The expected hotels booking bonanza during the Olympics has fallen flat amid claims the games have turned the city into a 'ghost town'.

Hotels are far from full and many have had to slash prices while the Financial Times today reported tourists are avoiding central London, casting doubt on expectations of the sporting spectacle giving the metropolis an economic boost.

Tourists were expected to have to fight to get accommodation amid fears of sky-high room rates.

Hotel provider JacTravel said bookings in London were "very substantially down" compared with the same period last year.

Both JacTravel and travel website Travelzoo said that London hoteliers had had to discount room rates, with Travelzoo saying that hoteliers had overestimated demand.

JacTravel director Angela Skelly said: "Compared with the same period last year, bookings for London are very substantially down, whereas bookings for all other European cities are significantly up - as is London in September."

JacTravel, which books more than 500,000 bed nights a year in London, said that as of last week, room rates were down to normal levels having been inflated by as much as 300% two months ago.

It said some four-star hotels which had been quoting rates of £300 to £400 had dropped them to around £109 to £150, while some two-star establishments had slashed prices from £200 to £50.

Travelzoo UK managing director Joel Brandon-Bravo said: "As with the royal wedding, it does look like many hoteliers overestimated demand and are now left with empty rooms to fill."

Expedia and Booking.com are respectively owned by American parent companies Expedia Inc and Priceline.com. UK hotel room revenue amounted to around £10.1 billion in 2010, the OFT added.

The OFT said the alleged infringements were anti-competitive in that they could limit price competition between online travel agents and make it more difficult for new online travel agents to gain market share by offering discounts to consumers.

The investigation was launched in September 2010 following a complaint submitted by a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room only hotel accommodation, the OFT said.

Clive Maxwell, OFT chief executive, said: "We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers."

The Competition Act 1998 prohibits, among other matters, agreements and practices that prevent, restrict or distort competition in the UK.

IHG has more than 661,000 rooms in over 4,500 hotels in nearly 100 countries, operating nine hotel brands - InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Even Hotels and Hualuxe Hotels and Resorts.

Booking.com claims to be the number one online hotel reservation service in the world, offering more than 210,000 hotels, and is available in 41 languages.

Expedia offers a directory of 80,000 accommodation properties worldwide and four million rooms, as well as fares on more than 450 airlines.

The Financial Times said the games had attracted around 100,000 foreigners to London. But this lags behind the 300,000 usually expected at this time of year.

As predicted, theatres are suffering, with the FT quoting Nica Burns, chief executive of Nimax Theatres saying: "We're bleeding darling".

Ms Burns predicted taking for her six theatres will be down 30 per cent over the summer.

The Association of Leading Visitor Attractions, which represents London's major museums and tourist attractions, has reported a fall of 30-35 per cent in attendance over the past fortnight.