* Thomas Cook reiterates full year guidance
* UK bookings to Spanish islands level off
* Recovery in Turkey and Egypt continues (Adds detail, quote)
By Alistair Smout
LONDON, May 18 (Reuters) - Britain’s Thomas Cook echoed concerns raised by rival tour operator TUI over the market for travel by British tourists on Thursday, saying that competition at home had slowed growth.
Although Thomas Cook said it was seeing strong demand across most of its markets, including a recovery in holiday bookings for Turkey and Egypt, growth in British demand for popular Spanish resorts had levelled off.
Tour operators raced to boost capacity in the western Mediterranean last year after security concerns hit travel to Egypt and Turkey. That makes last year’s growth spike tough to match as rivals have also boosted their Spanish capacity.
“We have a very competitive market environment from the UK to Spain,” Thomas Cook chief executive Peter Fankhauser said, adding that it was acting to support prices by focussing on higher margin hotels.
“We don’t have growth in Spain, but ... we are shifting capacity into Greece and Turkey and following customer demand.”
British bookings to the Spanish islands were slightly behind last year. Across Thomas Cook, bookings were up 12 percent year-on-year, while bookings from the UK were up just 2 percent.
Thomas Cook said trading was progressing as expected, and it would meet forecasts for full-year operating profit. This is expected to come in at 326 million pounds ($422 million), according to Thomson Reuters estimates.
TUI shares dropped on Monday after it said UK sales and bookings for the summer had slowed.
Unlike TUI, Thomas Cook was confident of a recovery in its Turkish and Egyptian markets, with Fankhauser saying bookings to Egypt had more than doubled, and that the recovery there and in Turkey was helping make up for flattening demand for the Spanish islands.
Thomas Cook shares initially rose 1.5 percent following its results, before turning flat. The stock fell 3.7 percent after TUI’s numbers earlier in the week.
The tour operator posted a loss in the first half, as is usual during its winter season. Thomas Cook said the period had ended in line with its expectations.
Its seasonal underlying operating loss improved by 2 million pounds to 177 million pounds in the six months to the end of March, and it posted a winter loss after tax of 272 million pounds.
Revenue rose 3 percent to 3 billion pounds, roughly in-line with a Thomson Reuters estimate, which the company said reflected strong winter demand to Spain and long-haul destinations. ($1 = 0.7717 pounds) (Editing by Kate Holton and Alexander Smith)