Iceland Tourism in the economy Tourism has been among the fastest-growing industries in Iceland in recent years and has established itself as the third pillar of the Icelandic economy. Domestic demand and growth in tourism-related services have demonstrated recovery since the crisis in 2010, supported by a competitive real exchange rate. The number of international tourists (overnight visitors) has increased from 302 900 in 2000 to 997 556 in 2014. Tourists from Central and Southern Europe constitute the largest group, followed by tourists from North America. The number of tourists from other parts of the world has also increased rapidly in recent years. The ratio of tourism-generated foreign exchange revenues to total export revenues averaged 28.4% in 2014, compared to 12% in 2000. Service exports, especially the tourism sector, have contributed a sizeable share of recent growth in GDP; the direct tourism industry s contribution to GDP rose from 3.6% in 2008 to 4.6% in 2014. Sustained demand for tourism services together with the ability to generate high levels of employment continues to prove the importance and value of the sector as a tool for economic development and job creation. In 2008, the total direct number of employees in activities related to tourism was 14 404 but by 2014 the number had risen to 18 886. Tourism governance and funding Since 2012, the Ministry of Industries and Innovation assumed responsibility for tourism. The Icelandic Tourist Board (ITB) handles the implementation of tourism affairs on behalf of the Ministry and has the following main responsibilities: Issuing licences, registration and monitoring in order to ensure that operational requirements are met. Development and organisational issues related to tourism, including implementing a defined tourism strategy, co-ordination of environmental and educational affairs, dissemination of information, regional and local development, and international collaboration. Quality control, including responsibility for implementing a new quality and environmental assurance system (VAKINN), the Tourist Site Protection Fund, and the collection of data on tourist numbers, their expectations and experiences. Marketing and promoting tourism is the responsibility of Promote Iceland, under the Ministry for Foreign Affairs. Promote Iceland is a public-private partnership, aimed at improving the competitive standing of Icelandic industries in foreign markets and 192
stimulating economic growth through increased exports. Promote Iceland is also responsible for reinforcing the image of Iceland as an exciting destination for tourists and for assisting in the promotion of Icelandic culture abroad. An Icelandic Tourism Council is appointed by the Minister for Industries and Commerce, with a mandate to make recommendations to the Minister, at least once a year, on the marketing and promotion of services to tourists, and to act as the Minister s advisor on matters concerning tourism planning. The Tourism Council brings together representatives from the Ministry, Icelandic Travel Industry Association, Association of Local Authorities in Iceland, Iceland Tourism Association and Promote Iceland. Municipalities are responsible for planning issues and many tourist attractions are also in their care. The local authorities have a representative on the board of the Tourist Site Protection Fund, which has made funds available to support a number of projects undertaken by local municipalities. Regional associations of municipalities operate Developmental Agencies with the support of the Icelandic Regional Development Institute and, on their behalf, various development projects for the tourism industry have taken place. Such projects have also been supported by the Innovation Centre Iceland and the Icelandic Tourist Board. The Icelandic Tourist Board also collaborates extensively with the seven regional tourism marketing offices and provides financial support for their work. Iceland: Organisational chart of the tourism bodies Ministry of Industries and Innovation Ministry for Foreign Affairs Tourism Council Iceland Tourist Board Promote Iceland Contract on marketing and promotion Licensing and Administration Environmental affairs Quality System VAKINN Source: OECD, adapted from the Ministry of Industries and Innovation, 2016. In 2015 the Icelandic Tourist Board had a budget of ISK 357.3 million for its operation. A further budget of ISK 695.2 million was allocated to tourism services (of which ISK 451.8 million was for promotion/marketing). In addition, there is a Tourist Site Protection Fund of ISK 176.6 million, including ISK 158 million from tax/fees on overnight stays, and a special contribution for maintenance and infrastructure in tourism destinations of ISK 848 million. Tourism policies and programmes Rapid growth in the tourism sector in recent years has brought new challenges for the Icelandic authorities and public support system. The main issue is to invest in product 193
development and the necessary tourism infrastructure to accommodate the growing number of visitors. Over 70% of visitors name Icelandic nature as their main reason for visiting, so the future sustainability of the tourism sector depends on conservation of the natural environment. The seasoned traveller places an increasing emphasis on quality issues and environmental awareness, and the industry must be prepared to meet their expectations. The VAKINN quality assurance scheme has been further developed to address these needs. Quality assurance in Iceland A growing industry attracts entrepreneurs and new businesses. Over the past two years, the Icelandic Government has been focused on simplifying the legislative framework for tourism, while at the same time strengthening legislation covering the safety of tourists and professional standards of tourism service providers. The government has supported the continued development and growth of VAKINN, the official quality and environmental system for tourism in Iceland. VAKINN has been in operation since 2011 and now covers most aspects of tourism services. Most recently, six categories for accommodation were introduced to the system. Despite much public discussion in recent years on ways to fund the required infrastructure, the issue has yet to be resolved. A long term strategy for tourism infrastructure is needed and has been emphasised by the current Government. Meanwhile, funding for the development of