Many of the firms, which are already fighting for their survival, are using spectacular price reductions and perks like free places for children, to tempt customers to part with their dwindling hard earned cash.
The Thomson and First Choice group have even decided to offer redundancy protection insurance to holidaymakers who are reluctant to put down money on their holiday because they are worried about job security.
Research by retail analysts Mintel suggests that four in ten people are taking the view that a foreign holiday in 2012 is a luxury they probably not afford, highlighting the uphill struggle travel companies face.
Many thousands of families are likely to stay at home encouraged by the Olympics being staged during in the height of the summer and school holidays.
Mintel found that spending on holidays both at home and abroad has fallen to a five-year low of £33billion, and the figure is expected to decline further in 2012.
Thomas Cook recently announced it is to close 200 shops, threatening 1,000 jobs, after making an annual pre-tax loss of £398million.
At the same time, a number of smaller travel operators, such as Holidays 4 U, have collapsed in recent months.
Ian Ailles, Thomas Cook’s UK chief executive for package holidays, insists that many families still want to take a foreign holiday, despite the continuing financial adversity.
The firm rejected the idea that the Olympics will have a significant impact on the number of Britons going overseas, saying that only 3 per cent of those who have decided against a foreign holiday in 2012 said this was because of the Games.
David Burling, managing director of the Thomson and First Choice group, said: ‘Our research shows that customers would rather cut back on other luxuries than forgo their annual summer holidays in the sun.’