High travel costs dampen tourist demand for Iceland, says country’s tourism director

High prices are affecting the demand for travel to Iceland, according to Arnar Már Ólafsson, the country’s tourism director. He stated that Iceland has long been an expensive destination, but it has now become more costly than its comparative nations such as Norway and Finland.

“We know that travelers won’t accept any price, no matter how interested they are in the country. In our discussions with businesses in the industry, the primary complaint from customers, and consequently the reason they look elsewhere, is the price. So it has a significant impact,” said Ólafsson.

Ólafsson added that Iceland needs to improve its marketing as a tourist destination. “We are not deliberately marketing ourselves as a destination, while our competitor countries are doing so,” he said, adding that this could result in Iceland losing out to these countries in competition. He also noted that these countries have not experienced the same contraction in tourism as Iceland.

In fact, there has been a noticeable contraction in domestic tourism, as indicated by data released this week from the Icelandic Directorate of Tourism and Icelandair.

There was little change in the number of passengers flying with Icelandair in June. However, there was a significant increase in transit passengers but a decrease in passengers flying to and from the country.

In the first six months of the year, Icelandair carried seven percent more passengers than the same period last year. However, this does not tell the whole story, as the number of passengers traveling to the country decreased. There was, however, a significant increase in the number of transit passengers – those who only stop at Leif Erikson Airport but do not stay in the country.

The number of overnight stays by foreign tourists in May decreased by 18 percent compared to the same month last year. There were 478,000 this year compared to 584,000 last year. This data includes registered overnight stays in hotels, guesthouses, and other registered accommodations, including apartment rentals and stays in holiday homes and campsites.

A 9.2 percent contraction occurred in the number of overnight stays by foreign tourists in hotels. The overall decrease in overnight stays by foreign tourists in May was 18 percent.

Ólafsson stated that earthquakes and volcanic eruptions on the Reykjanes Peninsula late last year had a significant impact. “The airlines immediately saw a dip in demand,” says Ólafsson. However, he expects the effects to not be significant over the long term. “Most agree that the long-term effects of these events on the Reykjanes Peninsula are not so bad; they keep our brand alive.”