UK tour operator Thomas Cook is expecting the price of holidays for UK travellers next summer will increase by 7 per cent, largely as a result of rising oil prices and the weak value of the pound against the euro .
The group's chief executive, Manny Fontenla-Novoa, said sales of summer holiday packages for 2009 were already reflecting such price rises and he predicted that average prices for next year would remain 7 per cent above current costs.
Fontenla-Novoa blamed the impact of soaring oil prices on the cost of flights but also the escalating cost of accommodation in the Eurozone as the pound weakens. Thomas Cook's accommodation costs are typically four times its fuel costs.
The strength of the euro is also expected to hit holiday spending money for 2009, leading to a steep decline in holiday travel next year. Other factors having an impact on the market include the rapidly disappearing disposable income of UK consumers, an expected rise in unemployment and rising inflation on essentials, including fuel and food .
Thomas Cook has said it plans to reduce capacity for next summer by around 5 per cent.
"For the first time in a long time supply is maybe less than demand", Fontenla-Novoa said.
"In recent years, the travel industry has struggled to maintain its market as it lost business to some of the new low-cost airlines, and yet failed to cut its capacity in response to market realities."
The chief executive added that Thomas Cook was "in a very good position for the summer season" this year, with 19 per cent fewer holidays left to sell in Britain comapred to the same peroid last year.
"I’m delighted with our performance over the winter and we are in a very good position for the summer season," he added.
"I remain confident that we will achieve our goals for this year. For the longer term, our strategy is on track, our merger synergies are coming through, and we continue to target £480m of operating profit in 2009/10."
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