Tourism leads the recovery

The lion’s share of the GDP growth measured since the Icelandic economy began recovering in 2010 is due to the exponential growth of tourism. Íslandsbanki Research estimates that at least a third of GDP growth from 2010 to the present stems from this one sector. Clearly, then, tourism has played a major role in the revitalisation of the Icelandic economy in recent years. 

Overall, 10,300 jobs have been created during this period, including 4,600 in air transport, travel agency, and hotel and restaurant operations. Therefore, about 45% of the increase in the number of employed persons during this period can be traced to tourism. Yet this figure is doubtless an underestimation, as it does not include related sectors. Growth in tourism has therefore played a major part in reducing the unemployment rate in Iceland. 

ÍSB Research estimates that the tourism industry will generate ISK 342bn in foreign exchange revenues in 2015, or about 28.9% of estimated foreign exchange revenues from all goods and services exports during the year, as opposed to 23.8% in 2012 and 19.8% in 2009. 

Tourist numbers soar

ÍSB Research projects that tourist arrivals via Keflavík Airport alone will total about 1,191,000 in 2015 – an increase of nearly 23% year-on-year. The year’s total for all points of arrival will probably be around 1,350,000, more than four times the country’s population. Such a high ratio of tourists to inhabitants is extremely rare. The average amount spent per tourist per bed-night is ISK 18,700 in winter and ISK 12,100 in the summer. A comparison by nationality shows that Norwegians spend most per bed-night, or around ISK 29,000 during the summer and ISK 37,000 in winter. 


Hotel occupancy rate at historical high

ÍSB Research forecasts that bed-nights in year-round hotels will total some 2.7 million this year, up from 2.3 million in 2014. Since 2010, the occupancy rate for hotel rooms in Iceland has risen from 47% to 67%. In 2014, the occupancy rate in the greater Reykjavík area was 84%. Even if plans for 700 new hotel rooms in greater Reykjavík bear fruit, the occupancy rate looks set to remain at a historically high level in 2015. 


A comparison of occupancy rates and prices of hotel rooms in Reykjavík and in the most popular urban tourist destinations in Europe shows that occupancy in Reykjavík is well above average and prices are below average. In Reykjavík, the occupancy rate has risen in spite of price increases. Hotel construction is set to grow strongly in the capital area, with the number of hotel rooms estimated to rise some 33% by 2016, to a total of around 4,500. 

Rental cars account for nearly half of vehicles sold

The number of operating licences issued for car rental agencies trebled between 2003 and 2014 (from 51 to 151). This goes hand-in-hand with tourist numbers, which have also trebled over the same period. During the peak season, the number of rental cars totalled 12,179 in 2014, as opposed to 4,756 in 2006. It is projected at about 14,000 in 2015. The rental car fleet is relatively young, with new vehicles accounting for 36% of rentals in 2014. Furthermore, 86% of the entire fleet is five years old or less, up from only 13% in 2013. 


In 2009, sales of new motor vehicles fell from previous levels, and rental cars rose as a share of the total. This trend has continued, with rentals accounting for an average of 42% of new motor vehicle sales during the period from 2009 to 2014. A mere four types of vehicle comprise 50% of the fleet, and nine types account for 82%. 

You can get our report published this morning on the Icelandic tourist industry here (only in Icelandic).