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Iceland travel industry faces several challenges

Iceland travel industry currently faces several challenges and here are few of them.


Seasonality distribution. The high season in Iceland is May to September. At this time, the industry is experiencing incredible stress.

The main tourist attractions are crowded, which reduces the quality of their visits. People come to Iceland to admire the wild, untouched nature, but what they get is the experience of pandemonium, like near the Roman Colosseum.


There are shortage of guides. Therefore, in the summer, teachers, students, and relatives of the travel industry’s people work as guides.Transport companies are overloaded with orders, which leads to constant delays of excursions. Hotels for summer dates are booked for 2-3 years in advance. Having lunch or dinner in a beautiful place becomes a challenge.


Therefore, the industry's efforts are now aimed at encouraging tourists to visit Iceland in winter. And a lot has already been done for this. If a few years ago it was impossible to find a single working restaurant or store on Christmas Eve in Reykjavik, now there is no problem with this.

Many hotels and food outlets not only in the capital, but also in countryside, have rearranged their operating hours and are now ready to meet tourists all year round.


New routes are being created for winter traveling, for example, trips to glaciers on monster trucks, hiking on glaciers, visiting ice caves. Winter is the only time when ice caves in Iceland are accessible for visitors. Snowmobile tours, snorkeling and diving between two continents, swimming in geothermal pools and of course hunting for the northern lights are also available during winter time.


Another challenge is territorial congestion. Most tourists stay at the southern part of Iceland, much less travelers go to the northern part. Although the North of Iceland is amazing. Europe's largest waterfall – Dettifoss is situated there. You also can find in the North Hverir geothermal area with the landscape of Mars, the wonderful lake Mývatn and its geothermal bath - an experience no worse than the Blue Lagoon. There are fewer tourists there, mainly due to the distance of 450 km from the international airport, and a smaller choice of places to stay and having food. Improving logistics and infrastructure is something that both the government and business are working on today.


Only EasyJet flies from London to the airport in the northern capital of Iceland, Akureyri, the rest of the flights are domestic. The airport has an excellent runway that is suitable for most European airlines, however it currently does not have enough aircraft parking spaces and has a small terminal building. Work on this is actively underway and in the next few years international flights from Akureyri to Europe hopefully will be operated by the local airline company Icelandair and other European airlines.


As for infrastructure, the situation is also improving. The choice of comfort class hotels is becoming larger, new guesthouses and farm-based restaurants are opening and offering truly unique local products. Icelanders create their products with love, putting part of their Nordic soul into them.


Another current challenge for the Icelandic tourism market is prices. An average hotel in Reykjavik in high season will cost from 350 euros per night. Standard room in a five-star hotel – from 550 euros. Lunch will cost from 50 euros, dinner – from 70 euros per person. Transfer from the airport to Reykjavik – 200 euros and more. Taxi in Reykjavik – about 50 euros. In 2024, service providers have raised prices by 20-30% compared to last year, with prices skyrocketing up to 40% for some products. Market players explain this by inflation, rising wages, and high taxes (for example, income tax in Iceland reaches 46%). In my opinion, the factor of unprecedented high demand for Iceland is also influencing pricing, and market leaders are using the situation to make up for the losses they suffered during the Covid period, as well as create a cushion for nowadays and future risks. Such as, for example, the volcano in Grindavik, which frightened tourists and forced the cancellation of a number of events in Iceland. Whether a significant increase in prices will be a factor that will reduce the popularity of Iceland as a tourist destination in the next few years is a question for me.


Overall, Iceland's tourism market is impressively vibrant and diverse. The threshold for entering the market for businesses is low, and support from the state is huge. The market is competitive but friendly. Companies with a long history provide the platform for market stability. New projects add life, creativity and dynamics.


Thanks to these regular meetings and constant dialogue with suppliers, our travel agency Iceland Challenge has now strong partnerships with many companies in Iceland. As a full-service DMC, we create excellent travel products for the various purposes of businesses and individual travelers from all over the world. We will be happy to create new partnerships and cooperation.


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