Alda Sigmundsdóttir is the author of several books about Iceland.
A few days ago, while sitting at the dining table at my home in Reykjavík, I happened to glance up to see a woman in a windbreaker strolling past my house, gazing intently down at a map, disoriented in the way only a foreign visitor can be.
I caught my breath. “A tourist!” I cried.
“Where?” exclaimed my husband, running in from the kitchen.
Together we stared at this strange apparition who, having found her direction, promptly marched out of sight.
Two years ago, this exchange would not have happened. At that time, all of Iceland was swarming with tourists, and the sight of a lost traveler would not have given us a moment’s pause.
Then, in March, 2020, all that changed. Like popular tourist hotspots the world over, Iceland saw visitor numbers take a nosedive, virtually overnight. The country’s most important industry was suddenly deprived of oxygen, and the future was bleak.
Over the previous decade, this island nation of 360,000 people had become increasingly dependent on tourism – ever since it came to our rescue after the economic meltdown of 2008.
At that time Iceland experienced what was the worst banking collapse relative to the size of the economy in recorded history – not just the history of Iceland, but of the world. Its three commercial banks, which had grown to 11 times the size of the country’s GDP, all collapsed in quick succession. Iceland’s currency went into free-fall, losing approximately half its value within the space of about a week. Job losses, bankruptcies and home foreclosures followed.
Yet the devaluation of the currency had an unexpected side-effect. Iceland had always been an expensive country to visit, and now suddenly it had become, if not cheap, then at least relatively affordable. Folks who in the past had balked at the cost of visiting now saw an opportunity. And so the economy began to improve.
Then, just as tourism was beginning to work its magic, disaster struck – a volcano nestled deep inside the Eyjafjallajökull glacier erupted, disgorging a massive cloud of ash into the atmosphere. Air traffic across Europe was grounded for days, and general havoc prevailed. If the economic meltdown had awakened the world to Iceland’s existence, the photogenic volcano with the unpronounceable name put it firmly on the map.
Icelandic authorities panicked: surely the eruption would snuff out the fledgling tourism industry that had held such promise for getting the economy back on its feet. No one would want to visit now, they reasoned – they would think it far too dangerous!
The only thing to do was to go on the offensive and launch a massive marketing campaign. They hired a savvy British PR firm and released a video featuring people bopping around in stunning scenery and getting naked out in nature. And boy, did it work. The “Inspired by Iceland” campaign, augmented by earlier media attention and the Instagram feeds of hundreds of thousands of happy customers, sent tourism soaring. In 2010, the year Eyjafjallajökull erupted, some 490,000 tourists came to Iceland. By 2018, that figure had reached 2.3 million.
The speed at which this happened was a tad overwhelming for us locals. For one thing, our infrastructure lagged way behind. Iceland’s road system was not designed for the sort of traffic that this level of tourism required. And with an additional two million people to serve each year, our institutions – from law enforcement, to health care, to environmental protection – were suddenly underfunded and struggling.
The housing market turned into a nightmare as investors snapped up flats to make a profit on short-term Airbnb rentals, causing property prices to soar and practically eliminating the availability of long-term rental housing. Keeping all those tourists safe also became a major concern – Iceland’s landscapes are dangerous, our climate volatile. We Icelanders are brought up with the centuries-old knowledge of how to navigate these conditions, but that is not the case with our foreign visitors. In short, neither our lawmakers nor the general population coped well with this massive boom in tourism.
The upside, of course, was that it brought much-needed cash. Only four short years after Iceland’s economy tanked, while countries around us were still mired in recession, Iceland began showing economic growth, all on the strength of the flourishing tourism industry. Between 2013 and 2017 the number of new businesses in the industry grew by 42 per cent, while the number of new businesses not in tourism increased by only 11 per cent. Building cranes were suddenly everywhere again, and every new construction seemed to be a hotel. The Icelanders, only a few years after the madness that had heralded the financial meltdown, were once again delirious with Klondike fever.
No one wanted to ask what might happen if the tourists suddenly stopped coming. A few intrepid souls broached the question, but the closest anyone came to answering was with quips about the excellent nursing homes the hotels would make for an aging population in the unlikely event that anything went wrong. And then, it happened. In March, 2020, Iceland’s tourism industry ground to a screeching halt. Suddenly vacant or half-built hotels were a reality, as were empty “puffin shops” – what the Icelanders call their tourist shops owing to the prevalence of stuffed puffins on their shelves – and idle tour operators. Once again, Icelanders were faced with economic disaster.
Yet happily the nature of this crisis was much different from the last. This time the Icelandic treasury, its coffers fattened by the tourism influx of the previous decade, was in reasonably good standing. The Icelandic government swiftly announced measures designed to send the industry into hibernation for as long as it took for the pandemic to run its course, hoping to prevent mass bankruptcies. Unemployment rates shot up, of course, reaching their highest level in a decade, or nearly 12 per cent. It was clear that we were in the throes of a major transition.
