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Lefteris Pitarakis  /  AP
In this photo taken Wednesday, March 28, 2012, Marina Usher Mazur poses in her 3-bedroom second home in Notting Hill, London.Mazur is renting the house to two American families for 6,000 British pounds a week. That's more than double her normal rate, but she still received more than 30 responses.
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updated 5/8/2012 9:13:38 AM ET 2012-05-08T13:13:38

It's months before athletes hit the Olympic track, but time is running out for those in another fierce competition: The scramble for a place to stay in London.

Some innkeepers will be charging Ritz rates for Fawlty Towers rooms — and they will get away with it.

A limited hotel supply and unprecedented demand from almost a million tourists, media and businesspeople tied to the London Games means that accommodation in the British capital — never a bargain to start with — is more expensive than ever this summer.

That guarantees a bumper year for London's hotel and rental sectors, but a nightmare for those who have been dragging their feet on making sleeping arrangements.

Already, many central London hotels are fully booked from mid-July to mid-August, and those that still have rooms available now charge anything from double to four times more than their normal rates.

Related: Heathrow feels the heat as Olympics approach

"It's almost too late now to get into central London," said Miles Quest, a spokesman for the British Hospitality Association. "(Visitors) need to look outside the central area, where rooms will clearly be cheaper."

It's too good a business opportunity to miss, and hoteliers aren't the only ones cashing in. Vacation rental agencies and websites have reported a massive boom in business, with many homeowners planning to stay with friends or go abroad so they can rent out their homes.

"There was a massive increase in traffic as soon as 2012 turned — it was overnight. It was really crazy," said Matthew Parker, who is doing a brisk trade on his website Londonrentmyhouse.com, a matchmaking service for enterprising people looking to rent out their homes and visitors seeking a short-term stay.

"The site is taking adverts (ads) everyday, we're into the thousands now and many more to come. Homeowners are really grabbing the idea and running with it," he added.

It's easy to see why. London tourism officials expect about 900,000 Olympics-related visitors — including athletes, their families, staff, journalists, and tourists — to London this summer, all needing a bed. That's on top of the 1.5 million tourists London typically sees every August.

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Even with many new hotels springing up all over the capital, there are only about 110,000 hotel rooms in the London area — and almost a third of those have been allocated to Olympic personnel.

Tourism officials have brushed off the shortage, insisting that London has more rooms and a bigger range of sleeping options than any other Olympic host city has been able to offer. They have also been encouraging visitors to research alternatives like hostels, bed-and-breakfast inns and university dorm rooms.

Still, they acknowledge they are not in a position to do anything about what Tessa Jowell, an opposition lawmaker, has called a "scandal of extortionate price rises."

A recent survey by London-based international booking website Hotels.com suggested that the average London hotel room rate has doubled for the Olympic period compared to last year, but it's clear in many cases the jump is much steeper.

At the Travelodge in Stratford, the budget chain's property next to the Olympic Stadium, room prices have shot up from a modest 50 pounds ($80) per night to 274 pounds ($436) in late July.

"The prices aren't going to come down," said Hotels.com president David Roche. It's not that hoteliers are all greedy, he added — some owners are just looking to the Olympics to recover losses amid a sluggish British economy.

"Many hoteliers are looking at the Olympics to save them," he said. "They're wondering when the good times are going to roll again."

Prices in the vacation rental market can be lower, since more and more flats and houses are coming onto the market as more homeowners and landlords realize the potential to make some quick cash.

Rental costs vary wildly: As low as 75 pounds ($120) for a room in someone's flat, to 20,000 pounds (nearly $32,000) a week for a luxury central London townhouse. Many people are asking four times more than the normal rent, Parker said.

There's evidently demand to sustain such high prices.

"I'm booked for the entire Olympic period," said Marina Usher Mazur, who is renting her 3-bedroom second home in Notting Hill to two American families for 6,000 pounds ($9,550) a week. That's more than double her normal rate, but she still received more than 30 responses.

"I had a couple people say, you're crazy. But it went pretty easily," she said. "I was amazed at how many people were interested."

It's not impossible to find budget options, though, as long as visitors are prepared to commute. Kent and Essex, for example, are to the east in the Greater London area, and have good connections to the Olympic Park. Events will be taking part across all corners of the capital, so taking the time to research transport links will help determine which suburb to choose from.

"Many events are held outside east London," Roche said. "If you know where you're going, there's no need to stay in central London."

