Inbound tour operator JacTravel claims bookings for London during the Olympics are down 30% while other European cities are up.
The company said it had compared hotel bookings against the same time last year and found July bookings for London were more than 35% down while August was almost 30% down.
Chief executive Mario Bodini told Radio 4 that he attributes the downturn to people avoiding London during the Olympics and he blamed price hikes in the capital.
The message comes as a survey says a London staycation is 25% more expensive than the average foreign beach holiday.
But despite this the M&S Money research said half of Brits (54 per cent) are choosing to stay in the UK this summer.
The survey of more than 2,000 adults found Daytona Beach in Florida and Bridgetown in Barbados more expensive than London.
By Diane Evans