If there is one thing that centuries of living on an isolated island with a fierce and volatile nature has taught the Icelanders, it is how to deal with a crisis. With Icelandic tourism businesses suddenly deprived of foreign customers, they were forced to shift gears and to cater to the local population. To say that this had not been a priority over the past decade would be an understatement. Many new companies had not even bothered to set up websites in Icelandic. Some restaurant menus were only available in English. Some entrepreneurs had not even taken the trouble to give their companies Icelandic names. Indeed, it caused a major kerfuffle when the domestic arm of Iceland’s national airline, Icelandair, changed its public name from the Icelandic Flugfélag Íslands (Iceland Airways), to the English name Air Iceland Connect. Everything seemed geared toward foreigners, and many people feared for the future of the Icelandic language, which is spoken by fewer than a million people worldwide.
So in the summer of 2020, in order to stay alive, hotels and touring companies scrambled to attract the locals, offering deals so enticing that they sent the entire country into perpetual FOMO. It was like being a kid in a candy shop with many months’ worth of allowance to spend – so many delightful offerings from which to choose. With the borders all but closed and domestic COVID cases virtually nonexistent, Icelanders took to the roads like they had not done in years. The entire country was on the move, and an atmosphere of cheerful togetherness prevailed. We were like one big extended family, reunited after a long period, rejoicing in the feeling of being with our tribe.
What joy it brought to once again feel like we belonged to our own land, and that it belonged to us. We realized to what degree we had begun to feel ousted – not only by the number of people who perpetually crowded our natural sites, but also by the prices charged by hotels and tour operators. Some of us had our secret or little-known locations to which we could always retreat, be alone, and recharge our batteries. In almost all cases those had been “outed” in some popular guidebook or magazine article, and thus were secret no more. Lack of availability in accommodation and leisure activities had moreover become the norm during the summer months, causing Icelanders to flee to holiday destinations abroad.
In short, the Year of COVID was a return to a time that we thought was gone forever.
In an ideal world, the time-out of 2020 would have forced us Icelanders to reassess and evaluate just what kind of future we wanted for ourselves. And in some ways I believe this happened, at least on a grassroots level. Many tourism companies closed or downsized, and I hear from former associates that they want to rebuild on a different footing – or simply to do something else. There is widespread agreement that the past decade was a kind of madness, a hamster wheel of trying to keep up with the relentless demands of an industry that just kept growing.
Yet our legislators lag behind, and that is perhaps the crux of the problem. A comprehensive policy on tourism in Iceland needs to be formulated and implemented. As a country we must decide what kind of hosts we want to be, and how we can protect our culture, language and natural environment, while still welcoming millions of guests every year. Yet if the news of the past few days is any indication, the most our policy makers have done in this regard is to revive an old chestnut about wanting to attract fewer tourists, who pay more. At the same time they have just issued an air operator’s certificate to a new low-cost airline, Play Air, that will do little to further this avowed mission. Evidently the Icelandic “pantser economy” – an economy based on flying by the seat of one’s pants when it comes to formulating policy – always wins.
And now, the tourists are returning at a rate of up to 5,000 a day. COVID border controls were substantially relaxed at the beginning of May, and health authorities tread the fine line between reviving the travel industry and keeping Icelanders safe. Currently, foreign visitors need to be able to show proof of a previous COVID infection or full vaccination, or stay in quarantine for five days. The local population is divided on whether opening the borders to such a degree is a good idea; some are ecstatic at the prospect of things returning to normal, others less so. As someone who writes and publishes books bought primarily by tourists, I welcome the return of our foreign visitors, even as I am exceedingly conscious of all the inherent difficulties and challenges of mass tourism. It’s complicated.
Longer-term policies notwithstanding, most folks agree that, in the short-term, tourism is the key to getting the Icelandic economy swiftly back on its feet. The companies that were forced into dormancy are already coming back to life, and unemployment is on the downswing. Ironically, one of the major draws right now – the reason that far more tourists are arriving than authorities had initially predicted – is a volcanic eruption that started in March in an area known as Geldingadalir, about 30 kilometres from Iceland’s capital, Reykjavík. Just as the Eyjafjallajökull eruption in 2010 hoisted us out of economic depression in the wake of the financial meltdown, the Geldingadalir eruption looks set to do so post-COVID. Yet in contrast to the formidable Eyjafjallajökull, Geldingadalir is what we Icelanders call a túristagos, a delightful little “tourist eruption” easily accessible to onlookers, and a magnificent spectacle to behold. To many Icelanders, this timing is not an accident. Our magnificent land, it seems, while capable of the harshest conditions imaginable, also has the capacity to come to our rescue.
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