Competition between the main travel firms is said to have reached a record low following the mergers of Thomas Cook and My-Travel, and First Choice with Thomson to form TUI Travel.

A spokeswoman from travel association ABTA told the Tele there will also be a squeeze on last-minute deals this year.

“In terms of late deals, we do believe there are operators who now have more capital in the number of holidays in the market and it looks like they will make sure the number of holidays they have got to sell is brought in line with demand.

“Holiday prices will not necessarily go up but they will probably not go down as operators will not feel the need to slash prices in desperation to get rid of stock.

“We have noted quite a big dip in the number of holidays that are priced £400 or less so if this your price range, we would advise people to book as early as possible to avoid disappointment.”

Thomas Cook is also advising people to book early to ensure the best buy.

A spokesperson from its City Square branch in Dundee said, “In 2009, we’ll continue to see an increase in bookings for all-inclusive holidays. With food, drinks and some activities included in the price, all-inclusive packages make budgeting much easier.

She added, “Our advice is to book early — you’ll benefit from early deals and low deposit promotions, and with fewer holidays available in 2009 because most tour operators have reduced the number of holidays they're offering for summer, you’re unlikely to find any last-minute bargains.”

Despite fears holidaymakers are unlikely to find as many bargains as they have found in recent years, travel agents in the city have reported a busy trade over the festive season.

Russell Adamson, of Barrhead Travel in Dundee’s High Street, said the number of people jetting away to sunnier climes has not fallen over the festive period.

“This time of year is a busy time of year anyway,” he said. “At the moment, the prices are still really good and, if anything, our staff have found it even busier than usual.

“People are looking further afield. They are not just going to the Mediterranean but are deciding to go to the Caribbean instead, as there is not a lot of difference in the price now.

Colin Ramsay, of Ramsay Travel in Dundee, said, “Capacity of deals is way down on what it was, some companies as much as 35% down on what was available last year.

“Last-minute deals will be few and far between. We have already seen them tightening up for winter so I would expect far fewer deals available in the New Year.

He added, “We are 14% up on last year on the last six weeks, and we have had no down weeks for 11 months.

“Since it started, the credit crunch has not affected us, but has affected the industry. We don't know what January or February is going to bring, but so far trade has been very good."