Iceland’s low-cost airline, WOW Air, has ceased operations, leaving passengers stranded and confused.
If you asked a group of people in the last five years where they’d been itching to travel, Iceland would definitely come up. But the latest tourism figures indicate interest in visiting the country may be starting to lose some steam.
In 2018, 2.3 million people visited Iceland, 5.5% more than the previous year, according to the Icelandic Tourist Board, but that increase is far lower than what the Nordic island is used to seeing.
“In recent years, tourism in Iceland grew rapidly, with an average year-on-year growth in tourist arrivals of over 25% since 2013, peaking in 2016 with 38% growth,” Inga Hlín Pálsdóttir, director at Visit Iceland, told USA TODAY.” And for U.S. travelers, Iceland’s capital remains among the 50 most popular international destinations, Jennifer Dohm, Head of PR for the Americas at Hotels.com, told USA TODAY.
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So why is Iceland no longer the hottest cold-weather destination? The truth is, nobody’s totally sure. But the lure of other destinations, the country’s expensive accommodations and the demise of WOW Air could all be partly to blame.
Other destinations are attracting North American tourists
Iceland is still buzzy, but other areas are starting to gain more traction among travelers.
Dohm said that global searches for Greenland on Hotels.com ticked up 52% in 2018 while Iceland searches only went up 17%.
“We’ve been seeing more ‘Instagrammable’ and remote destinations grow in popularity over the last year, including other North Atlantic destinations like Greenland,” Dohm said.
Other data from Hotels.com indicates that North American travelers are flocking to countries like Ireland, Turkey and Japan. Tokyo, Osaka and Kyoto’s visitor numbers have grown by almost 9%, this past year with a record high of nearly 32 million visits.
Could overcrowding − or talk of it − be a part of the issue?
Clive Stacey, managing director of travel agency Discover the World, told The Telegraph that “the slow down is partly due to the fact that the place is getting a reputation for being a little bit crowded, but that doesn’t mean that it is.”
Chris Davidson, EVP of Insights & Strategy at travel and hospitality marketing agency MMGY Global, told USA TODAY that data shows “travelers are just as interested, or even more so, in visiting even as (international or domestic destinations) increase in popularity.”
Davidson says they have little evidence to back up the notion that tourists are bothered enough by overcrowding at major tourism destinations but that “there may be a tipping point where travelers ultimately feel the experience is somewhat compromised by long lines and crowded streets,” he added.
Iceland is expensive
Interest isn’t totally fading for tourists, but it could be changing.
Travelers in Iceland are starting to spend less while visiting the country, according to Rochelle Turner, research director of the World Travel & Tourism Council.
Turner told USA TODAY “spend per visitor has been declining,” and tourists are now shorting their trips to the country and mainly going to Reykjavik and areas around the southern coast, as opposed to elsewhere in Iceland.
The Arion report contradicts Turner and found current tourists aren’t spending less time in Iceland just yet thanks to cheaper accommodation like Airbnb.
Hotel and restaurant prices in Iceland are some of Europe’s highest, with accommodation costs more than doubling in the past decade, according to an October 2018 report from the research arm of Icelandic bank Arion.
But Hotels.com Hotel Price Index data show the average price paid per night for five-star hotels dipped to $478 in 2018 amid the slow-down of Iceland’s tourism. U.S. tourists paid $550 per night in 2017.
WOW Air shutdown could be partly to blame
Arion reports the “increased capacity of the Icelandic airlines” played a significant role in Iceland’s tourism spike a few years ago. Cut to today: Iceland’s low-cost carrier WOW Air ceased operations at the end of March, leaving passengers left in the lurch.
“Growth has been dragged down in part due to a decline of (WOW Air), however other airlines are now starting to pick up the flight routes,” Turner noted. Iceland’s slowing growth last year needs to be examined in context to its prior strong growth, Turner added.
Icelandair, American Airlines, Delta, United Airlines, Norwegian Air and Aer Lingus were among the carriers offering discounted fares for affected WOW customers.
Pálsdóttir of Visit Iceland echoed Turner’s sentiment: “Iceland tourism is not as dependent on specific airlines as before since there are many more airlines offering flights to and from Iceland compared to few years ago.”
Cooling expected to continue
Turner says the World Travel & Tourism Council predicts 4.2% average annual growth over the next decade, which could be more sustainable than the previous boom. Pálsdóttir of Visit Iceland, too, says data indicates a stabilizing of Iceland’s tourism growth.
Iceland faced an economic collapse about a decade ago and had since spent time recovering. An associate professor at the University of Iceland, Gylfi Magnusson, told Bloomberg in October that a tourism crisis could influence the economy at large, like “demand for labor, investments in hotels, the current account balance, the exchange rate of the krona (Iceland’s currency), and so on.”
Contributing: Sara Moniuszko, Dawn Gilbertson
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