Holiday bookings should recover sharply in the New Year and the UK should only suffer a three per cent drop in visitors by the end of 2002, according to research commissioned by the Centre for Economics and Business Research for the ABTA Convention.

ABTA commissioned Douglas McWilliams, chief executive of the Centre for Economics and Business Research (CEBR), to research effects of the attacks of 11 September on the travel industry.

McWilliams believes that the economic downturn will last into the next year, but will be back on track by 2003 - but additional concerns about security and safety has, and will continue, to lead to a drop in travel to and from the UK. He also believes that the Gulf war can act as a useful comparison, but that the effects will be more severe and last longer.

The report makes assumptions that no major further negative impacts from terrorism will happen.