Iceland tourism: How the country became overrun with tourists

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This was published 6 years ago

Iceland tourism: How the country became overrun with tourists

By Soo Kim
Updated
The Blue Lagoon at Grindavik is one of Iceland's most popular attractions.

The Blue Lagoon at Grindavik is one of Iceland's most popular attractions.Credit: Alamy

With the country poised to welcome 2.3 million visitors by the end of this year, tourists in Iceland will soon exceed the national population by seven to one.

The meteoric rise of tourism in the small Nordic country has prompted the Icelandic government to consider introducing a series of measures to limit arrivals, including a imposing a "nature tax" on tourists to help preserve the country's raw beauty.

With just 340,000 residents spread across a 40,000 square miles, Iceland has witnessed an exponential rise in the number of visitors in recent years, sparked by appearances of its otherworldly landscape in the ever-popular Game of Thrones television series and various Hollywood blockbuster films from Star Wars to Interstellar.

Since 2010 the number of tourists visiting has nearly quadrupled to around 1.8 million tourists, with the number of overnight stays amounting to a total of 7.8 million in 2016. While the number of visitors from Australia is still relatively low, Traveller's readers voted Iceland their 6th favourite country in our 'Destination of the Decade' survey, tied with the US.

Last year, critics warned Iceland's capital, Reykjavik, was "becoming Disneyland", as the number of US tourists alone (around 415,200) surpassed the country's population.

The expanding industry, which is now Iceland's second largest after its wholesale and retail sectors, has raised concerns over the sustainability of such rapid growth.

"This sector is maturing and becoming a real industry in Iceland, and with that of course come challenges that we need to be ready to tackle," Thordis Kolbrun R. Gylfadottir, the country's tourism minister told Bloomberg.

Top 15 destinations where tourists outnumber locals (2016 figures)

  1. Andorra - 36.6 annual tourists per resident
  2. Macao - 25.6
  3. British Virgin Islands - 13.3
  4. Saint Maarten - 13.1
  5. Turks and Caicos Islands - 13
  6. Aruba - 10.5
  7. Northern Mariana Islands - 9.6
  8. Guam - 9.4
  9. Monaco - 8.7
  10. Palau - 6.4
  11. Cayman Islands - 6.3
  12. US Virgin Islands - 6.2
  13. Iceland - 5.4
  14. Malta - 4.5
  15. The Bahamas - 3.8
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See also: How to see Iceland without the crowds

Sedlabanki, the central bank of Iceland, warned of "the risk that accompanies continued rapid growth" and how it could be a "shock for the economy as a whole," in its latest financial stability report in October.

In particular, the bank highlighted the strain that tourism has put on local housing, as "prices are still rising steeply" and "the surge in short-term private rentals is a major factor", it warned.

Last year, authorities in Iceland attempted to clamp down on short-term rentals by proposing a business tax on those letting out their homes on Airbnb for more than 90 days a year.

But the property rental business in the country has shown no signs of slowing down, with new figures revealing earlier this year that the most prolific Airbnb landlord in Iceland had reportedly earned €1.93 million ($A3 million) in 12 months, with five individuals bringing in more than €800,000 in the same period.

"We need to map this out to see what we can do to make the tolerance higher. Sometimes it is about strengthening infrastructure, sometimes it can be about steering access to particular areas," Gylfadottir said.

"The decisions we make will affect how this sector will evolve," she added.

One of these could be to introduce a "nature pass" fee, which would be used to fund the preservation of Iceland's natural resources, but "this is yet to be discussed and worked out", according to the minister.

"We will probably never compete with the lowest priced destinations, but people need to experience that they are getting their money's worth."

Iceland is already one of the world's most expensive countries, but earlier this year the government was considering increasing the existing hotel tax – which raised a reported 400 million króna (£2.95million) in 2016 – forcing tour operators to purchase licenses and imposing limits on the number of people who can visit certain sites.

The government claimed money raised through any such initiatives would go towards improving infrastructure and facilities.

The world's most visited countries (2016)

  1. France - 82.6m annual visitors
  2. United States - 75.9m
  3. Spain - 75.6m
  4. China - 59.3m
  5. Italy - 52.4m
  6. United Kingdom - 35.8m
  7. Germany - 35.6m
  8. Mexico - 35m
  9. Thailand - 32.6m
  10. Turkey - 25.4m

Source: UNWTO

​"The sector and all of us have to be careful not to become victims of our own success," the minister said earlier this year.

"Some areas are simply unable to facilitate one million visitors every year," she said. "If we allow more people into areas like that, we're losing what makes them special – unique pearls of nature that are a part of our image and of what we're selling."

The Telegraph, London

See also: 'Go home': Anger as Europe's hotspots overrun by summer tourists

See also: 'Don't send any more tourists' - when a city is overrun

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