The Ups and Downs of Tourism Industry in Iceland.
An overview of Iceland’s tourism sector since the past decade.
Iceland, A country with a population of little more than 350,000 people, has territorial size, same as that of the US state of Kentucky. An island nation with a rich, unique, and picturesque landscape.
What’s the first thing that excites you when you think of Iceland? Certainly, When I think of Iceland, I can imagine the Volcanoes, the mesmerizing blue lagoons, the breathtaking waterfalls or that black sand beach, and of course, The Northern lights. All of this feels like a treat to witness. Iceland has a whole lot of things to offer except high-rise buildings or that city vibe. If you’re pissed by your daily city life, driving through the traffic and listening to those honks. Constantly surrounded by tall skyscrapers and very little nature around you. Then maybe Iceland could be a place where you would want to visit rather than a beach. I couldn’t resist the beauty of this island nation. The Northern Lights, Hot Springs, Waterfalls, and the Blue Lagoons. All these beautiful things are all in one place, and that’s Iceland for you.
This very nature is the main factor that attracted more than 2 million tourists in 2019. But this wasn’t always the case for Iceland before 2008. So, What caused the sudden spike in tourism for Iceland?
Impact of the 2008 financial crisis.
Iceland was one of the worst affected countries due to the 2008 financial crash. The market capitalization of the Icelandic Stock Exchange fell more than 90%. Yes, you read that right! The GDP had dropped by 10% and, the country went into a severe economic depression. The collapse of National Banks ruined the savings of thousands of people. They didn’t see any signs of positive growth for two years until 2011.
The Icelandic króna had plunged by 80% of its value. The fall of the Icelandic króna meant people could travel to Iceland at a much affordable price than ever before. Not to forget Iceland, along with other Nordic countries, is very expensive in daily expenses. Daily commodities are expensive compared to other European countries, Largely because of the large imports. The devaluation of the Icelandic króna led to a sudden spike in tourism.
The graph below depicts the number of tourists visiting Iceland in the past decade.
This spike in tourism boosted Iceland’s economy. Tourism now accounts for 40% of export revenue and 10% of GDP.
2011 Volcanic Eruptions.
A series of volcanic eruptions in 2010 and 2011 caught the world’s attention towards Iceland. Between 23rd May to 25th May 2011, 900 European flights got delayed due to these eruptions. On 22nd May, Iceland closed the Keflavik International Airport. The transatlantic flights got delayed. Then US President Barack Obama’s visit to Ireland got delayed by a day.
All the media outlets Immediately rushed to Iceland to report these eruptions. It was a significant event that got a lot of attention from people around the world. International media was reporting on Iceland more than they had in the past two decades. These eruptions played the role of advertisements for Iceland. After the PR work by the eruptions, an ultra-low-cost airline, Wow Air, was founded in 2012 that offered exciting offers for tourists traveling to Iceland. People traveling to Europe through the transatlantic route got a free layover of 7 days in Iceland.
The 2013 Hollywood film “The Secret Life of Walter Mitty” was shot in Iceland. Movies can play a huge role when it comes to tourism. These events played a huge role in giving a new life to Iceland’s economy. They did the work of putting Iceland on the Global map for tourism.
The Impact of Covid-19 Pandemic.
In January 2020, The Icelandic government enacted the National Pandemic Preparedness Plan, taking a series of steps to make sure that the virus doesn’t reach their shores. They took these steps when the entire world was underestimating this virus.
But, Unfortunately after two months, Iceland reported its first Covid case at the end of February 2020. The Island nation was steady in its response to the pandemic. They had a plan in action to prevent the further community spread of the virus. Despite all these measures, Hundreds of new infections got reported in March 2020. It was faster than the rate at which cases were rising in the US. (As proportionate to the country’s population) Despite the rising new Cases, Iceland didn’t go under a lockdown and instead kept tracking people who had contacted the virus. These people had to quarantine. Everybody entering the country had to submit their plans to quarantine themselves. International tourists were not allowed to enter, and only exceptional cases of people were allowed to enter.
This model worked and, Iceland flattened the graph of Covid Cases. It was a successful model like Taiwan and New Zealand at keeping the virus at bay.
The Comeback of Tourists.
After a decade-long boom in the tourism sector, The economy heavily depended on tourism. The island nation had to welcome the tourists to keep its economy afloat. In 2018, 3 million tourists visited Iceland. Due to the pandemic, The visitor growth rate had decreased by 76% in 2020.
Iceland was the first country in the European Union to welcome vaccinated tourists in March. Since then, Life has returned to normal on the island. As 70% of people in Iceland have got the vaccine. The government removed restrictions like wearing a mask, social distancing, and social gatherings. These lifted restrictions helped in attracting tourists as 42000 people visited Iceland in June 2021. The efficient management of the pandemic by the Icelandic government allowed it to open its borders. Still, Iceland has a long way to go to recover its tourism industry. According to the CEO of the Icelandic travel industry organization, Jóhannes Þór Skúlason, It will likely take 3 to 4 years for the tourism sector in Iceland to recover.
Conclusion.
Iceland’s tourism sector evolved from the 2008 financial crash. The economy and the volcanic eruptions played a role in boosting tourism. But, We can never deny that the sole reason for the rise in tourism lies in its natural beauty. The other factors just played a complementary role.
