Hospitality in Iceland – Lucrative opportunities for investors

How Tourism is Fueling Iceland’s Economic Growth

Tourism in Iceland is driven mainly by American tourists and accounts for the largest generator of hard currency and export growth in Iceland. Iceland experienced double digit growth numbers for the last few years, however tourism growth has reached a sustainable level recently, an advantage for investors. With the market cooling down, investors have an opportunity to avoid the risk of an overheated market. With tourism infrastructure ready and more experience in hospitality in Iceland, Iceland is more then ready for the next wave of tourists.

Moderate growth is much more manageable as it reduces the risk of infrastructure lags, overcrowding and intolerance among natives. The exchange rate of the krona is expected to help moderate tourism. As the krona appreciates, tourism will regulate as Iceland becomes a more expensive destination. If this appreciation deters tourists from visiting the island nation, the demand response will limit he potential for appreciation keeping tourism at a sustainable level.

hospitality iceland

hospitality iceland

Iceland’s hotel industry contains a mix of independent and chain hotels, there are over 150 hotels operating in Iceland with a large portion located in the capital. Despite significant capital investment in the past few years, new construction has not managed to keep up with the rapid increase in tourism. The hotel sector has seen the most investment activity in the hospitality industry as American investors look to acquire stakes in a number of hotel chains.

There is an abundance of opportunities in this island nation when it comes to the hospitality industry. Strong political and business support, public-private partnerships and an emphasis on sustainable development make Icelandic tourism a key sector for investment. Located in between two of the world’s strongest markets, North America and Europe, Iceland is highly accessible from a number of different airports. As tourism continues to expand in Iceland, it has gradually become a year-round destination with visitors traveling from across the globe.

The hotel sector remains strong in Iceland despite budget accommodation like Airbnb. Despite a drop in visitors in 2019, Iceland’s hotels still managed to achieve a record number of overnight stays. Iceland’s capital, Reykjavik had strong daily rates when compared to other Nordic capitals as well as high revenue per available room and a high occupancy rate.

hospitality iceland

hospitality iceland

With Iceland’s focus on quality over quantity and commitment to sustainable development and targeted marketing, Iceland has continued to attract visitors with above average incomes. The United States and China have been expanding markets while Europe and Britain have always been a core market. Its focus on sustainable development in accord with nature and the native people offers a unique experience to tourists. Swapp Agency can offer insights on the inner machinations of Iceland’s travel and hospitality sectors and secure reputable connections in the industry. Iceland’s hospitality industry is expanding prudently and the potential for investment extensive.

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