Iceland's booming tourism (almost 30% growth each year since 2010) has helped the country stabilise its economy following the 2008 banking crash and lift capital controls put in place during the crisis. Tourism has also brought a host of changes, from crowds to more foreign-born workers. Infrastructure and logistical planning rush to keep up. Meanwhile, the populace is pressuring the government to respond to the country's changing situation, protect the environment, and recover from high-profile scandals. All the while being proud of its high-performing football teams.
Curious travellers started to arrive en masse following the 2010 Eyjafjallajökull eruption and a smart publicity campaign led by the Iceland tourism board, which helped spread word of Iceland's charms. Tourism saw a 444% increase from 2010 to 2017, with about 2.2 million visitors arriving in 2017, a shocking number when you consider the nation's population is 350,000. Businesses catering to tourists also boomed, and tourism now accounts for 39.2% of Iceland's goods and services (up from 18.8% in 2010) and 8.6% of the GDP, and it employs 14.3% of the country's workforce.
There are some signs of a slowdown, as the strong króna and higher prices have made travel (and life) in Iceland expensive – also potentially shortening visitor stays. Tourism has also hit the regions of the country differently: many tourists stick to the capital area, the Southwest and the Ring Road, so while it's packed there, places like the North, East and Westfjords still remain relatively under-visited.
The strengthening of the economy as a result of tourism income is indisputable, and many locals appreciate the new services, increase in international profile and wage increases (7.3% from 2017 to 2018) that the industry brings.
But there's a flipside. Short-term apartment rentals in the centre of Reykjavík are pushing locals out of the market. There's also a hotel-building explosion in the capital – by 2020 the number of hotels is due to increase by half – that, too, brings changes.
News reports consistently feature the destruction of the environment (off-road driving, litter, defecation), or rescues of stranded tourists from glaciers, mountainsides and wave-swept beaches by Iceland's search and rescue team (a volunteer- and donation-based operation). In 2016 more than 75% of Icelanders considered the pressure from tourism on the environment to be too high – from whale and puffin consumption to crowds at natural sights.
There is also an impact from the increasing need for foreign labour (who made up about 13% of the workforce in 2018) and the way that changes Icelanders' experience and the use of the Icelandic language (with increased English everywhere).
Responses include limits on short-term apartment rentals, additional cautionary signs and barriers at sights, restrictions on free camping, educational campaigns for tourists and improved methods for learning about safety and logging hikes (www.safetravel.is). Oddly, despite official stances that promote spreading tourism around the country, in 2018 buses were cut back in the North and East.
Important debate is taking place about how Iceland's fragile environment can withstand the pressure it's under. The country's unspoilt natural landscape is both beloved by Icelanders and a major tourist draw. If current growth continues, Iceland could host close to three million visitors in 2020. There's also concern about foreign interests buying vast swaths of land, including important salmon-fishing rivers.
How much tourism can Iceland's waterfalls, trails and lava fields sustain? How can they be adequately protected, for both locals and visitors to enjoy?
Tourism authorities are currently placing huge emphasis on promoting responsible travel and preparing visitors for how to experience and protect the unusual environment. There is also a move to create a Highland National Park, which would protect 40% of the country, and a popular initiative promotes whale watching over eating whale in local restaurants.
Iceland also benefits from its copious sources of renewable energy (primarily geothermal and hydro power). This helps fuel life on the island and also attracts large energy users – (controversial) aluminium smelters are already in place for cheap power, and lower impact computing 'server farms' are on the rise.
One of the world's few nations to prosecute the bankers held responsible for the financial collapse in 2008, Icelanders maintain a sharp watch on their leaders. From the April 2016 Panama Papers scandal that brought down Prime Minister Sigmundur Davíð Gunnlaugsson to the 2017 controversy that brought down the coalition of Prime Minister Bjarni Benediktsson (when his father defended a convicted paedophile), Icelanders hold their leaders to account.
Despite the resulting drama, capital controls (measures limiting the movement of cash and capital in and out of the country) put in place during the recovery after the financial collapse were finally lifted in 2018, and that same year Iceland made grand news when it became the first nation in the world to legislate parity in pay for men and women.