Is Holiday Travel Recession-Proof?

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The first is the rise in oil prices, although this has been felt worse by competitors in the low-cost airlines.

Another significant factor facing in the UK is the pound, which is about 15 per cent down on the euro this year. The companies have also shrugged this off.

Analysts added that the big players in the package industry had taken out "aggressive hedges" to bear the worst of the fuel costs. Thomson is fully hedged while TUI has hedged 90 per cent of this summer's and 65 per cent of next summer, although some believe it could become more challenging to offset the increased fuel costs next year.

Joe Thomas, an analyst at Investec, said the company would still have to raise its charges and estimated "that holiday prices will need to be increased by 1.5 per cent to 2 per cent to offset the £10m higher fuel cost next year". He does not believe that would be a problem: "The fuel cost is only 9 per cent of revenues, whereas it's 30 per cent for the low cost airlines; it's harder for them to pass on costs and still claim they are a cheap no frills service."

The death knell had been sounded for the industry with the rise of the low-cost airlines. This forced the consolidation of the sector, with the four players in the UK market merging last year to form the two rivals. As the airlines feel the heat of the fuel costs, the package tour companies are benefiting.

Simon Larkin, at ABN Amro, said Thomson had produced a "strong set of numbers which demonstrate the merits of the industry consolidation that occurred and the robustness of the annual holiday. For sure, there are forward challenges, but the group is well hedged on currency and fuel, capacity is being managed and cost synergies are coming through." Another analyst said: "If the Bank of England's bearish predictions are accurate 2009 could be painful."

Stocks that are standing firm

Package tourism is not the only industry to stand firm following the onset of the credit crunch. Beyond "defensive" stocks, there have been few industries to emerge relatively unscathed.

The latest company to update the market with a bullish statement was Cadbury. The confectioner has endured a difficult 12 months as it attempted to divest its American beverages business, but yesterday said it was expecting a solid performance in the first half of its financial year, to be announced in July.

It said yesterday that revenues from the first six months are expected to beat the company's previous goal. One industry that has performed strongly despite consumers keeping their hands in their pockets is UK supermarkets. Last month, Tesco reported record results, while smaller rival J Sainsbury posted a slight bump in full-year sales on Wednesday.

Defensive stock in a time of recession are cigarette companies such as Imperial and British American Tobacco, which earlier this month posted a 14 per cent jump in revenues in the first quarter of the year. Some analysts also picked healthcare companies to ride out the market turmoil.

Provided by The Independent—from London, for Independent minds