Olympics organisers have been forced to hand back more than one fifth of hotel room nights reserved for the Games.

More than 120,000 nights at around 200 hotels will now be freed up for prospective spectators after Locog overestimated how much capacity it would need for officials, journalists and dignitaries.

Agreements were struck with hotels in 2005 to provide more than 40,000 rooms. Hotel owners now have six months in which to re-sell the rooms to recoup their expected windfall.

A spokesman for Ramada Hotel and Suites, in Docklands, said it reserved 95% of its space during the Games to Olympic related guests.

She added: “Our hotel rooms for the Olympics have been sorted out for several years now. They haven’t told us yet whether they want to keep them.”

Locog chief executive Paul Deighton said: “The hotel industry in London got behind the bid to stage the Games in the most extraordinary way and that support helped us across the line.

“We always promised that we would not hold on to hotel rooms we didn’t need but return them to the individual hotels at the beginning of 2012.

“We are now doing this and I hope that this enables the hotels to continue with their planning for this summer.”