The group, which owns Thomson and First Choice, on Thursday said it had sold around 86 percent of its summer holidays by the end of June and had fewer holidays left to sell compared with the same point last year.

The gloomy weather offset weaker demand for holidays in crisis-hit Greece, chief executive Peter Long told reporters.

"Northern Europe has been pretty consistently bad from a weather perspective over the last couple of months and that has benefitted us with people deciding to book (holidays)," he said.

British budget airline easyJet (EZJ.L) last month said quarterly sales were boosted by sun-starved Britons fleeing unusually soggy home weather, with bookings to Malaga and Alicante in Spain and Faro in Portugal up by a fifth during periods of poor weather.

Travel firms and airlines across Europe have seen bookings fall in recent months, hit by the eurozone crisis and uncertainty in Greece, one of the continent's main holiday destinations.

TUI (TT.L) believes consumers are willing to loosen their purse strings for a get-away and are increasingly looking for a holiday at a fixed price where they don't have to worry about how much they are spending.

"Many of the differentiated holidays we offer are driven by the all inclusive offering which has proved to be very popular in this economic climate," said Long.

TUI Travel said underlying operating profit fell 16 percent to 74 million pounds in the three months to the end of June, primarily because the Easter holidays fell in its second quarter as opposed to the third quarter in 2011.

Group revenues fell 2 percent to 3.69 billion pounds, while operating margin dropped 0.3 points to 2 percent.

Shares in TUI Travel, which have risen 13 percent in the last month, were 0.5 percent down at 194.05 pence by 0845 GMT, valuing the business at around 2.17 billion pounds.

"Pricing has been particularly impressive, up 9 percent year-on-year, helped by a strong performance in the lates market," said Jefferies analyst Ian Rennardson.

"Combined with volumes trending ahead of capacity, we believe TUI is outperforming the market, taking share from rivals."

The FTSE 100 company said the UK, the Nordic region and Germany had all delivered solid growth during the period but that its French business continued to underperform because of a slower than expected recovery in North African markets.

TUI said winter 2012/13 sales started well and that it was confident of meeting full year earnings expectations.

The company is expected to report an average pretax profit of 351.2 million pounds for the year to the end of September, according to Thomson Reuters I/B/E/S data.

Recent results from hoteliers such as InterContinental (IHG.L) Marriott (MAR.N) and Starwood (HOT.N) have shown signs of a steady industry recovery despite some weakness in euro zone crisis-hit southern European nations and some slower growth in China .

Rival Thomas Cook (TCG.L), which recently secured a three-year funding lifeline, last week reported a steep third-quarter loss despite a lift in foreign bookings from Britons exasperated with the rainy weather at home. (Editing by Paul Sandle and Helen Massy-Beresford)

• A Permanent Economic Emergency