A sharp decline in holidays available from the UK will ensure the continuing good health of Europe’s major travel companies despite the global downturn.

Up to 25% fewer traditional holidays were on sale in the UK this summer, according to Thomas Cook chief executive Manny Fontenla-Novoa, and a further 12% reduction is on the cards for summer 2009.

Fontenla-Novoa forecast this would result in a 6%-7% rise in average UK prices next year, despite pressure in some quarters for price cuts.

Thomas Cook and rival TUI Travel dominate the European travel industry following the mergers of Thomas Cook with MyTravel and TUI Travel with First Choice Holidays last year – when both groups were listed on the London Stock Exchange.

Fontenla-Novoa addressed a Captains of Industry lunch at World Travel Market on Monday, refusing to comment on current trading as Thomas Cook prepares to release half-year results.

However, he said: “The UK industry has taken 25% of capacity out of the market in two years, with the XL Leisure Group collapse removing another tranche of capacity. Next summer there will be 12% less [than this summer].”

Fontenla-Novoa described consumer confidence in the UK as lower than elsewhere in Europe and said the capacity cuts had been timely, adding: “The last four or five weeks have been pretty unusual.”

He called on hoteliers at WTM to lower room prices now rather than wait until February or March to act.

Spain has suffered most from rising costs resulting from the value of the euro against the pound, he said. “There has been a big shift into Turkey and Egypt [by

Fontenla-Novoa reiterated his commitment to traditional high-street travel agencies, saying: “You need a high-street presence if you want early sales of brochure holidays. The high street will not shrink by much.”

* More WTM 2008 coverage at travelweekly.co.uk/wtm2008