Thomas Cook has said it expects the price of holidays to Spain to go up by around 5% to 10% due to the fall in the value of the pound following the Brexit vote.
The travel company told Sky News this was also in part due to intense competition and higher hotel costs at popular Spanish island resorts as they take advantage of a buoyant market.
Holidaymakers have been flocking to the Spanish mainland, as well as the Canaries and the Balearics (Ibiza, Menorca and Majorca) – following political instability and concerns over safety in other tourist destinations.
Last month, the tour operator said it had resumed selling holidays to Tunisia for the first time since the terrorist beach attack in the resort of Sousse in 2015, when a gunman killed 38 people, including 30 Britons.
The tour operator said while it had seen a pick-up in demand to other destinations such as Turkey and Egypt, Spain remained its customers’ number one choice and accounted for around 40% of the holidays the group sold this summer.
The pound has fallen from €1.30 just before the EU referendum to around €1.13 on Tuesday – a drop of 13%.
Thomas Cook’s warning on prices came as chief executive Peter Fankhauser said the firm had dealt with an “operationally challenging” past month as it dealt with the impact of Hurricane Irma on up to 22,000 of its customers in the Caribbean and Florida.
In its latest trading update, the company reported total bookings this summer were 11% higher across the group, with UK bookings up by 8%.
Bookings to Greece, which is dealing with a migrant crisis, were up 20% compared with last year, while holidays sold in Cyprus saw a 16% bounce.
The firm also unveiled a tie-up with Swiss-based hotel property development firm LMEY Investments to grow its own-brand hotel portfolio, acquiring a 42% stake in Aldiana, a German tour operator and hotel management firm.
It follows an alliance with Expedia earlier this month, to make the US travel giant its preferred provider of hotels for city and domestic holidays.