Tour operator First Choice has indicated that consumers were losing interest in traditional winter breaks after sales of its short-haul holidays fell.

First Choice cut capacity for flight-only deals and stays in three-star hotels in the belief that there would be less demand this year.

Bookings for mainstream short-haul holidays to destinations such as the Canary Islands, Egypt or Morocco this winter were 13 per cent lower than a year ago and customer numbers were down by a fifth.

But the group justified the move by pointing out that revenues were six per cent ahead in its mainstream business following a 39 per cent rise in sales of long-haul flights. Margins have also improved because the prices of its holiday deals have risen.

The firm has seen its traditional market eroded over the past three years by the growth of budget airlines.

It has reacted by cutting the number of holidays available to consumers and pushing harder into long-haul markets, specialist holidays and activity trips.

Chief executive Peter Long said consumers were becoming more savvy about their choice of holidays, rather than booking cheaper trips abroad as pressure builds on their budgets.

He said: "If there was a real overall weakness then it would be seen on price. Our customers are not trading down - if anything they are trading up and that is encouraging."

In an update on trading, First Choice said sales of specialist holidays to Europe this winter were two per cent lower than last year.

But this was more than offset by the 16 per cent growth in bookings to North America, which is a more lucrative market for First Choice and left overall revenues in the division ahead by seven per cent on a year ago.

Sales of activity holidays such as diving tours and ski trips were 91 per cent ahead of a year ago, although this was helped by a number of acquisitions made during the year.

Details emerged as First Choice expressed confidence in delivering double-digit earnings growth for the year to the end of October - in line with expectations.

Progress should be achieved despite a string of setbacks this year for First Choice including the Asian tsunami, bombings in Egypt and hurricanes in the Caribbean.

Sales of mainstream and specialist holidays over the past summer were up 13 per cent on a year ago, outstripping the four per cent growth in demand for activity trips.

"Fundamentally there is a very strong demand for travel experiences," said Mr Long.

He added that First Choice's figures showed the typical UK consumer's attitude to vacation spending is: "When I feel good I trade up, I do lots of exciting things. When I don't feel as good, a holiday is even more important so I'm going to take it and I can do that at the expense of the latest new plasma TV or replacing the car."