Four Ways That The Tourism Industry Is Eating Itself

And four ways we can make it sustainable.

Dr. Ben Henning is not a tourism expert. Rather, he works in geographic information systems cartography. He and his colleague Anne-Cécile Mermet, of Switzerland’s Université de Neuchâtel, have been using tourism data to construct a larger picture of the tourism industry in Iceland as a whole. The bad news is: the current situation is not sustainable. The good news is: there are things we can do to make it sustainable, but it will require making unpopular decisions.

“There are competing conflicts of interest between private people basically cashing in on this trend, but on the other hand, an almost out-of-hand development of tourists not only in the greater Reykjavík area but all around Iceland,” Ben told us. “The tourism industry isn’t really managed here. Politics has turned a blind eye to these developments. To some extent, we can only hope that this trend continues and we get this crash, because this will ease the pressure on the housing market.”

At its core, the different sectors of the tourism industry—the airlines, the hotels, Airbnb, and the tourism companies, amongst others—unwittingly undermine each other by serving their own interests, perhaps without even realising that these interests can be and often are at odds with the interests of other tourism industry players.

Fortunately, there are things we can do to turn the situation around. It will mean making some hard decisions that might prove decidedly unpopular with Icelandic voters. The trade-off, however, is between having less growth but over a longer period, and having periods of boom and bust.

“Compare it to the financial crash,” Ben says. “Turning a blind eye to it leads to something that nobody had ever wanted, whereas if you had more regulations and enforced them, we probably wouldn’t have ever gotten into trouble. What advantage do you have if you have rocketing growth rates, and then at some point, that same thing crashing again?”

What we’re doing wrong:

1. The Airlines vs. The Hotels. There are more and cheaper flights, with more international connections, bringing an increasing number of tourists to Iceland. These cheap flights tend to attract “budget travelers,” who are more likely to choose camping, parking by the side of the road, and hosteling over booking a hotel room. At the same time, hotels continue to be built. As a result, if hotels want to fill these rooms, they will have to lower their rates, but this leads to a tipping point wherein hotel owners will have to ask themselves if they can get a return on their investment if the rates get too low. Further, a new law puts a cap on how much Airbnb hosts can charge for a single night, meaning hotels must underbid these listings in order to compete, adding further pressure.

2. Airbnb vs. Hospitality Workers. As tourism grows, so does immigration. There aren’t enough Icelanders to fill all the tourism jobs available, and so immigrants fill an increasing number of these jobs. Almost all immigrants to Iceland rent rather than buy apartments. However, Airbnb postings, directed at tourists, comprise a startling portion of available housing. In downtown Reykjavík, anywhere from 50% to 75% of available housing is comprised of Airbnb accommodations. The vast majority of Airbnb postings are not for single rooms, either: they comprise entire households. As such, the very same immigrants coming to work in the tourism industry get shut out of available housing due to the tourism industry itself.

3. Tourism Companies vs. The Environment. Iceland does not have a national park service, in the sense of a national authority which charges admission to Iceland’s sites of natural wonder (arguably the strongest reason why people visit Iceland in the first place), and enforces strict regulations on what one may or may not do within these areas. Tourism companies who bring an increasing number of people to these areas, in some cases, encourage reckless behavior or do not provide tourists with proper instructions on how to behave in a safe and environmentally friendly manner at these locations. This not only puts an increasing number of tourists in physical danger; it also degrades the sites of natural wonder as traffic increases.

4. Tourism vs. The Government. Iceland’s government is only just now in the beginning stages of adopting some kind of tourism policy, but it may already be too late. A growing number of tourism industry workers, being immigrants, are often subject to exploitative conditions. The government has so far taken no new steps to combat this, despite it being endemic to the tourism industry; rather, it is left to immigrants themselves to report violations to their labour unions, which assumes they know what their rights even are.

Further, the face of downtown Reykjavík is changing due to tourism, and not necessarily for the better. Laugavegur, long considered Iceland’s main shopping street, arguably no longer belongs to Icelanders. This can lead to a form of “civil unrest,” although not perhaps in the form of riots, but rather a general and growing resentment of locals towards tourists, tourists towards other tourists, and locals towards the government for effectively “selling out” their country.

What we could do right:

1. A national park service controlled at the national level. Ben refers to the United States as a model for how we ought to be maintaining our sites of natural wonder. “We can see how the national park system is managed over there is a good concept,” Ben says. “There, you have this authority at a federal level, who are setting the framework for how a national park works, who are enforcing the rules and are also managing the parks in terms of what activities are allowed.”

2. Buying back natural sites from private owners. As mentioned, a great many places of natural wonder in Iceland are owned and maintained by private owners. This leads to an inconsistency of policy and maintenance. In order to put all these sites under the same national hat, the government would need to spend a considerable amount of money in buying these sites back.

3. Placing taxes on tourists and limiting their numbers at natural sites. This is never a popular idea, but it’s something Ben says is “essential for managing the growth.” At the same time, some sort of cap—as is done in other parts of the world—needs to be placed on how many people can visit a site of natural wonder in order to prevent environmental degradation.

4. Requiring that all tour guides must be qualified and licensed. Unqualified tour guides can, and often do, either encourage reckless and environmentally damaging behaviour, or lack the knowledge to advise tourists how to behave in a safe and environmentally friendly manner. There are many qualified and licensed tour guides, but at the moment, actual qualifications are not a requirement for leading a group of tourists into the wild.