Tourists returning to Egypt and Turkey, Tour operator Cook says

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Yet demand remained strong across the business with summer holidays 42% sold, an 1% increase on the previous year, despite the slump in the pound making trips overseas more expensive for United Kingdom residents.

Bookings and prices rose in the company's northern Europe division but it was not so straightforward in the UK.

Shares in Thomas Cook slipped in early trading on Tuesday (28 March), even after the tour operator reiterated its profit guidance as the holiday market was gradually beginning to recover. It said bookings for Greek holidays were up 40 per cent compared with a year ago.

"Customers' appetite to go overseas on holiday this summer is good across all our markets", CEO Peter Fankhauser said.

"Competition is particularly intense in the airline sector, putting downward pressure on pricing", he added.

The group's winter holiday season finished as expected, with United Kingdom bookings 6% higher, but selling prices 1% lower on average as a 5% cut in flight-only deals offset a 5% hike for package holidays. Sales of holidays to Spain and long-haul destinations such as the Dominican Republic offset soft demand for Turkey.

Thomas Cook said the wider holiday market is enjoying a bounce back after a hard 2016, with summer bookings overall up 10%.

Europe's second-largest travel firm said winter bookings grew one per cent and average selling prices edged down one per cent compared with the same period the previous year.

Neil Wilson, senior market analyst at ETX Capital, said while Thomas Cook is doing better than a year ago the company is still faced with a tough operating climate.

Based on the current trading performance, the company continues to expect full-year underlying operating result to be in line with current market expectations. Thomas Cook said part of the reason for the increase in prices was due to its focus on higher-end holidays. "The stock is not expensive, but execution risk is high", he said.