Europe’s largest travel company has been boosted by a late surge in holidays to Greece and Spain.

Tui said bookings rose 2 per cent over the past four weeks ‘as customers book closer to departure and the summer season draws to a close’.

The German firm said Greece and Spain, including the Balearics and Canaries, were the most popular destinations.

But with families facing higher living costs due to the Iran war, overall bookings for the summer were down 5 per cent, with demand in the UK down 7 per cent while Germany saw a 2 per cent slide.

And Tui said: ‘Early indications for the new winter season point to a continuation of the later booking environment against the backdrop of ongoing geopolitical and economic uncertainty.’

It said winter bookings are down 7 per cent so far – including a 9 per cent slump in the UK and 4 per cent in Germany – but added that business has ‘improved over the last four weeks’ when bookings were just 1 per cent lower than the same period last year.

Tui said it expects the Canaries, mainland Spain, Egypt and Cape Verde to be its most popular destinations this winter with long-haul trips to Thailand, Mexico and the Dominican Republic also on the radar of holidaymakers.

At its expanding cruise business, bookings for the coming season are down 6 per cent on last year after the Iran war caused itineraries for Middle East trips to be revised.

‘Encouragingly, booked occupancy levels continue to improve week by week,’ the firm said, as customers snap up trips to the Caribbean, central America, the Mediterranean, South Africa and the Indian Ocean.

Tui’s Hapag-Lloyd arm is also offering a 31-day semi-circumnavigation of Antarctica from Ushuaia in Argentina to Christchurch in New Zealand.

Following the pick-up in business in recent weeks, Tui narrowed its full year profit guidance to between £1billion and £1.1billion having previously given a range of £940million to £1.2billion.

It said cost cutting efforts and keeping prices firm was helping offset the impact of soaring fuel costs caused by the Iran war.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: ‘Tui’s reputation for trusted, good-quality holidays is standing it in good stead, especially when disruption risk makes customers value reassurance that they will be looked after if things go wrong.

‘Forecasts point to improved profitability next year but getting there won’t be without challenges. Geopolitical uncertainty feeds into both higher fuel prices and consumer sentiment, while booked revenue for winter is down.

‘Prices are holding up across Tui’s offering, but occupancy is down in both Hotels & Resorts and Cruises. Having added capacity in these divisions, Tui now needs its differentiated proposition to pull in late demand for rooms and cabins without giving too much away on price.’