Apr082017

Iceland has tourism problems due to cheap flights

Cheap flights have resulted in a rapid increase of tourists to Iceland in past five years.

I flew San Francisco to Iceland last week for $70 all-in one way and stayed at the Hilton Nordica Reykjavik for 16,000 Hilton Honors points + 62 EUR. I was probably one of the lowest spending American tourists to visit Iceland in the past year with a total expenditure around $150 for my two days on the island. Average spend per foreign tourist for a stay in Iceland is around $1,500.

In 2015, there were 1.29 million foreign visitors to Iceland. This was a 62% increase in tourism in two years. WOW Air launched in November 2011 with routes from Reykjavik to European airports beginning May 2012 and launched flights for USA routes in 2015. The number of American and Canadian visitors to Iceland doubled from 2013 to 2015.

Americans were the top nationality of foreigners passing through Keflavik Airport in 2015 with 242,805 passengers, followed by UK with 241,024 passengers. Germans were third with 103,384 air passengers.

40% of foreign tourists visit Iceland between June and August.

About 40% of international visitors in 2015 came to Iceland in the June-August summer months. 30% arrived in April-May and Sep-Oct months and 30% in winter Nov-March.

44% of North American visitors came during the three summer months.

Overnight lodging stays in Iceland

The capital city Reykjavik in the southwest of the island has a population around 124,000 and the capital region has about 217,000. The capital region is about 106 square miles in size. Nearly 2/3 of the people on the 40,000 square miles of Iceland are concentrated in 0.28% of the land mass.

In 2015, there were 5.6 million guest nights by foreign visitors in Iceland. Foreign visitor overnight stays have increased more than 21% annually since 2010.

48% of guest nights were in the Reykjavik area during 2015. There is seasonal disparity with 68% of foreigner guest nights in summer staying outside Reykjavik area, while in winter 75% of foreigner guest nights are in Reykjavik. 

There were only 4,700 hotel rooms in Reykjavik in 2015. Airbnb listings provided around 4,000 additional rooms in Reykjavik.

The demand for rooms in Reykjavik is so high, the government established Airbnb rental legislation in 2016. The surge in tourism in Iceland has made available room rentals a valuable revenue source for Icelanders, but rapid growth in tourism also resulted in a need for immigrants to fill tourism industry related jobs beyond the employment needs for 340,000 Icelanders. Tourism has overtaken fisheries as the country’s largest revenue source. The availability of rentals for resident immigrant tourism industry workers is impacted by the large number of rentals occupied by tourists with the ability to pay far higher rental rates than local workers.

About 65% of foreign visitors stayed at least one night in a rural areas of Iceland. Basically, any place outside of the Reykjavik area is considered rural Iceland.

What this shortage of available lodging means is room rates more than double in summer months with 4-star chain hotels typically pushing $400 per night. Reykjavik has a building spree, but the new chain hotels are primarily geared for upscale travelers with new hotels like Marriott’s Edition planned.

Visiting Iceland outside June-August is the better option for budget tourists, unless you are prepared to camp.

KEF no camping

Keflavik Airport sign poster: Sleeping/camping and cooking is prohinited in the building and on the grounds.

Iceland’s environment is its primary attraction to visitors

In the 2015 survey, 75% of Icelanders stated they are concerned about the impact of the sudden surge in large numbers of visitors to Iceland straining the environment. Iceland has several national parks, but Iceland does not currently have a government national park service and there are no visitor fees to parks, as is common to popular national parks in the USA.

WOW Air 

WOW Air, a Keflavik based hub airline, serves 28 destinations. Wizz Air, EasyJet and Norwegian also serve Reykjavik with flights to Iceland from many European airports. WizzAir has new routes from Prague and Wroclaw launching in May 2017.

Iceland suddenly has tourism problems, primarily due to cheap flights.

Pink WOW Air Building in downtown Reykjavik surrounded by construction cranes.

Pink WOW Air Building in downtown Reykjavik surrounded by construction cranes.

Sources:

Tourism in Iceland in Figures, May 2016 – Tourist Board of Iceland

Iceland and the Trials of 21st Century Tourism – Skift.com (2016 special report).

Loyalty Traveler – Budgeting 2 days in Reykjavik, (pr)Iceland (April 6, 2017).

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

More articles by Ric Garrido »

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  1. I just looked up the points needed for either Hilton properties for September and they are 60,000 and 70,000 points.

  2. Hilton Honors has variable reward rates by month and the minimum standard reward rate is higher for May to October than for my stay in April.

    Plus, Honors Points & Money rates increased due to program changes in the past month. The rate I booked in February for Hilton Nordica Reykjavik for 16,000 points + $66 was 16,000 points + $118 after the March 2017 changes to the new Hilton Honors reward system.

    Hilton Honors reward nights points value analysis after March 2017 changes
    http://loyaltytraveler.boardingarea.com/2017/03/06/hilton-honors-reward-nights-points-value-analysis-after-march-2017-changes/

    Hilton Honors buy points 80% bonus gives me cheap Iceland hotel stay

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