New figures released by the hotel consultancy team at PKF show RevPAR grew by 3.5 per cent in the capital last year and by 0.5 per cent in the provinces.
The statistics show how well hoteliers performed despite the continuing economic uncertainty. However Robert Barnard, a partner for Hotel Consultancy Services at PKF, said expectations would remain 'modest' for 2013.
"The hotel sector as a whole will be satisfied with its performance during 2012, all things considered," said Barnard.
"Expectations for 2013 are likely to remain modest unless we see any significant economic recovery. The lack of any meaningful new development should shield operators to some extent, but the industry is still waiting for a sustained increase in demand. As things stand, many will be relieved just to hold their own this year," he added.
Occupancy fell
The increase in RevPAR for the 12-month period was driven in London by higher room rates - the average daily room rate (ADR) grew from less than £144 to £150.23. In the regions, a 0.7 per cent increase in ADR to £60 also helped improve RevPAR.
Despite a year of big headline events including London 2012, occupancy fell in both the capital (down 1.3 per cent to 81.6 per cent) and elsewhere in the UK (down 0.2 per cent to 70.7 per cent).
“Despite high profile events such as Diamond Jubilee celebrations and the Olympic and Paralympic Games, the abiding memory of the past 12 months for many in the industry will be the absence of any meaningful recovery in consumer or business confidence.
"Operators in London and the regions therefore deserve credit for posting year-on-year increases in rooms yield at a time when the domestic economy has stagnated and concerns about the Eurozone have constrained demand from overseas," said Barnard.
High-performing capital
The PKF stats clearly show the continued strength of the London hotel market. New information from both hotel experts STR Global and real estate firm Jones Lang LaSalle back up that view.
STR Global has revealed London was one of just four markets in Europe to post an increase in ADR of more than 10 per cent - according to the firm, the ADR jumped by 12 per cent.
Meanwhile, Jones Lang LaSalle has said the capital continues to attract foreign capital. Investment volumes in London totalled £1bn for 2012, 56 per cent of total UK investment volumes.
Jon Hubbard, Northern Europe chief executive for the hotels & hospitality group at Jones Lang LaSalle, said: "Despite the economic challenges it faces, the UK remains Europe's most active hotel investment market and interest remains in key assets in prominent locations."