The “Maddie effect” has decimated bookings to Portugal this year, according to the chief executive of Thomas Cook.

Manny Fontenla-Novoa said the disappearance of Madeleine McCann two years ago was “still hurting Portugal”, with bookings some 30% down on last year.

“Portugal is such a family destination that it is still not recovering because of what happened there,” he said.

Fontenla-Novoa said the destination's tourism would revive eventually but that it would take time.

“The Portuguese tourist people have done a lot," he said.

"If they had done much more it would have been insensitive. They have understood people’s emotions and are taking their time, so business will pick up, but we are not seeing it yet.”

Fontenla-Novoa added that Mexico would also be “decimated” because of the swine flu outbreak and did not anticipate seeing it come back until at least August.

He revealed the incident would cost Thomas Cook between £10 and £12 million but said the group could “cope” with that setback as the destination represented just 2% of its total programme.

Fontenla-Novoa said: “We are not hurting too badly from it because we don’t own any hotels there, so we have been able to switch aircraft to the Dominican Republic and Egypt.”

He said a lot of property owners in Mexico had consolidated, closing some of their hotels and laying off thousands of staff, but that Cook planned to talk to hoteliers about getting back to normal by August.

Mainstream Holidays managing director Pete Constanti said Cook’s offer, that anyone booked to Mexico could switch to a different holiday, was being reviewed today (Monday) in light of the Foreign Office downgrading its advice regarding travel to the country on Friday.

• Aito agents: Child safety dominates (18 Jun 2009)
• Portugal reacts to economic crisis (13 Jan 2009)
• Warner Takes Fam to 'Maddie Resort' (1 Oct 2007)