High travel costs curb foreign tourism to Iceland, says country’s tourism director

The high cost of travel to Iceland is significantly impacting the demand among foreign tourists, according to Arnar Már Ólafsson, the country’s tourism director. He says Iceland has long been an expensive destination, but it has now become pricier than comparable countries such as Norway and Finland.

“We know that tourists won’t pay for just anything, even if they are interested in the country. In our discussions with companies in the sector, the first thing buyers complain about and therefore look elsewhere, is the cost. So it has a significant impact,” says Ólafsson.

Ólafsson adds that there is a need to improve the marketing of Iceland as a tourist destination. “We are not purposefully marketing ourselves as a destination while our competitor countries are doing so,” he says. This could result in Iceland being overshadowed in competition with these countries. He adds that these countries have not experienced the same contraction in tourism as Iceland.

Recent figures show a noticeable contraction in domestic tourism. The Central Bureau of Statistics published an overview of registered overnight stays in May, and airlines also published passenger numbers. There was little change in the number of passengers flying with Icelandair in June. 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 transported seven percent more passengers than the same period last year. However, this doesn’t tell the whole story, as there was a decrease in passengers heading to Iceland. There was a significant increase in the number of transit passengers, passengers who only stop at Leif Eiriksson Airport and do not stay in the country.

A statement from the airline quotes the company’s CEO, Boga Nils Boga, saying that demand for travel to Iceland has decreased. Sixteen percent fewer passengers flew to Iceland in June compared to the same month last year.

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. These figures include registered overnight stays at hotels and guesthouses and other registered accommodations such as apartment rentals and stays in holiday homes and camping areas.

There was a 9.2 percent contraction in the number of overnight stays by foreign tourists in hotels between the years. The total decrease in overnight stays by foreign tourists was 18 percent for the month.

According to Ólafsson, earthquakes and volcanic eruptions on the Reykjanes Peninsula had a significant impact late last year. “Airlines immediately saw a dip in demand,” says Ólafsson. He expects the impact not to be significant in 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 in the air,” he says.