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: London prepares for the spotlight

Photos: Venues

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  1. Welcoming the world

    Olympic rings have been mowed into the grass by shire horses at Richmond Park in London. The rings are visible on the flight path to London Heathrow International Airport, ready to welcome athletes and visitors to the London 2012 Games.

    The Games will take place July 27-Aug. 12, 2012. (LOCOG via AP) Back to slideshow navigation
  2. Getting around

    A cable car is seen June 28 across the River Thames in London. The cable car will make the half-mile crossing between Greenwich and the Royal Docks, allowing visitors to take in the views of Olympic Park, the Canary Wharf financial center and the Thames Barrier. Each of the 34 cars holds 10 people. Travelers can purchase one-way or round-trip tickets, with a one-way ticket costing 3.20 pounds (about $5 US). (Lefteris Pitarakis / AP) Back to slideshow navigation
  3. Final countdown

    Work continues July 3 on the entry routes to the Olympic Stadium in London. The stadium will host several events during the 2012 Games. (Luke MacGregor / Reuters) Back to slideshow navigation
  4. Olympic Park

    A July 12 aerial view of the Olympic Park in Stratford, one of the venues for the 2012 London Summer Olympic Games. (David Goddard / Getty Images) Back to slideshow navigation
  5. Twisty tower

    The ArcelorMittal Orbit is seen May 11 in the London 2012 Olympic Park. The 375-foot observation tower is the tallest in England and will remain a permanent fixture in the city long after the Games end. (Ki Price / Reuters) Back to slideshow navigation
  6. Shopping, anyone?

    Shoppers are seen at the Westfield Stratford City mall in east London. The 1.75 billion British pounds ($2.75 billion U.S.) mall includes a 24-hour casino, 14 bowling lanes, 70 restaurants and 250 shops between the main public transit hub and the main entry point to the Olympic Park. An estimated 75 percent of fans will have to walk through the mall and its temptations to reach the venues for showcase events like gymnastics, swimming, basketball and track. (Lefteris Pitarakis / AP) Back to slideshow navigation
  7. Shooting events

    A steward stands outside the Royal Artillery Barracks in Woolwich, London, on April 20. The OIympic shooting events will be held at this venue. (Matt Dunham / AP) Back to slideshow navigation
  8. Carrying the torch

    Torchbearer Zachary Franklin carries the Olympic flame on a raft down the Lee Valley White Water Centre on July 7 in Waltham Cross, England. The 70-day relay leading up on the Olympic Games involves 8,000 torchbearers covering 8,000 miles. (LOCOG via Getty Images) Back to slideshow navigation
  9. Tennis, anyone?

    Andy Murray of Great Britain serves during a semifinal men's tennis match July 6 against Jo-Wilfried Tsonga of France on day 11 of the Wimbledon Lawn Tennis Championships at the All England Lawn Tennis and Croquet Club in London. The 2012 Summer Olympics tennis competition will be held in the venue. (Paul Gilham / Getty Images) Back to slideshow navigation
  10. Olympic Stadium

    This picture taken with a fisheye lens May 5 shows a general view of the British Universities and Colleges Sport Athletics Championship at Olympic Stadium in London. The 80,000-seat stadium will host the opening and closing ceremonies during the 2012 Games. (Matt Dunham / AP) Back to slideshow navigation
  11. Velodrome

    The Velodrome in east London can seat 6,000 spectators and will host the cycling events at the 2012 Summer Games. A glass wall around the venue's perimeter also gives visitors a 360-degree view of Olympic Park. (Ben Stansall / AFP - Getty Images) Back to slideshow navigation
  12. Home sweet home

    An aerial view of the Athletes' Village in the London 2012 Olympic Park on April 16. (Anthony Charlton / London Organising Committee of the Olympic Games via Getty Images) Back to slideshow navigation
  13. Spin your wheels

    Exterior view of the Velodrome within the Olympic Park in London, England, on Feb. 19. The velodrome will host the track cycling events at the 2012 Olympic Games. (Gerry Penny / EPA) Back to slideshow navigation
  14. Eyes on the prize

    An aerial view of the Aquatics Centre and the Water Polo Arena in the London 2012 Olympic Park on April 16. (Anthony Charlton / LOCOG via Getty Images) Back to slideshow navigation
  15. Transformation

    An aerial view of Olympic Park taken on April 4, 2008, (bottom) and Dec. 21, 2011, (top) show the Aquatics Centre (front), Water Polo Arena, right, and the Olympic Stadium, back, in London and the site when construction began. (Anthony Charlton / Olympic Delivery Authority via EPA) Back to slideshow navigation
  16. Olympic Stadium and Orbit Tower

