Thomas Cook, the tour operator, reported a sharp decline in bookings to Spain and Portugal as British holidaymakers increasingly opt for destinations outside the eurozone.

The travel group said that while sales for this summer to Turkey were up 29 per cent, accounting for 20 per cent of all of its UK package holidays, sales to Spain were down by 28 per cent while Portugal fared even worse, showing a 36 per cent fall.

Manny Fontenla-Novoa, the Thomas Cook chief executive, said that while he expected the Spanish market to end the summer down by about 17 per cent, Portugal was still suffering some fallout from the disappearance of Madeleine McCann from a holiday apartment in Praia da Luz.

“The problem is that Portugal is seen a family destination,” he said. “The authorities are trying to address the issue in a sensitive way.”

Mr Fontenla-Novoa said there was little or no evidence of trading down by UK customers, with demand for four and five-star accommodation rising strongly. All-inclusive bookings are up 12 per cent as holidaymakers look to control their spending and seek ATOL protection in the wake of the failure of XL Leisure.

The company said that seasonal first-quarter losses before exceptionals had halved to £27.4 million after a robust winter holiday season and it remained confident of a successful summer, despite later booking patterns in most of its source markets. “People are leaving it later to book but they’re still booking,” said Mr Fontenla-Novoa.

He said he expected the economic climate to claim further casualties among rivals, adding: “With unemployment predicted to accelerate, the environment is going to get tougher for tour operators. We’ve got a strong brand and can navigate our way round that, but for smaller operators it’s not so easy.”

In the UK, bookings for the winter are down 7 per cent, against capacity down 6 per cent, while the average selling price is up 7 per cent. Summer bookings are down 6 per cent after a recent rally, with capacity down 11 per cent and the selling price up 9 per cent.

The group said it expected its full-year results to be in line with market forecasts and Mr Fontenla-Novoa said that it could easily cut UK capacity by a further 10 per cent in the event of a booking slowdown. But he added: “We think capacity is now about right.”

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