London is now the world's most expensive city for five-star hotel suites and luxury serviced apartments, according to a new study.

Conducted by research house Dataloft, the survey takes into account cost per square footage, with findings also showing that the luxury hotels market – which once suffered as a result of the recession – has made a noteworthy recovery.

The numbers come hot on the heels of another report, which recently found that London is expected to become the world’s favourite tourism destination this year.

The findings show that the highest cost of renting a luxury room comes in at £11,700 (US$19,600, €14,600) per night in Mayfair, with a lack of supply and the strength of the pound having pushed prices up to new heights.

Mayfair has been found to be the most expensive and exclusive place to stay in the capital, with the area housing the highest rates in the luxury market, where it holds a four per cent premium over Knightsbridge and a 60 per cent premium over St James and The Strand.

Due to high land prices, the cost of luxury offerings is highlighted by another finding, which reveals that it costs a total of £746,044 (US$1.2m, €935,000) to rent a suite for a year – the equivalent of buying a flat in the capital.

Despite increasing costs, there is still a significant demand in the market, showcased by average occupancy rates between 78 to 80 per cent in the capital’s luxury sector, beating percentages found in the likes of Dubai, Paris and Barcelona.

However, the report has also found that of the 129,000 hotel rooms in central London, only 14,900 rooms provide five-star accommodation.

Hoping to exploit gaps in the market, a number of developers are seeking to cash in with the new Beaumont Hotel due to open later this year, while the Galliard Group is expected to open its 235-bed hotel conversion of Old Scotland Yard sometime in 2016.