Inbound tour operators have reported a dramatic 95% downturn in bookings for the period during next year’s London Olympics.

The European Tour Operators Association, which conducted the research among 38 of its leading members, said the results demonstrated that the capital could suffer financially during the games.

The news comes ahead of a debate at this year’s World Travel Market on the benefits for destinations of hosting sporting events and comes as Thomas Cook reveals sales of its packages for the London 2012 Olympic Games are being hampered by a public misconception the event has sold out and a general lack of consumer awareness.

ETOA’s survey of 38 members, which are responsible for two million tourists a year and represent more than £2 billion in export revenue to the UK economy, reports that sales for the period of the Olympics have plummeted, with some reporting that sales are almost non-existant for August next year. The report paints a far worse picture than predictions made by ETOA a year ago, when two-thirds of operators surveyed feared a 30% fall in business.

The association has blamed inflated hotel prices for deterring leisure visitors and sports fans. Previous research by ETOA identified a “bubble” in the London hotel market.

ETOA says further findings from its survey show normal leisure business declining each side of the Olympics as holidaymakers and operators stay away.

Executive director Tom Jenkins said: “The expectations of visitor numbers currently circulating within the hotel industry are hugely inflated. If UK businesses are basing their plans on data in some prominent visitor forecasts, London will suffer financially, as has been experienced by previous host cities.”

In a normal year, on average 10&% of overseas visitors arrive in the UK in August – nearly 1.5 million- and typically stay six days, according to the International Passenger Survey.