The price equates to about £400,000 a room and a multiple of 16.7 times the hotel's earnings in 2002.

InterContinental's chief executive, Richard North, said the sale was part of his group's strategy of "selling hotels that we do not need to own, providing we can achieve fair value."

The purchase brings Radisson Edwardian's total number of four- and five-star hotels in London to eleven, with a total of 2,300 bedrooms.

Jasminder Singh, chairman and chief executive of Radisson Edwardian, said: “We have sought the addition of an hotel in Mayfair to complement our group’s extensive coverage of London for some time and I can think of no better freehold property than the London May Fair Hotel to achieve this goal.

"Once refurbished, it will become one of the finest hotels in the capital and will further strengthen our group’s position in the luxury market segment.”

The May Fair Hotel was opened in 1927 by King George V. Facilities include two restaurants, a 290-seat theatre, a ballroom and a fitness club.

Planning consent has been obtained to extend and refurbish the hotel, involving the construction of a new six-floor wing of rooms and an eighth-floor extension, adding 80 bedrooms, as well as extending and improving conference and meetings facilities.