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11 January 2008
Are prices set to rocket for holidaymakers in Malta and Cyprus – the newest members of the eurozone?
The eurozone got bigger this week as two of the most popular destinations – Malta and Cyprus – joined Europe’s currency club. But, if history repeats itself, this could prove bad news for UK holidaymakers, according to First Rate® Foreign Exchange Services – the UK’s leading foreign currency provider and foreign currency provider to the Post Office®.
Costs for holidaymakers in Malta and Cyprus are currently lower than in eurozone countries like France and Spain, based on the Maltese lira and Cypriot pound. However, if prices rocket as they did in Spain and Greece when the first 12 countries switched to the euro six years ago, the two islands could become Europe’s most expensive resorts. This is one of the key predictions made in the new Holiday Money End of Year Report, which will be published by First Rate this month.
Before the 2002 changeover, Spain and Greece were the cheapest of Europe’s major holiday resorts – places where eating and drinking cost a fraction of the UK price. By contrast, Italy was, invariably, the most expensive. Within months of adopting the euro, prices had rocketed in Greece and almost doubled in Spain1. Only in Portugal did euro prices stay more or less in line with the Portuguese escudo rates.
Six years on, research by First Rate® for its 2007 Holiday Costs Barometer2 shows that euro prices have settled down in Greece. Portugal remains best value and Italy is now established as one of the more reasonable destinations for living expenses. However Spain, once the bargain basement of Europe, is now the most expensive.
Cyprus and Malta currently sit in the middle of First Rate’s Holiday Costs Barometer of 10 items regularly purchased by UK holidaymakers in third and fourth places. However, if the switchover to the euro follows the 2002 pattern, prices could rise by over one third3, making Cyprus and Malta more expensive than Spain.
In the light of research4 suggesting that nearly three-quarters of UK travellers were unaware that Cyprus and Malta were switching to the euro in January 2008, Gordon Gourlay, Managing Director, First Rate® said: “Holidaymakers planning trips to Cyprus or Malta would be well advised to keep abreast of news about price rises.”
The Cyprus pound and Malta lira are two of our top 10 currencies and 2007 sales put them in the 10 fastest growing – so we know that these are among the most popular holiday choices for our customers. We hope that prices will not rocket as they did in 2002 for the original euro currencies but will be monitoring developments regularly and will report on fluctuations.”
Note to Editors:
1 Price research conducted by American Express®, 2001 and 2002, using data provided by National Tourist Offices.
2 First Rate Holiday Costs Barometer 2007 of 10 items regularly purchased by UK holidaymakers:
| ITEMS | Euro France |
Euro Greece |
Euro Italy |
Euro Portugal |
Euro Spain |
Pound Cyprus |
Lira Malta |
| Cup of coffee - café/bar | £1.54 | £2.31 | £0.69 | £0.38 | £0.77 | £1.69 | £0.86 |
| Bottle of Heineken (or similar) – café/bar | £3.08 | £3.84 | £2.69 | £1.00 | £1.92 | £2.01 | £1.57 |
| Bottle of Coca-Cola - café/bar | £1.92 | £1.54 | £2.31 | £0.77 | £1.54 | £2.01 | £0.79 |
| Bottle of Evian (1.5litre) –supermarket | £0.14 | £1.15 | £0.23 | £0.46 | £0.69 | £0.81 | £0.79 |
| Nivea suncream (factor 15) – supermarket | £5.38 | £4.61 | £6.92 | £4.61 | £9.23 | £6.74 | £6.27 |
| Postcard and stamp for UK - tourist shop | £1.00 | £0.77 | £0.86 | £0.38 | £0.62 | £0.75 | £0.79 |
| Insect repellent – supermarket | £5.38 | £2.31 | £3.08 | £1.54 | £6.15 | £7.08 | £3.91 |
| Packet of Marlboro Lights cigarettes | £3.84 | £2.31 | £3.08 | £2.31 | £2.50 | £3.64 | £3.02 |
| English newspaper (Daily Mail/Express) | £2.15 | £2.31 | £1.54 | £1.69 | £1.38 | £1.42 | £0.93 |
| 3 course evening meal for 2 in local restaurant | £42.28 | £23.06 | £30.75 | £23.06 | £46.13 | £20.21 | £31.08 |
| TOTAL COSTS | £66.71 | £44.21 | £52.15 | £36.20 | £70.93 | £46.36 | £50.01 |
Based on euro, Maltese lira and Cypriot pound exchange rates on 28 December 2007.
3 American Express® research into costs of basic holiday items (meals out, drinks, suncream etc) showed an average rise of 36 per cent in Portugal, Greece, Italy, France and Spain between 2001 and 2002.
4 YouGov research, November 2007.
About First Rate Foreign Exchange Services:
First Rate is the UK’s leading provider of foreign currency services supplying over 14,000 retail outlets with a foreign currency service. It is the UK’s biggest and fastest-growing foreign currency notes supplier and Europe’s major provider of traveller’s cheques and the second globally.
First Rate can provide UK retailers and businesses with the following foreign currency services:
- Travel Money Online – a service enabling the ordering of foreign currency notes and traveller’s cheques securely via First Rate’s white label internet application
- Bulk provision of currency for currency retailers
- End-to-end consumer order processing – totally outsourced, white label currency solutions for phone, internet or retail outlet order placement
To find out more visit www.firstrate.co.uk.
For further information, please contact:
Four Countries Communications
Ruth Barker
Tel: 0207 749 9219
Mobile: 07814 571128
Email: ruth@fourcountries.co.uk
First Rate Exchange Services Ltd is registered in the UK and Supervised by HM Revenue & Customs for Money Service Business (MSB): License number 12133160. First Rate is a joint venture between The Governor and Company of the Bank of Ireland (Registered in Ireland and passported into the UK for regulatory purposes) and the Post Office® Ltd. The Bank of Ireland is authorised by the Irish Financial Regulator and the Financial Services Authority for the conduct of business in the UK.