    The Olympic stadium and Orbit Tower of the London 2012 Olympic games in Stratford, east London, seen on Jan. 12, 2012. (Facundo Arrizabalaga / EPA) Back to slideshow navigation
  17. Velodrome

    A view of the Velodrome from the Parklands area in the Olympic Park in London on April 8, 2011. (Anthony Charlton / Olympic Delivery Authority via EPA) Back to slideshow navigation
  18. Olympic Stadium

    The Olympic Stadium is seen from Hackney in London on Nov. 27, 2011. (Eddie Keogh / Reuters) Back to slideshow navigation
  19. Beach volleyball venue

    People walk across the Horseguards Parade on Nov. 29, 2011, in London, which will host the beach volleyball event for the London 2012 Olympic Games. (Andy Rain / EPA) Back to slideshow navigation
  20. Rising to the occasion

    Hot air balloons rise into the early morning sky July 25, 2011, over London. Seven balloons took part in the flight over London as part of a collaboration between the London Sky Orchestra project, the 30th anniversary of the London International Festival of Theatre, and the Greater London Authority, which is marking a year to go before the 2012 Olympic Games. (Andrew Winning / Reuters) Back to slideshow navigation
  21. Mascots

    Olympic mascot Wenlock, left, and Paralympic mascot Mandeville pose for photographs May 19, 2010, at a school in London. The backstory of the two mascots is that they were created from the last drops of steel left over from the construction of the final support girder for the Olympic Stadium. (Matt Dunham / AP) Back to slideshow navigation
  22. Bull’s eye

    An aerial view of Lord's Cricket Ground, which will host archery events during the London 2012 Olympic Games. (Tom Shaw / Getty Images) Back to slideshow navigation
  23. Hoop dreams

    An interior view of the London 2012 Basketball Arena. Construction on the 12,000-seat basketball arena for 2012 Olympics in London has been completed, just 15 months after building began. The stadium became the fourth venue at Olympic Park to be finished, on budget and in time for the first test event to be held at the site in August. (Dave Tully / ODA via AP) Back to slideshow navigation
  24. The Dome

    An aerial view of the North Greenwich Arena, also known as The Dome, which will host artistic gymnastics, trampoline, basketball and wheelchair basketball events during the 2012 Olympics in London. (Tom Shaw / Getty Images) Back to slideshow navigation
  25. Manmade whitewater

    An aerial view of the Lee Valley White Water Centre, which will host the canoe slalom events during the London Olympics. (Tom Shaw / Getty Images) Back to slideshow navigation
  26. In the arena

    Nina Ligon represents Thailand during an equestrian competition at Greenwich Park on July 4 in London. The equestrian eventing was one of the London Organising Committee of the Olympic Games’ test events prior to 2012. (Olivia Harris / Reuters) Back to slideshow navigation
  27. Goal!

    An aerial view of Wembley Stadium, which will host soccer events during the 2012 Games. (Tom Shaw / Getty Images) Back to slideshow navigation
  28. Courtside seats

    An interior view of the Handball Arena at London’s Olympic Park. The Handball Arena became the third venue at the Olympic Park to be completed. (David Poultney - Locog Handout / EPA) Back to slideshow navigation
  29. Tennis, anyone?

    An aerial view of Wimbledon, which will host the tennis events during the 2012 Olympic Games. (Tom Shaw / Getty Images) Back to slideshow navigation
  30. The Mall

    An aerial view of The Mall, which will host the marathon, race walk and cycling events at the 2012 Games. (Tom Shaw / Getty Images) Back to slideshow navigation
  31. Torch unveiled

    Sebastian Coe, chairman of the London 2012 Olympic Organising Committee, poses for pictures with the newly unveiled 2012 London Olympic Torch on June 8 in London. Runners will use the torch to carry the Olympic flame 8,000 miles around Britain to the opening ceremony. (Geoff Caddick / AFP - Getty Images) Back to slideshow navigation
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  1. Image:
    LOCOG via AP
    Above: Slideshow (31) Venues for 2012 London Olympic Games - Venues
  2. Image: Lighting Ceremony of the Olympic Flame
    Orestis Panagiotou / EPA
    Slideshow (50) Venues for 2012 London Olympic Games - Torch relay
  3. Image: security check
    Michael Kappeler / EPA
    Slideshow (15) Venues for 2012 London Olympic Games - Security
  4. Image: London 2012 - Famous Landmarks Of Iconic London
    Oli Scarff / Getty Images
    Slideshow (36) Venues for 2012 London Olympic Games - City sights

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