The Big Question: Why are British hotels so expensive, and do they justify their high prices?

Why are we asking this now?

The UK has the most expensive hotels in Europe, according to a new report. Staying a night here cost an average of £106 in 2007, up 12 per cent on the previous year. Hotels in Norway and Switzerland, the next most expensive, charge £99 a night. Italy and Denmark are £98 while guests pay only £83 in France and £79 in Spain – and far less in Eastern Europe: just £66 in Poland and £59 in the Baltic states, Lithuania, Latvia and Estonia, making them the cheapest in Europe. The figures were compiled by the online reservation service Hotels.com.

So does that make UK hotelsthe mostexpensive in Europe?

No, actually. Russia is excluded from hotels.com's international ranking, but Moscow comes out as the most expensive European city – its price jumping 22 per cent in a year. In the table of 64 major worldwide destinations, London is the fifth costliest, behind Moscow (£194 a night); New York (£143); Dubai (£125) and Venice (£125).

And London isn't the most expensive in Britain – that dubious distinction goes to the Georgian jewel that is Bath, which, at £117 a night, is £2 more expensive than the capital. Oxford and Aberdeen are also more expensive than the British average at £106. Staying in Edinburgh costs £103 a night. "It's quite interesting that Bath is higher than London but I think that is down to the number of five-star, luxury country house-type properties," said Dan Thomas, news editor of Caterer and Hotelkeeper magazine. "It also attracts quite a few American tourists." But Bath may not stay the most expensive for ever – Oxford and London are fast closing the gap.

So where are thecheapest places tostay in the UK?

The Midlands is the area to head to. Coventry comes out cheapest in the Hotels.com survey, with rooms costing just £57 a night. Nottingham (£66) and Birmingham (£79) were also relatively cheap. Similarly priced are Bournemouth (£77), and Glasgow (£79).

So why are Britishhotels so expensive?

Three factors – tax, costs and supply and demand – according to the British Hospitality Association, the hotel industry's body. At 17.5 per cent, British VAT is, it says, more expensive than tax on accommodation in many Continental countries, such as Italy where it is 10 per cent, the Netherlands (6 per cent) and France (5 per cent), though Germany levies 20 per cent VAT on hotels.

Costs here are higher too, but the biggest factor, says the BHA (and independent experts), is supply and demand. With daily changes in room rates possible, hotel prices are very elastic; sensitive to changes in demand. Britain is a very strong draw for tourists and for business people, the sixth most visited nation on earth, behind France, Spain, the US, China, and Italy (with 32 million foreign visits).

A booming economy and a shortage of land also push up prices. So room rates in the crowded, still economically buoyant south of England are high – because hoteliers can charge the rates and still fill the rooms.

According to research by TRI Hospitality Consulting, room occupancy in London in January was 73.4 per cent, the highest of 10 European cities, while chain hotels in Berlin and Budapest could fill only half their accommodation. London is an all-year round destination.

Any prospect of UK hotels becomingless expensive?

There is no sign of prices coming down. If the economy deteriorates, fewer travellers may stay fewer nights but hotels seem to have had no problem filling their rooms in the past six months.

Why is Moscow so expensive?

One might have thought Moscow would be relatively affordable but it has few hotels and they are concentrated at the five-star luxury end. The building of many new hotels may change this in the long run. In New York, developers converted many existing hotels into apartments, causing a shortage, before the slide in the dollar attracted tourists to The Big Apple.

Dubai is also very expensive, but that is because it has concentrated on the luxury end of the market. Its Burj al Arab – whose well-known architecture resembles a sail – bills itself as the world's only seven-star hotel, with a butler in every suite. Venice has always had small, expensive, exquisite hotels. Orlando and Bangkok were two of the cheapest cities, costing £55 and £58 respectively.

Do all nationalities pay the same to stay in the same hotels?

One would have thought so, but the research suggests people from some countries pay more than others. According to hotels.com, which compared in prices in seven cities, the Irish pay the most – £99 on average. The British hand over £93 a night. The Germans and the Danes pay the least, £85 and £83 respectively. So while the Austrians pay £78 to stay in Frankfurt, the British pay £95 and the Belgians £110. The Germans, on average, pay £27 less each night to stay in New York. This could be down to travellers from different countries being offered better deals – or their extravagance.

Any tips for booking a cheap hotel?

Compare rates online. Inquire if a hotel has any discounts available. Staying at the weekend in cities popular for business (such as Brussels or Frankfurt) can be much cheaper. Consider budget hotels. They may lack luxuries, but if you are looking for the equivalent of a Ryanair flight, then they are for you. Consider tailoring your destination to suit your pocket. A £100 a night will buy you a five-star stay in Cairo, Lisbon, Warsaw, Marrakesh, Bali, Buenos Aires, and Jakarta but only three stars in Rome, Paris, Los Angeles, and Hong Kong, two stars in Tokyo and Moscow and 1.7 stars in New York.

Where are the best hotels in the world?

From the stately art-deco Dorchester to the boutique Charlotte Street Hotel, London undoubtedly has some fine places to stay. So what is the verdict of Jeff Weinstein, editor-in-chief of Hotels magazine? Speaking from Chicago, he says: "The best service is usually to be found in Asian hotels. They are very eager to please and they have a culture which is service-based. You don't see that so much in Europe. But there are some wonderful hotels in Europe."

Are British hotels good value for money?

Yes...

* British hotels are reliable and give visitors reasonable minimum standards of comfort and security

* Many properties are steeped in history and sited close to world-class tourist attractions

* Britain is one of the most popular tourist destinations, so prices are bound to be higher than in countries with fewer visitors

No...

* British hoteliers are exploiting Britain's popularity by increasing their prices with little justification

* Staff costs here are the lowest of 10 European cities, according to a recent survey by hotel consultants

* The prices charged by budget hotels show that some middle-market operators are overcharging