Iceland, tourism boom faces sustainability

Iceland is one of the Countries which registered a double digit growth in numbers of tourism flows in recent years. According to the Icelandic Tourist Board‘s stats, international arrivals  were growing until 2011 at a slow and unsteady pace, reaching 500.000 units at most. Recently, the total number of international tourists who reached the country through Keflavik airport grew from 1.261.938 in 2015 to 1.767.726 in 2016, beyond all expectation. Comparing the data regarding the months of January and February, in 2016 the number of international arrivals was 178.301, and it rose up to 284.342 in 2017. The main origin markets are USA, Canada, Cina, Denmark, Finland and France.

Tourism represents an important contribution to Iceland’s GDP. According to the report “Travel & Tourism Economic Impact 2016″ del World Travel & Tourism Council, in 2015 it generated a direct contribution of ISK173,5 billion (1,5 billion euros), namely 8,2% of GDP. It is foreseen to grow up to ISK243,5 bn, (more that 2bn euros) in 2026, namely 8,7% of GDP. The total contribution, including the indirect and induced one, was ISK576,3 bn (4,9bn euros), that is 27,2% of GDP, and is projected to grow up to ISK795,3 bn (6,7bn euros) in 2026. The international tourists’ expense was ISK281,2 billion (2,4bn euros) in 2015. The tourism expense for leisure purposes, domestic and international, represented 81,7% of direct contribution to GDP.

According to the World Economic Forum, as reported in the “Travel & Tourism Competitiveness Report”, Iceland is 18th out of 141 analysed Countries for tourism competitiveness. The strength points of the destination are “Human Resources and Labour Market” (2nd place), “Prioritization of Travel & Tourism” (5th), “International Openness” (6th) and “Tourist Service Infrastructure” (8th). A weaker point is “Cultural Resources and Business Travel” (77th) but, in particular, “Price Competitiveness” (128th).

The reason of Iceland’s success as a destination can be lead back, as reported by Euromonitor in its report “Travel in Iceland”, to the Government’s policies regarding Travel & Tourism. In the last decade, Iceland was influenced by the global economic crisis and by the bank industry bust. On the other hand, the Government started a promotion campaign of Iceland as a unique destination to live unforgettable outdoor experiences, thanks to its uncontaminated nature. One of the campaign’s strength points was online marketing: the Governments lunched the destination brand “Inspired by Iceland” in 2010, which is still developing nowadays. In 2015, the Icelandic Tourism Board created the “Iceland Academy“, an online network which aims to link travellers and institutions, and to enhance the destination brand appeal. The Icelanic marketing campaigns are particullary focused on the US market, mainly to students.

Another reason is attributable to traditional offline operators who, in order to face the rough OTAs competition, started to offer unique tourism packages. An interesting example is given by Iceland Travel, which offers to their customers the chance to reach the “Ice Wall”, one of the locations of the popular series “Games of Thrones”. The same company also started to create taylor-made packages in order to meet the increasing demand of the luxury segment.

The capital Reykjavik was chosen by the famous hotel chain Hilton as the first city to host a new hotel concept, named Canopy by Hilton. This new accommodation typology offers new lifestyle experiences to its guests, focused on local traditions. The hotel offers typical Icelandic dishes in decorated rooms according to the local culture.

Recently, Iceland began to face the consequences deriving from the tourism success. As reported by  Bloomberg, the Country started to become overcrowded, compromising its strongest point: environmental sustainability. Moreover, the Icelandic Government is discussing whether increasing the tourism taxes or applying a limit to travellers visiting certain areas of the Country.

Iceland is considered to be a safe destination and with a low risk deriving from international terrorism, as reported by the UK Foreign Travel Advice. Particular attention should be paid to the seismic and volcanic activity which characterise the Country.

At Twissen we observed that Iceland started several successful campaigns to promote the Country as a leisure destination. Digital and film productions increased the popularity of the destination that, as many others, is now facing sustainability issues, a very actual component.