With the pound sterling hitting an all-time low against the euro last month, there seems to be little hope of retaining our market share from UK tourism this year.
Since the start of 2008, the UK government has been pushing for internal tourism in a bid to revive British economy, while a series of newspaper articles last year stamped Malta as an expensive destination since it joined the euro. The Maltese government took great offence at such stances, but short of suing The Times of London and The Guardian, little could be done to find a remedy for such damning statements.
Tourism big shots who spoke to us this week are expecting this summer not to be short from a disaster in terms of bookings and revenue.
The fact of the matter is that Malta will be losing out on UK tourism not merely because we have joined the euro, but because the UK is not doing well at all.
The pound sterling is the world’s oldest currency still in use, and that must make the British very proud. The record in fact, shows that the English have been very conservative whenever discussion on currency developments took place.
Upon introduction of the French Franc in 1824, Lord Wrottesly had proposed decimalisation of the sterling but this was rejected. Since then, until the end of the imperial shillings system in 1971, the sterling remained virtually untouched.
In 1990, the UK joined the European Exchange Rate Mechanism (ERM) to reduce exchange rate variability but this only lasted two years. On the day known as Black Wednesday, the EU forced the British government to withdraw because its economic performance made the exchange rate unsustainable.
It is not likely that the UK considers joining the euro in the foreseeable future, and Gordon Brown stated this publicly when he was still Chancellor of the Exchequer.
The situation now is that the euro and the pound sterling fluctuate against each other, causing havoc on both sides of the common economy in times of crisis.
It all seemed great for the UK when in November 2007, the sterling hit a 26-year high of $2.1161. But since then the currency weakened dramatically against the euro, falling below €1.25 last April and reaching its lowest ever point at €1.0219 last December.
It now makes sense to shop online, using Sterling denominated websites.
Because many UK suppliers are in dire straits, Maltese companies purchasing from the UK are now being granted better prices and more flexible credit terms.
A major Malta-based software company must be really concerned with its sterling denominated invoicing and expenditure in euro.
Hit hardest will most definitely be tourism, with 35 per cent of inbound tourism made up of UK nationals.
Spending millions on a crisis advertising campaign does not seem to be on the cards, and is not necessarily a good idea. Nest summer will be horrible, and we need to get over this.
It would be useful to invest further in getting our level of service in order by training human resources the proper way, embellish our infrastructure and adopt a forma mentis by which we show our guests that we care.
It would be neither feasible nor realistic to expect such changes to happen in as little as six months. The best we can do is hope for a prosperous 2010.