How is a small island miles from anywhere one of the best performing tourist economies?

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Aurora Borealis over Iceland

Why is Iceland a growing world power in tourism? The answer is multifaceted. Not only is the country absolutely gorgeous — filled with natural beauty that includes glaciers, hot springs, and volcanoes — and home to a range of activities and adventures, but it is leading the world in ecotourism (read more, on the need to balance growth with conservation). Iceland has, out of seemingly nowhere, become one of the world’s most sustainable nations. For tourists who value eco-responsibility and want to use tourism in a positive way, the draw is undeniable. Iceland is pioneering new levels of sustainability in tourism, managing its resources and people in innovative ways that are good for the Earth. From the Travel & Tourism perspective, it’s worth taking a closer look at what this island nation is doing right.

According to the WTTC 2016 Economic Impact report, Iceland’s Travel & Tourism total contribution was anticipated to rise by 1.7% from 2015 to 2016. Although data shows that employment growth has slowed, this is only a temporary phenomenon. For 2016, T&T investment is anticipated to grow 7.1%. As such, the ten-year outlook shows direct employment rising by as much as 2.7% over the next decade. There was a time when fishing dominated Iceland’s economy… a long time, in fact. Ever since the Vikings showed up in the ninth century, Iceland has been largely synonymous with fishing. That’s no longer the dominant thing is is synonymous with, though, as tourism is now the largest contributor to Iceland’s export revenue.

The unprecedented success of tourism in Iceland has been driven, in part, by the country’s energy sustainability. Not only is it a tourist-driving factor, but it has also served as a huge boon for the national economy. In return, this has shifted Iceland’s place in the world economy. Pushing the shift in focus has been Iceland’s president, Ólafur Ragnar Grímsson. President for an impressive two decades, Grímsson has been very verbal about his passion for sustainably developing the country’s tourism infrastructure. He has been the link between Iceland’s climate action and its burgeoning economy. The increased tourism is change that Iceland is prepared for, which is helping it grow rapidly and sustainability. Grimsson has been quoted thusly: “When this decade comes to an end we might have two million tourists coming to Iceland every year, and we have to plan for that.”

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What, exactly, is Iceland’s plan for sustainable growth? That, too, is a multifaceted answer. According to the National Energy Authority of Iceland,

“Iceland is a pioneer in the use of geothermal energy for space heating. Generating electricity with geothermal energy has increased significantly in recent years. Geothermal power facilities currently generate 25% of the country’s total electricity production. During the course of the 20th century, Iceland went from what was one of Europe’s poorest countries, dependent upon peat and imported coal for its energy, to a country with a high standard of living where practically all stationary energy is derived from renewable resources. In 2014, roughly 85% of primary energy use in Iceland came from indigenous renewable resources. Thereof 66% was from geothermal.”

One thing Iceland has going for it is the ability to use sustainable resources as one of the key selling points for T&T in the country. Not only has geothermal energy lowered costs for the locals and boosted the economy, but that geothermal activity gave way to the tourist rush to soak in natural hot springs and gorgeous Blue Lagoons. The fact is, the Eyjafjallajökull volcano eruption that also helped put Iceland onto the global radar. The world was quick to forgive the country it’s massive disruption of air travel once it learned more about Iceland. In the years since the eruption, Iceland and its volcanoes have appeared in positive features from National Geographic to the Guardian to the New York Times.

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Seljalandsfoss waterfall

And while natural events gave the island a PR boost, savvy marketing has also contributed to Iceland’s popularity. In the past several years, tourists have flocked to the country as a stopover point between Europe and North America. Major Reykjavik-based airline Icelandair has proven to be hot with travelers seeking adventure. On itineraries en route to major destinations like New York, London, and Paris, Icelandair offers passengers the opportunity to layovers for up to a week at no extra charge. Since the program’s inception, it’s worked wonders for Iceland’s tourism. Coupled with the natural beauty and tourist-ready infrastructure or tours and hotels, tourists loved the chance to experience Iceland. The layover program encouraged tourists who would otherwise be “just passing through” to stay a bit and soak up Iceland’s infectious charm. In fact, the Financial Post reckons that Iceland’s airlines have been instrumental in boosting the economy after the 2008 recession. Although other airlines now offer similar layover programs in Iceland, Icelandair has led the pack. In fact, in 2014, the layover program gained ground with the airline’s successful #mystopover campaign, which included in its promotions a surprise two-day tour for one lucky passenger.

And why wouldn’t one want to visit Iceland; that’s the better question. According to the World Happiness Report for 2016, Iceland is the third happiest place in the world, ranked only behind Denmark and Sweden. Who wouldn’t want to experience that kind of atmosphere? While Iceland is modern in the sustainability, it’s timeless in the beauty and fascinating culture. Who can overlook the nation’s notable history of storytelling, complete with trolls and elves that mythically thrive among the distinctly unordinary surroundings. Iceland strikes that magic balance of sheer beauty and compelling policies that make it exceedingly tourist friendly.

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