Tessa Jowell, secretary of state for culture, media and sport, announced Government backing in the House of Commons last Thursday, while London’s mayor, Ken Livingstone, sports minister Richard Caborn and the British Olympic Committee also voiced their support for the bid.

Should the capital be successful in winning the games, it is estimated they will generate between £280m and £610m extra tourism revenue for the country, according to one report. Conservative estimates predict tourism would increase by at least 20% between 2011 and 2013.

The successful staging of the Olympic Games in London would also provide wider, unquantifiable benefits, such as a boost to the UK’s image and prestige among a global audience.

Winning the bid would also greatly benefit London’s hotel industry, which continues to experience challenging trading conditions. London’s hoteliers expressed overwhelming support for the bid in a Caterer survey carried out in January this year.

Despite concerns over London’s creaking transport system and fears that the Olympics could suffer from Millennium Dome syndrome, industry commentators believe the benefits of the games would far outweigh the potential pitfalls. Nearly £2.5b came from “tourist benefits” after the Olympics were held in Sydney in 2000.

“Cities need these shots in the arm to keep them motivated,” said David Bailey, director at TRI hospitality consultancy.

Melvin Gold at hotel consultants PKF was upbeat about the prospect. “From 1994 to 2000 London occupancy exceeded 80% every year. This is a cyclical business, and a bid for the games is a great motivating factor. It shows Government commitment to investing in London and tourism.”

Between 80,000 and 100,000 hotel and hostel rooms would be required to accommodate the International Olympic Committee (IOC), family, media, spectators and those who accompany them. London, which already boasts slightly more than 100,000 bedrooms, is already on track to double its hotel stock to 200,000 by 2012.

New York, Madrid, Moscow and Leipzig are already in the race for the 2012 games, while Rio de Janeiro and Paris are still considering bids. The winner will be announced by the IOC in July 2005.

Government estimates put the cost of hosting the games at about £2.4b. The money to finance the event would come from the London Development Agency, London council tax payers and a new national lottery.

A survey conducted in December revealed that 81% of people throughout the country support the bid.

The UK has previously bid to host the 1992 games in Birmingham and the 1996 and 2000 games in Manchester.