tourism site infrastructure and the Icelandic Road and Coastal Administration has been increased. The Government is aware of the need to maintain existing tourist destinations and to develop new ones in order to foster the sustainable development (economic, social and environmental) of tourism in Iceland. Holistic regional destination planning and management is necessary for the future sustainable development of the industry nationwide. Destinations need to define their strengths and opportunities and map out a vision for the industry s role in the future development of their areas. In 2014 the Minister of Industries and Commerce and the Icelandic Travel Industry Association joined forces and devised a new Road Map for Tourism. Launched in October 2015, the Road Map will provide a long-term tourism strategy with an emphasis on sustainable development (Box 1.7). The long term vision for 2030 is that the tourism industry will become a sustainable and profitable sector yielding stable foreign exchange earnings for the economy and increasing the prosperity and the quality of life in Iceland. In December 2014, the Government signed a new contract with the tourism industry to continue the marketing campaign Inspired by Iceland. The campaign s objectives are to increase awareness of Iceland as a year-round destination, increase commerce from tourists and to decrease seasonality in every region for Icelandic tourism. 194
Statistical profile Table 1. Iceland: Domestic, inbound and outbound tourism 2010 2011 2012 2013 2014 TOURISM FLOWS, THOUSAND Domestic tourism Total domestic trips.......... Overnight visitors (tourists).......... Same-day visitors (excursionists).......... Nights in all types of accommodation 855 805 854 1 025 1 085 Hotels and similar establishments 403 420 461 516 537 Specialised establishments 42 48 37 48 38 Other collective establishments 375 309 316 405 435 Private accommodation 34 28 40 56 75 Inbound tourism Total international arrivals 562 631 769 903 1 107 Overnight visitors (tourists) 489 566 673 807 998 Same-day visitors (excursionists) 73 65 96 96 109 Top markets United Kingdom 61 68 95 137 181 Nordic countries 118 131 145 150 164 United States 51 78 95 120 152 Germany 59 61 70 83 94 France 30 37 42 49 59 Nights in all types of accommodation 2 144 2 444 2 898 3 522 4 405 Hotels and similar establishments 1 671 1 903 2 241 2 650 3 127 Specialised establishments.......... Other collective establishments 248 253 283 377 597 Private accommodation 157 203 267 363 511 Outbound tourism Total international departures.......... Overnight visitors (tourists) 296 343 360 367 402 Same-day visitors (excursionists).......... Top destinations TOURISM RECEIPTS AND EXPENDITURE, MILLION ISK Inbound tourism Total international receipts 162 823 196 495 239 427 276 343 303 609 International travel receipts 68 532 86 936 107 953 130 772 159 050 International passenger transport receipts 94 291 109 560 131 475 145 571 144 560 Outbound tourism Total international expenditure 78 874 92 757 105 455 110 753 120 711 International travel expenditure 72 750 85 827 97 641 103 453 113 594 International passenger transport expenditure 6 124 6 931 7 814 7 300 7 117.. Not available Disclaimer: http://oe.cd/disclaimer Source: OECD Tourism Statistics (Database). 1 2 http://dx.doi.org/10.1787/888933320041 195
.. Not available; p Provisional data Disclaimer: http://oe.cd/disclaimer 1. Data refer to number of enterprises. 2. Data refer to number of employees. Table 2. Iceland: Enterprises and employment in tourism Number of establishments 1 Number of persons employed 2 2014 2010 2011 2012 2013 2014 Total Tourism industries 1 946 p 14 379 15 410 16 630 17 597 18 886 p Accommodation services for visitors 422 p 2 513 2 914 3 369 3 735 4 174 p Hotels and similar establishments 357 p 2 377 2 763 3 149 3 468 3 878 p Food and beverage serving industry 665 p 7 106 7 450 7 787 8 075 8 507 p Passenger transport 145 p 2 062 2 228 2 322 2 397 2 516 p Air passenger transport 24 p.......... Railways passenger transport Road passenger transport 109 p.......... Water passenger transport 12 p.......... Passenger transport supporting services Transport equipment rental 100 p 326 365 431 500 590 p Travel agencies and other reservation services industry 410 p 945 1 035 1 233 1 395 1 597 p Cultural industry 66 p 456 436 439 433 422 p Sports and recreation industry 138 p 971 982 1 049 1 062 1 080 p Retail trade of country-specific tourism characteristic goods Other country-specific tourism industries Other industries Source: OECD Tourism Statistics (Database). 1 2 http://dx.doi.org/10.1787/888933320056.. Not available Disclaimer: http://oe.cd/disclaimer Table 3. Iceland: Internal tourism consumption Million ISK 2013 Domestic tourism consumption Inbound tourism consumption Internal tourism consumption Total...... Consumption products 87 778 165 134 275 871 Tourism characteristic products 65 753 136 748 224 825 Accommodation services for visitors 17 905 32 270 57 300 Food and beverage serving services 2 551 15 087 21 579 Passenger transport services 17 943 50 868 79 149 Air passenger transport services 14 974 40 415 65 098 Railways passenger transport services...... Road passenger transport services 2 396 9 333 12 238 Water passenger transport services 573 1 120 1 813 Passenger transport supporting services...... Transport equipment rental services 7 721 13 346 21 394 Travel agencies and other reservation services industry 12 666 17 307 30 567 Cultural services 2 062 1 040 3 102 Sports and recreation services 4 905 6 830 11 736 Country-specific tourism characteristic goods...... Country-specific tourism characteristic services...... Other consumption products 22 025 28 385 51 045 Tourism connected products 20 075 26 332 46 407 Non-tourism related consumption products 1 950 2 054 4 639 Non-consumption products...... Source: OECD Tourism Statistics (Database). 1 2 http://dx.doi.org/10.1787/888933320069 196
From: OECD Tourism Trends and Policies 2016 Access the complete publication at: http://dx.doi.org/10.1787/tour-2016-en Please cite this chapter as: OECD (2016), Iceland, in OECD Tourism Trends and Policies 2016, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/tour-2016-21-en This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to rights@oecd.org. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at info@copyright.com or the Centre français d exploitation du droit de copie (CFC) at contact@cfcopies.com.