Iceland, Mar 30:
Tourist bookings in Iceland are growing more slowly than forecast with travellers deterred by high prices
and frequent volcanic eruptions near an inhabited area.
Bookings over the winter months have been as much as 15% below estimates, according to data
compiled by the Icelandic Tourist Board.
The country’s top source of foreign currency, tourism bounced back quickly after the pandemic and was
expected to reach new heights this year, until intense seismic activity started rocking the island’s
southwest corner in October. The first eruption near a now-devastated fishing town happened on Dec. 18
and there have been three more since.
“We saw already in November that new bookings went down,” Johannes Thor Skulason, managing
director of the Icelandic Travel Industry Association, said by phone. “They have since slowly started
recovering but the effect from the seismic activity and the media coverage around that can still be felt.”
Previously, volcanic outbursts in Iceland’s remote areas have helped boost travel but the fact that activity
is now taking place close to the country’s top tourist attraction, the Blue Lagoon spa, as well as inhabited
areas is deterring some foreigners.
The country’s hot economy is also starting to hurt its attractiveness for foreign visitors. Rapid growth has
fueled price increases, with inflation exceeding 10% last year and remaining persistent since. Iceland’s
central bank has hiked interest rates by 850 basis points since May 2021 and now boasts Western
Europe’s highest benchmark rate at 9.25%.
