Thomas Cook has shrugged off the economic gloom and reported strong trading this summer, with Turkey and Egypt the fastest growing holiday destinations.

Europe's second-biggest travel company said yesterday there was no evidence that people were cutting back on holidays, despite household budgets being stretched by rising living costs. Bookings for winter and next summer are already ahead of last year.

"The main holiday is a 'must have' item for consumers," said chief executive Manny Fontenla-Novoa. "In our experience, people will cut back on all sorts of other things before they cut back on their holiday."

The strong euro has put holidaymakers off European breaks and Turkey and Egypt have become the new hotspots, replacing Spain and Greece as the fastest growing destinations.

"There's real growth in Egypt and Turkey and they will be even bigger next year," said Fontenla-Novoa. "The weakness of the pound against the euro has made European destinations less attractive."

This summer's bookings to Turkey and Egypt were up 15% from last year, and bookings to Egypt this winter are up 25% so far while Turkey is 13% ahead.

Thomas Cook and bigger rival TUI Travel have been cutting the number of flights and holidays, leaving them with a smaller pile of unsold holidays at the end of the season . Thomas Cook has reduced capacity by 7% and has scope to cut it by a further 15% if needed.

Analysts at Investec said: "Doubts on trading for 2009 will not diminish until later this year or early next year and profit taking is possible after a 40% share price increase in the last month."

Tour operators have come under severe pressure due to the growth in low-cost carriers and holidaymakers increasingly booking their trips over the internet.

Thomas Cook and TUI are now among the top three travel websites in the UK, along with Expedia, said Fontenla-Novoa. "We're selling more holidays on the internet than anyone else, including Expedia."