Generic restaurants and boutiques have popped up, bringing with them new inauthentic locations for travelers to shop and eat.Many expect these types of projects to be put on hold as the country’s business community grapples with a reality where tourism may not be a reliable cash cow. We need to make sure that travelers have a good time, not just in one place, but across their entire trip.
With Iceland’s tourism growth in doubt, it’s possible that the need to attract tourists will outweigh calls to limit tourism and its damage to the environment.Others, though, have a more conservative vision for the future of tourism in Iceland. (Andrew Sheivachman / Skift)It’s one thing, though, to appeal to the individual values or ethics of the individual traveler and encourage them to drink tap water or avoid driving their truck off a cliff. The month following the eruption of Eyjafjallajökull, which led to the cancellation of 95,000 flights in Europe and Iceland. The country’s strongest unions also recently locked in a wage increase, putting more pressure on low-margin businesses. Even individuals that were not in finance played the game: the Netherlands and the UK in particular made deposits with Landsbanki under what was known as ‘Icesave’.“In essence, after the rapid expansion of the bank balance sheets, the banks experienced a wholesale run, where bond investors simply did not have the appetite to maintain the necessary growth in bond issuance to keep them afloat,” Gudrun Johnsen, Assistant Professor of Finance at the University of Iceland, told With the unprecedented flow of capital to Iceland’s financial sector, banks went on a foolhardy, debt-fuelled spending spree, rapidly snapping up real estate and companies in overseas markets. That’s my strong belief… We are hoping to get in line with the normal growth, which is about 4 or 5 percent per year. As shocking at it seemed, it was the best move that the Icelandic authorities could have made. Last year, the Icelandic investment rates fell to 14% of GDP, the fifth lowest in Europe.
While the company’s master plan from 2015 did not anticipate the massive surge in new routes and arrivals, this downturn is helping to bring the sector back to its original projections.“When Wow Air went bankrupt it was not bad timing if you look at it from a construction perspective,” he said. It’s a very healthy economy and in all measurements a rich country. While these legal parameters are relatively weak, they indicate an adjustment in outlook and a shift in how banks operate in order to better serve society.During the country’s rehabilitation, a primary necessity was to make the economy more competitive, as well as making wages lower so they fell in line with those of other countries.
People will not be able to go all the way on that vegetation but instead there will be a viewing patio or platform. With this, the government was able to protect domestic deposits and also keep the currency from devaluing even further.
And a hundred feet are worse than ten.
Skift returned after three years to IcelandWhat was different this time was a sense of concern for the country’s overheated tourism industry, What’s more, there is a worry about a malaise left in the wake of an unprecedented boom period that helped bring the country out of an economic recession.
The cost of labor, though, presents a major challenge to tour operators operating on thing margins.“Another thing influencing companies in Iceland is that salary costs are going up,” said Baldursson.
Recent additions to the travel agenda also include the Icelandic Museum of Rock ‘n’ Roll and the country’s first crime fiction festival, Iceland Noir, in 2014. “I explained to them that two feet are two feet. We’re seeing that companies have a tendency now to look more into their costs and cost base. The country has also invested in a host of new attractions with which to lure tourists, such as a $2.5m project to tunnel Europe’s second-largest glacier, the Ice Cave. Along with the individual lessons that can be taken from the Icelandic example, perhaps the most important and over-reaching is to not follow the standard protocol for escaping national debt and economic crises – these methods clearly do not work, as is perfectly illustrated by Greece at present, as well as the debt-shackled economies of post-colonial Africa. Its success can be highlighted further by the recent pivotal moment in Iceland’s economic recovery: in June, government officials unveiled their plans to abolish the capital controls that had remained in place since 2008. And then I’m talking about the public sector. But you can’t combine those things if you don’t bring [travelers first to boost the economies in those regions].”Part of the problem is that many emerging tourism companies acted to take advantage of the boom by growing quickly instead of taking a more measured and conservative approach.Travelers are still spending on package tours when they visit, despite flights and accommodations eating up a more significant portion of travelers’ budgets, according to data from the Iceland Tourist Board.While travelers continue to spend, the margins operators are likely to have shrunk.“Wow Air went down in April, and that obviously had an effect,” said Hjalti Baldursson, CEO of Reykjavik-based tour operator technology company “The margin of the companies that are selling is going down. Overall, the number of cruise ships entering port has increased from 476 in 2016 to 750 in 2018, according to Cruise Iceland.
“It has cooled down and people were panicking, but the slow down is probably a good thing.”Eiríksdóttir pointed out that the weather is often bad in Iceland, increasing the demand for indoor activities like FlyOver Iceland for visiting families and residents.
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