Popular Tourist Attractions

Consequences of Tourism

Airbnb in Iceland

Further Issues



In the past 17 years tourism in Iceland has grown significantly.  By the end of 2017, the number of foreign visitors is set to exceed 2 million. In fact, according to the graph below Iceland has outpaced European and world tourism growth over an extended period of time. Tourism levels have increased so much that it significantly surpasses the total population in Iceland.

TourismTourism Graph
Figure 1. A graph from 1990 – 2010 depicting the growth of tourism in Iceland relative to Europe and the World.
Figure 2. A graph depicting the increase in number of tourists in Iceland relative to the total population within Iceland.

Known as an “untouched” land with unique natural features; Iceland has some of the few remaining wilderness areas in Europe. It is for this reason that tourists around the world are being drawn in by the Icelandic charm.

The increase in tourism can be attributed to four key factors:
•    Growth of tourism globally
•    Low-fare flights & stopover deals
•    Popularization by famous shows and movies (Game of Thrones, Star Wars)
•    Devaluation of the Icelandic Krona

Figure 3. A comparison of where Game of Thrones filmed and the location in Iceland.

Popular Tourist Attractions

The following pictures depict some of the most popular tourist attractions in Iceland. It's easy to see why people from all around the world are yearning to visit.

Figure 4. Skogafoss, a popular waterfall many tourists visit.

Figure 5. Vatnajokull, the largest and most voluminous ice cap in Iceland

Northern Lights
Figure 6. One of the most popular natural features in Iceland - The Northern Lights

Blue Lagoon
Figure 7. The Blue Lagoon, a geothermal spa.

Consequences of Tourism

One of the biggest issues Iceland is currently dealing with in regard to tourism is the lack of infrastructure and clear policy. Prior to 2000, Iceland never experienced the great rush of tourists to its island. Thereby, it is now struggling to keep up with the demand. The lack of clear policy leads to confusion surrounding environmental impacts and repercussions for destroying natural features.

Moreover, the lack of institutional frameworks such as public facilities, adequate transportation, signage and parking areas causes significant environmental degradation. Since the boom in tourism popular sites have experienced vandalism, littering, trampling of protected areas and people relieving themselves outdoors. Many popular destinations have sustained so much damage that landowners have considered bulldozing it.

Figure 8. Article headlines in Iceland.

Figure 9. An example of the vandalism taking place in Iceland.

The additional lack of regulation has led lots of tourists to search for the “off the beaten path” experience, causing significant damage from off-roading and the need for search parties. As previously mentioned, Iceland is working hard to handle problems associated with tourists, but the current infrastructure cannot handle the high volume of issues.

Due to the lack of public transportation in Iceland many tourists decide to stay in the south-west region because of the close proximity to the main airport, Keflavik. This causes an issue in regional distribution of tourists, leading to the capital, Reykjavik, handling most of the tourists. Further exacerbating the negative impacts of tourism in one single area.

Tourist Distribution
Figure 10. Distribution of where tourists visit in Iceland.

Airbnb in Iceland

Furthermore, Iceland is struggling to handle the influx of tourists in the housing development sector as well. In 2015, they constructed 290 new hotel rooms, which was still not enough to cope with the requirement of 1400 hotel rooms. Thereby, leading to the increase in Airbnb usage. The website has experienced a 124% increase in activity in 2016.

According to Iceland Monitor, rentals of Airbnbs in the country have risen by an astounding 156%. This negatively impacts the local property market by driving up rental prices. High rental prices lead to a shortage of housing for locals, who cannot afford the steep prices.

Figure 11. A property available for rent in Iceland.

To combat issues such as this one, the Icelandic parliament in 2016 passed a law that sets specific limits for renting out your property through Airbnb. The law states that a person can rent out their property for up to 90 days a year without needing an operational license. And the gross income from renting out their property cannot exceed 1 million ISK, therefore meaning Airbnb renters cannot charge more than 11,111 ISK/night (107.77 USD/night). Additionally, operators would need to register their property every year at a cost of 8,000 ISK (77.60 USD). Interestingly, Iceland took a page out of Berlin’s playbook. When affordable housing started to disappear in Berlin, the government passed a law stating hefty fines would be issued to users who rent out entire properties rather than single.

Further Issues

The abundance of cheap renewable energy has been one of Iceland’s key economic assets for a very long time. Since the increase in tourism, the country has been using its unique natural features and fragile ecosystem to diversify its economy. As of 2016, the tourism industry now accounts for 10% of Iceland’s GDP. And tourism is responsible for 30% of the country’s export revenue; fisheries and energy being another huge export revenue. 

The current issue being discussed among leaders is the land-use conflict. In order to harness renewable energy (geothermal and hydrothermal) popular tourist destinations will need to be disturbed, making the site unavailable to tourists. While this conversation is ongoing, it will be interesting to see how Iceland develops in the future with these issues present. 
Figure 12. A graph of Iceland's energy supply by source.


Abraham, Amelia. “How Game of Thrones Changes Iceland’s Tourism Industry.” Refinery29, Refinery29., 30 May 2016.

Boston Consulting Group. “Northern Sights: The Future of Tourism in Iceland.” Boston Consulting Group, Sept. 2013.

Fontaine, Paul. “New ‘AirBnB Law’ Approved by Parliament.” The Reykjavik Grapevine, Froken Ltd., 4 June 2016.

Gottlieb, Jenna. “Iceland’s massive popularity with tourists has a gross downside.” Quartz, 28 Nov. 2015.

Organization for Economic Co-operation and Development. “Iceland Highlights 2014.” OECD. 2014.

By: Heidi Ahn