pace with the rate of inflation.
"Hoteliers are also struggling with rising costs and flat or stagnating occupancy, so the pressure on profitability is inevitable.
"Demand for branded full-service accommodation in London remained extremely strong in May.
"Hoteliers were therefore still able to increase achieved average room rates, but the more competitive environment that now exists is reflected in how growth has moderated compared with previous years."
Mr Langston said that the European cities survey showed a "marginal year-on-year occupancy dip."
He added: "Amsterdam hoteliers had a strong May thanks to buoyant corporate demand. With no dilution from new hotel openings in the rest of 2008, the overall outlook for the Amsterdam hotel market is positive."