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Cashing In And Selling Out: Shady Business In The Tourism Industry

Cashing In And Selling Out: Shady Business In The Tourism Industry

Photos by
Raffaele Piano

Published June 15, 2018

It’s no secret that tourism has, in just the span of a few years, become one of Iceland’s largest industries. Everyone wants a piece of the action, and Icelanders have been very diligent and creative as they compete for their share of the gold rush. However, foreign companies have also taken notice and have sought a share of the market. While not necessarily bad in itself, Grapevine has learned that many of these companies operate in legal grey areas at best; at worst, they put lives in danger, underbid local companies, underpay their workers and do not pay their share of taxes into the system.

Fortunately, there are solutions to these problems, but a lack of initiative from the government means that, until the laws are changed or more clearly defined, the onus will be on the tourists themselves to only hire Icelandic-based tour operators — often easier said than done.

The interlopers

For Kormákur Hermannsson, founder and co-owner Base Camp Iceland, this matter is very close to his heart.

“The problem with companies operating illegally in Iceland is we have no way of competing with them,” he says.

Here’s how it works: Icelandic companies have to be licensed tour operators. This requires insurance, inspected vehicles that are licensed to transport people, and paying market salaries to guides, amongst other things. Companies based abroad don’t have to comply with any of these rules. Many, if not most, don’t pay taxes such as VAT.

To make matters worse, many of these companies will bill themselves on their websites as using “local guides”, and make other claims that are difficult at best to verify.

“Do you want to make it into a sustainable, responsible market that can be respected? Or do you want to race to the bottom of the barrel? Today, we’re very close to the bottom of the barrel.”

Ásdís Dögg Ómarsdóttir, the general manager Asgard Beyond, has also noticed these companies popping up with increasing frequency in recent years. Some of these companies will even hire some of her company’s services for their own tours. The economic aspect matters to her, but there is also the issue of safety.

Lives at risk

“Sometimes my guides will come back to the office and be like ‘Oh my god you won’t believe what I saw today,’” she tells us. “They might see, for example, one guide leading a stroll of 30 people. But 99.9% of the time, nothing happens, so companies and guides get away with it. But when shit hits the fan, that’s when you want someone well educated and experienced to be there on the spot to figure things out.”

In her experience, one thing that might be obfuscating how much danger there is with untrained and under-equipped guides running tours is when other qualified guides cover for them. Unqualified guides working for a bad company may run into trouble, not have the resources to fix it, “but our guides happen upon them by accident and sort it out,” Ásdís says. “Because you’re not going to leave someone in a crevasse, and not help out. Eventually there’s going to be a an accident, or a few of them, and maybe then something will be done. But I think the governments needs to go ahead and do something about this right away.”

Where is the oversight?

For both Kormákur and Ásdís, this is happening because of both a lack of legal framework and a lack of enforcement of what little legal framework there is.

“I think there’s a lack of infrastructure for oversight, but there’s also a fundamental lack of understanding of the function of the tourism market,” Kormákur says. “I know it’s been growing rapidly, and when you have rapid growth like this, government authorities tend to be very reactive. They only react when something has happened. So we lack the general marketing plan for tourism in Iceland.”


Kormákur Hermannsson, founder and co-owner Base Camp Iceland.

“In a way, the foreign companies that are operating here may be operating legally, but in a grey area,” Ásdís says. “I think it’s super important that anyone who runs a business that’s operating here delivers the same amount of taxes into the economy. But the sad part is that there are no regulations about safety in Iceland when it comes to tourism, except maybe for diving. One big question is, if somebody breaks the law, what’s going to happen? Who’s going to be responsible for punishing anyone? I think in general that’s the big problem.”

Until such time as the government does clarify the law and step up enforcement, those wanting to tour Iceland can take steps to ensure they have hired a local company. Vakinn, the official quality and environmental system for Icelandic Tourism, has a special page listing all the certified Icelandic companies who fully abide the law, which can be found at vakinn.is/en/certified-companies.

All that said, there is still a lot of work to be done, and Kormákur worries about the future.

“This is not only about someone having an unfair upper hand in a competitive market,” he says. “It’s also about, as a local, what kind of tourism do you want? Do you want to make it into a sustainable, responsible market that can be respected? Or do you want to race to the bottom of the barrel? Today, we’re very close to the bottom of the barrel.”


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