By Avril Ormsby
LONDON, Jan 15 (Reuters) - With the pound at new lows against the euro and the dollar at the end of 2008, Britain looked good value to Maltese couple Mario and Josanne Cassar. They bought two suitcases to get all their purchases home.
"It's almost ridiculous, the prices we are paying," Mario said as he and his wife visited St Paul's Cathedral in London.
They are not the only tourists drawn to Britain by more than the sights of Big Ben, Stonehenge or Shakespeare's birthplace. On top of the weak pound, steep discounts offered by cash-strapped retailers are bringing people to shop.
"Accommodation is cheap, food is cheap and we have bought lots of clothes," 50-year-old Mario said.
With Britain's economy in reverse and interest rates at their lowest in history, 2008 was the weakest year for the pound since 1971. Sterling fell 27 percent against the dollar and the euro gained 30 percent against it to bring the two within striking distance of parity for the first time.
Britain's currency on Tuesday also hit a near 14-year low against the yen.
In the past month the Eurostar cross-channel rail service has recorded a 15 percent rise in passengers from Brussels and Paris.
But if Britain is becoming a magnet for bargain hunters, Britons abroad face dwindling spending power and some are contemplating cheaper domestic holiday destinations.
The industry wants to tap this trend to promote Britain as the "best-value country in the western world".
It has already launched a campaign to entice Britons to stay at home and in April a 6.5 million pound ($9.4 million) promotion, backed by the government and the industry will kick off in an attempt to lure visitors, mainly from eurozone countries and North America.
"I can truly say there has never been a better time to visit Britain," Christopher Rodrigues, chairman of the national tourism agency VisitBritain, told Reuters.
"We must take advantage of the unprecedented position of the pound," said Rodrigues, with the brightness of the professional optimist. "This is a great opportunity to merchandise Britain."
He cited the country's arts, culture, sports, heritage and countryside: much is at stake.
Tourism generates 85 billion pounds a year directly for the British economy, 6.4 percent of gross domestic product, or 114 billion pounds when indirect business is included -- making it the country's fifth largest industry.
The bulk of the revenue -- 66 billion pounds -- comes from domestic spending, so the industry needs Britons to stay home.
GRUMPY STAFF, GREY SKIES
Cash-conscious Britons are exploring cheaper holidays such as camping: the Camping and Caravanning Club said it has seen a 23 percent increase in bookings for 2009 since November compared with the same period last year.
"We expect to see a lot of growth," said its spokesman Matthew Eastlake.
But even before the credit crunch, tourism in the country was in the doldrums, underperforming global average growth, the trade body Tourism Alliance said.
It said Britain's share of global tourism receipts has fallen by almost 20 percent over the past 10 years, and domestic tourism revenue was down by more than 25 percent.
The decline was triggered by an outbreak of foot-and-mouth disease on British farms in 2001, which shut off much of the countryside to visitors, and attacks on London's transport network in July 2005, while a lack of investment and the availability of cheap foreign holidays added to the problem.
In addition, poor weather and a lingering impression of grubby hotels, poor value and surly service have not helped, VisitBritain's Rodrigues said.
He acknowledged that visitors have had to put up with a failure to provide basics such as clean towels and service with a smile, and warned that tens of thousands of jobs were at risk during the recession unless standards were raised.
"We're now in an environment where you have to do quality," he said.
Rodrigues also pointed to improvements. Depressed urban areas, such as Liverpool, have seen regeneration.
The northern city, known around the world as home to the Beatles and soccer club Liverpool FC, was rebranded last year as European Capital of Culture.
Prime Minister Gordon Brown last summer did his bit to promote British tourism, holidaying in Suffolk, on the east coast, in contrast to his predecessor Tony Blair's fondness for Italy.
Britons' interest in booking flights abroad fell 42 percent in the first week of January from the same period last year, according to web activity monitor Hitwise.
But it doesn't mean they will stay home.
"It looks like the weak pound is putting people off flying to the eurozone and the U.S., and they are looking at destinations with more favourable exchange rates instead," said Robin Goad, its director of research.
The Association of British Travel Agents (ABTA), which represents travel agents and tour operators, said Britain would still face stiff competition from cheaper resorts such as Turkey, Egypt and Morocco, which are attractive to Britons in search of sun and good value.
"Although the pound is weak there are countries outside the eurozone where there is a good exchange rate," said Sean Tipton, ABTA spokesman.
But Dorleta Otaegui, 30, and her partner Inaki Olavarrieta, 30, from San Sebastian in northern Spain -- a country already officially in recession and with the highest unemployment in the European Union -- came to London specifically for the bargains.
"We are happy ... we have more money," said Otaegui. "Things here are very, very cheap." (Editing by Sara Ledwith)