Yes, fares to Europe are relatively expensive this year, and London is an insanely expensive city. (Not that you'll be driving to Central London necessarily, but I find a good cost comparison between New York and London is this: it costs $2 to park at a meter for 15 minutes in London compared to 25 cents in New York).
Anyway, British Airways is softening the blow by providing two free hotel nights when you book your flight to London with them. Now, don't expect the Four Seasons, but London hotels are so expensive that even a 3 star hotel for free is nothing to sneeze at. In fact, some of the free hotels are listed as 4-star, such as the Park Inn Hyde Park and the Thistle Kensington Park. Fares are as low as $861 RT from New York JFK, including tax. Fares from other BA USA gateways are available.
This offer is for air travel Mon-Wed (travel other days is slightly higher) and is good all summer long, but it ends on Wed May 16. And this is based on double occupancy, meaning that two people must travel together to take advantage of the hotel offer. You'll get an additional $20 off if you book at ba.com, and pay an additional $20 if you book over the phone (the carrot and stick approach).