Iceland’s lodging and tourism industry is at a crossroads, if my recent conversations with its movers and shakers are anything to go by.
I was in Iceland’s capital Reykjavik attending the inaugural Iceland Tourism Investment Conference & Exhibition, a well-organized and needed event that brought together Iceland’s hoteliers, bankers, consultants, owners and developers.
It might not seem to be difficult to get these together. After all, Iceland has a population of only about 320,000, and the joke is that everyone is related to everyone else. Icelanders delight in telling visitors there exists an app that lists everyone in the country and their familial ties so that if you meet that special someone during a cooking class you can soon work out if that connection is a little too close.
The reality is that the leaders of the industry have not gotten together before, at least on anything like the scale seen during this event, held at the gleaming harborside Harpa Convention Centre on 29 February through 1 March.
The reason for that? They might all have been too busy turning over revenue.
Iceland as a tourism destination is booming.
At the opening keynote, two bankers from Icelandic bank Íslandsbanki, Bjarnólfur Lárusson, business manager for corporate banking; and Ingólfur Bender, chief economist and head of research, relayed some of the recent successes.
Tourism forms 17% of the loan portfolio of the bank, Lárusson said, and annual tourist numbers are five times that of the population. Bender added the real pressure is on the warmer months when up to 30,000 tourists arrive every day, and that tourism now accounts for 34% of Iceland’s foreign income, whereas in 2009 that number was 14%.
And there is the crux. Iceland is spectacularly beautiful, and it is beguiling because its majesty of ice and fire is mostly sparsely populated. More than 70% of the population live in or close to Reykjavik.
“These numbers raise notions of sustainability. Do we want this?” Bender asked.
Hotels are coming in, too. For example, Icelandair Hotels, part of the national airline carrier, is developing three new hotels with Hilton Worldwide Holdings—two for its Curio soft-brand collection, one for its Canopy brand. Also, right in front of the convention center is a huge hole that will soon become an Edition from Marriott International.
Most likely these are needed properties, but there are also numerous others coming in, and there is a fear that this will continue to be what might be seen already as a spiral of accommodations across segments to cater to the dramatic rise of airlines servicing Keflavik Airport, which services Reykjavik and the southwest of the country.
“Twenty-five airlines now service Iceland. In 2009, that number was seven,” Lárusson said, adding that many of those were low-cost carriers.
Wholesalers, charter flights and cruise ships also are putting pressure on this fragile country. Its people are strong, though. They are nearly all descended from Vikings.
Adventure guides I talked to were worried by this. Comments ran along the lines of: How can you sell our wondrous natural phenomena when there are five full-size coaches outside every one of our attractions?
Reykjavik’s mayor, Dagur Eggertsson, told conference attendees that the city has 4,000 rooms but that there are another 2,000 in the pipeline over the next five years.
That supply might be healthily absorbed, but one definite theme to emerge from the two days was that all stakeholders need to gather—and not just every other year (the conference is scheduled for its second appearance in 2018)—and hammer home the message of sustainability.
From what I heard this message has gotten off to a great start.
A slice of Iceland
And it is a beautiful island that everyone should feel protective of.
Those attending conferences often only manage to do the travel triangle of airport, hotel and conference center, but in Reykjavik a 20-minute walk gets you to this:
A leisurely stroll in Reykjavik takes you to the suburb of Seltjarnarnes and its dramatic scenery and wildlife. (Photo: Terence Baker)
The suburb of Seltjarnarnes pokes into the chilly sea and is home—at least in March—of Whooper swans and Pink-footed geese.
And only one lodging option there so far (the pleasant Blue House B&B), which is probably how the locals want to keep it.
Email Terence Baker or find him on Twitter.
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