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Growing Pains

Growing Pains

As Iceland’s budding tourism industry grows mature, we ponder some of the challenges it faces, and wonder how it can best rise above...

Gabríel Benjamin Haukur S. Magnússon
Photos by
Lóa Hjálmtýsdóttir

Published September 3, 2014

In the aftermath of 2008’s TOTAL ECONOMIC COLLAPSE, scores of Icelanders found themselves struggling to make ends meet as jobs became scarce and household debt skyrocketed. The nation collectively struggled to come up with ways to pull itself up by the bootstraps; the government assembled expert panels while enthusiastic citizen groups established think tanks (and faltering tycoons founded predatory instant loan businesses), all trying to determine: where can we score some cash?

In 2010, a solution finally appeared in the form of the infamous Eyjafjallajökull eruption, which stalled air traffic all over Europe and made Iceland a household name in the process. The government’s response to what it feared would be a fresh PR-disaster was also perfectly timed and surprisingly clever, with the “Inspired by Iceland” campaign and its all-singing, all-dancing promo clip effectively amplifying and capitalizing upon the island’s new-found place in the spotlight.

All of the sudden, interest in Iceland-as-tourist-destination was at an unprecedented high, and tourists and travellers flocked to the country like never before.

Clearly, there was money to be made. An opportunity to be seized.

And indeed, official numbers show everyone and their grandmother spared no time in jumping the tourism bandwagon. Since 2010, for instance, the number of registered tour operators in the country has increased by about 100 per year, with 776 active operators in the field at the time of writing.

Wow!

But just who are all these operators serving? And just how great is the fortuitous and unprecedented surge of tourists we are currently experiencing? For context, look at these numbers:

  • In 1953, Iceland hosted about 6,000 tourists.
  • In 1985, a total of 97,443 tourists visited the island.
  • In 2003, when this very magazine published its first issue meaning to cash in on “the tourism boom,” an estimated 320,000 people dropped by for a chance to check out that new magazine everyone was talking about.
  • For 2014, it is estimated that upwards of ONE MILLION TRAVELLERS will make their way to the island that’s currently home to 327,050 desolate souls.

Since the year 2000, the number of visitors to Iceland has increased by 8.2% annually; subsequently tourism has surpassed the fishing industry as the nation’s largest industry.

Truth and consequences?

Steps towards enabling Reykjavík to accommodate the sudden influx of visitors (and those to come—some project Iceland will play host to two million tourists per annum by 2020) have permanently altered the face of the city (if not its spirit), with beloved downtown music venues and shops making for hotels and puffin shops (if this is your first time in Iceland, that’s what we affectionately call the tacky trinket stores that are overtaking streets everywhere from Reykjavík to Reyðarfjörður). Many downtown property owners have also seized the (admittedly very lucrative) opportunity to make a quick buck through rental portal Airbnb, with scores of long-term tenants being cleared out of flats in the much-fetishized 101 Reykjavík neighbourhood.

The tourism boom has also brought suspicions that a Cuban-style double economy might be taking root in places, with several reported instances of establishments doubling their prices when serving non-Icelandic speakers, and/or accepting dollars and euros as payment for a fraction of their worth.

The regulators

As Iceland’s fragile, not-quite-better-yet economy grows increasingly dependent on revenues from tourists and travellers, certain growing pains are making themselves felt. For those attempting to make an honest króna, navigating the regulatory framework can be a confusing task; certain laws appear arbitrary and out of context with existing legislation and/or reality (or both!), and supervisory bodies are lagging behind the fast-paced growth.

A little over a week ago, Progressive Party MP Karl Garðarsson announced that he wanted to revisit the idea of raising VAT on hospitality services, as well as revoking the tourist industry’s tax exemptions. “I think it’s normal that they [the tourism industry] pay their fair share, just like everyone else does,” he said, adding that the state would in turn need to rethink circumstances and update legislation and legal framework to best support and regulate the industry.

“The tourism boom has also brought suspicions that a Cuban-style double economy might be taking root in places, with several reported instances of establishments doubling their prices when serving non-Icelandic speakers, and/or accepting dollars and euros as payment for a fraction of their worth.”

But what sort of changes in policy and framework do relevant authorities envision?

Ólöf Ýrr Atladóttir, the Icelandic Tourist Board’s director, says her organisation released a five-part recommendation this May for the Ministry of Industries and Innovation, where they listed out several thorough recommendations for improving existing laws. These recommendations have the stated goal of increasing cooperation between the state and tourist operators, streamlining and simplifying legislation, and addressing concerns from all parties involved.

Hopefully, someone from the legislative branch will eventually find time to take a gander at those recommendations.

But, what about nature?

It’s not just tour operators receiving flak as the industry expands. Among other popular targets of criticism are reckless travellers who veer off marked paths and casually destructive motorists that indulge in off-road driving, damaging the island’s sensitive flora and fauna.

Andrés Arnalds, an official from the Soil Conservation Service of Iceland, says that off-roading is becoming a major problem nation-wide, and that further preventative measures are necessary. Just this August, land near Löðmundarvatn lake was considerably damaged by off-roaders.

Kristín Linda Árnadóttir, the general director of Iceland’s Environmental Agency, says that her organisation has been clamping down on such activities by placing an increased focus on education and information dissemination. “We’ve done a good job of getting car rental companies to participate,” she says, “but we are constantly looking into the matter and attempting to determine whether there are groups out there that we aren’t reaching.”

The agency released a report this June with an updated list of endangered nature sites. Surprisingly, despite increased foot traffic, the areas listed as being at greatest risk—in the “red” category—have decreased recently from ten in 2010 to five this year.

Kristín says this is a trend they’ve been noticing for the past few years. “We compile these reports to help us determine where to prioritise our efforts and funds,” she says, “we are, after all, managing 113 protected areas.” Through better footpaths, clearly marked roads, and improved observation platforms, many areas, such as Gullfoss, have started recovering.

The landscape is however constantly shifting, and Kristín says her organisation needs to stay on top of things. “It was just a few decades ago that only people driving very powerful cars were able to venture into the highlands,” she says, almost wistfully. “These days,  almost anyone can travel there.”

See Also:

The Toll On Nature


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