Year on year, comparing 2010 with 2009, spending on three and four star accommodation across Europe grew at two and three per cent respectively while travellers splashing out on five star accommodation increased by 9 per cent.

London witnessed nine per cent growth in lodging spend in the first quarter of 2011, while the Midlands saw a fall of 11 per cent for the same period.

Travellers staying at luxury accommodation in Europe are leading the increase in spending, according to a survey from American Express.

However, spending on business travel is still nowhere near levels last witnessed in 2007.

The news comes despite banks continuing to classify small and medium sized hotel businesses in the UK as a ‘high risk’ lending option, even though Bed & Breakfast businesses are regarded as a safer bet.

Sujata Bhatia, vice president of American Express Business Insights, said the growth was great news for the hotel industry in what remains a delicate environment.

She added, ‘This is a fantastic segment that is willing to spend although they don’t earn very much. Hotels have to use a dramatically different approach to attract them, such as using social media.’