Second holidays will be jettisoned in preference to people giving up their main annual break in the credit crunch, the head of a leading bed bank believes. John Kent, founder of youtravel.com, predicted that 40% of consumers in the UK would forgo second holidays in a worsening economic climate. He said: "British holidaymakers go away on average twice a year and will cut out their winter holiday but will not cut their main summer one."

Kent also predicted further consolidation in the accommodation-only sector, with two other companies likely to merge within the next six months. However, he believed that consumer demand for dynamically packaged holidays would not be diminished by economic concerns as travellers increasingly look for better value for money.

Despite the demise of XL Leisure group in September, he said half the flight capacity had been reinstated for next summer and more was likely to be added. This would protect the resort-based business provided by bed banks such as youtravel.com. Kent also revealed the company was in discussion with the Inland Reveue over the 1.5 million euro Value Added Tax burden it has by retaining principal status.

The company believes it is no longer necessary to continue acting as a principal and hopes to have an answer from the IR by the end of the month -allowing it to operate on the same basis as its competitors.

Group managing director Graham Nichols stressed that the company would continue to provide indemnity cover and conduct accommodation health and safety checks but the VAT cost was putting youtravel.com at a commercial disadvantage against its rivals. They were speaking at World Travel Market as the company confirmed a partnership with an unnamed supplier that will add more than 3,000 city hotels in 250 destinations to the site.

The move doubles the overall accommodation content on offer and will be bolstered with further agreements to triple the number of city hotels available. Prices start at £26 per room per night in Krakov, with New York sample rates at £167 in a four-star hotel. The city hotels will be accessed through a tab on the website home page.

Sales and marketing director Paul Riches said: “We have also negotiated short release periods so that we’re able to offer our trade partners last minute sales opportunities.”