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Thomas Cook reports strong holiday market

Despite assumptions that the UK holiday market was in trouble Thomas Cook has today announced that holidaymakers are not shortening their breaks or trading down to cheaper alternatives. This appears to fly in the face of the general assumption that UK consumers were looking to retain as much cash as possible in the short term to offset an increase in the cost of living and potential problems in the employment market. So what exactly is happening?

The fact that Thomas Cook was able to reduce first half losses from £131 million last year to £110 million this year is a sign of the times. Interestingly, the company had already reduced potential holiday numbers by 10% in readiness for a potential fallback, which has allowed Thomas Cook to increase prices on average by 9%. The company has also reported a significant reduction in unsold holiday places which has added to the general upbeat nature of today's statement.

Other factors to consider in the holiday market are the outbreak of swine flu, which has seen significant one-off costs associated with flying customers back from troubled areas, and an increase in travellers to non-euro destinations. Turkey and Egypt continue to be among the more popular destinations for UK travellers even though the pound has suffered substantially over the last few months.

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