The cost of summer holiday packages have shot up by nine per cent at Thomas Cook, as bosses report a surge in demand for Spanish island breaks.

The travel giant said rising demand had been sparked by holidaymakers opting for popular resorts such as Majorca and the Canary Islands, as opposed to Turkey and Egypt, following political unrest and terror attacks.

As a result, hotels have put their prices up by between six and eight per cent, they said - adding that some of the rise could also be accounted for by a focus on more profitable luxury holidays.

The shift in the popularity of certain destinations has meant deals have been moved to Greece.

The latest figures show that in the past year:

Group chief executive Peter Fankhauser said Thomas Cook was remaining cautious, as the impact of Brexit was not yet clear.

Various upcoming European elections, a stronger dollar and the threat of disruption were also factors which may affect performance, he said.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Times are tough in the European travel industry and Thomas Cook isn't having the best of it, though the good news is things don't seem to be getting any worse."