Operators have been warned not to slash prices in what is predicted to be a “cut-throat” month for the trade.

Thomson managing director Peter Rothwell said it was vital operators do well this month. “You don’t get the opportunity to catch up [during the rest of the year] so January will be cut-throat,” he said.

But he warned against forcing prices down to ridiculously low levels. “Giving away holidays is a fool’s game, we need to judge it right.”

Most operators said it was too early to give an accurate indication as to how peak season sales were faring but agreed it will be tough, with the market 17% down before Christmas.

Thomas Cook head of holidays and commercial director Ian Derbyshire said the peak period, which runs until March 31, will be “extremely competitive” as operators look to recover from the disastrous summer, which finished 8% down on 2005. “It’s going to be very aggressive on price,” he warned.

Somewhere2stay.com managing director Stuart Jackson agreed it will be an aggressive start to the year but added: “You could not get cheaper holidays than those that were in the market last year.”

Derbyshire claimed Thomas Cook was outperforming the market and said operators will be able to capitalise on pent-up demand because a large number of people did not go on holiday last year. “People spent their money on improving their home environment,” he said.

Derbyshire claimed package capacity has been reduced by around 5% for summer 2007.  “However, 5% is nothing when you are talking about the sale of 16 million package holidays,” he added.