Read the full article here: http://www.bbc.com/future/story/20170222-the-country-that-tourism-has-taken-by-surprise
What happens to an economy when a country has a sudden and unexpected influx of tourists? Iceland offers intriguing lessons about the impact on cities, the environment and even food supply.
A girl scoops up a huge dollop of sticky white mud and ladles it into the hands of her friend, who smiles and gasps as it spills back into the water. Dozens of people are here, neck deep in a heated pool of soothing seawater. The late November air temperature is around 0 degrees celcius but the lagoon is like a hot bath. An electronic display at the exit to the changing rooms reads 38 degrees celcius. People apply mud masks and video themselves on smartphones encased in little plastic pouches.
Tourist numbers are increasing
Over the last 20 years, the number of international tourists has risen steadily. In 1995, around 500 million people travelled abroad – last year, around 1.2 billion people did. It is also an increasingly lucrative industry. In 2015, global revenue from tourism was $1.26 trillion – double what it was in 2005. It contributes more than $7 trillion to the global economy and supports one in 11 jobs around the world.
The Blue Lagoon is well known to Iceland’s visitors. The artificial pool, warmed by a nearby geothermal power plant, is particularly arresting at night. Huge clouds of steam billow into the starry black sky above the crowds of British, French, American, Russian and Chinese holidaymakers who have all come here to soak.
Iceland’s hot pools have long been popular. But the number of people visiting the country has increased dramatically in the last few years. Iceland has a population of just over 330,000. Last year, around 1.7 million tourists came to visit. And the numbers are expected to continue rising. Iceland is experiencing a tourism boom that has taken it by surprise – and the influx is changing the once isolated country in interesting ways.
After the 2008 financial crisis, the value of the Icelandic krona fell heavily. As part of its economic recovery, Iceland made deliberate efforts to attract foreign visitors. But even those responsible for marketing Iceland abroad have been struck by the numbers. “I don’t think anyone could have expected this,” says Inga Hlin Palsdottir at Promote Iceland, a PR organisation for the country.
Iceland is experiencing a tourism boom that has taken it by surprise
What’s going on? In many ways, Iceland provides a snapshot of several shifts going on in the world: a move everywhere towards service industries like tourism, which now supports one in 11 jobs on the planet; fluctuations in national economies that have knock-on effects at home and abroad; and the impact of cheaper and more available air travel.
The uptick in visitors may also partly be down to people’s growing awareness of the country. Iceland has been in the news quite frequently in recent years. There was the financial crisis that broke its banks and sent the country into political turmoil. There were the eruptions of its Eyjafjallajökull volcano in 2010, which grounded flights across Europe. And last year Iceland’s football team won fans around the world when it reached the quarter-finals in its first ever appearance at the European Championships.
But one of the biggest factors has surely been the growing availability of low cost airline tickets from Europe and the United States. Passenger numbers at Keflavik International airport have grown steadily over the last 10 years. In 2016 alone the number of people passing through the airport leapt by 40%, from nearly five million to nearly seven million.
In 2016 the number of people passing through Keflavik airport jumped by 40%
In particular, Icelandair’s offer of a free stop-off in the country for passengers travelling across the Atlantic has had a big effect, says David Goodger at analysts Oxford Economics. “People are breaking their trip to spend a few nights in Iceland itself,” he says. “They’ve done a very good job at selling into that market.” Other stop-off destinations for flights between Europe and the Far East have pulled the same trick. “It’s what the likes of Dubai and Singapore did very successfully a few years ago.”
The effect of tourist spending is clear, especially in Reykjavik. “Look at this area here,” says Palsdottir, gesturing out of the window of a trendy hotel in Reykjavik’s marina. “During the financial crisis, this was a dead area.”