The tourism industry bounced back swiftly as the pandemic impact faded in 2022. As yet, the worsening economic outlook abroad seems not to have dampened appetite for travel to Iceland to any discernible degree. We forecast that 2.1 million tourists will visit Iceland in 2023, followed by record numbers in 2024 and 2025
Tourism rises to new heights in the medium term
The tourism industry bounced back swiftly as the pandemic impact faded in 2022. As yet, the worsening economic outlook abroad seems not to have dampened appetite for travel to Iceland to any discernible degree. We forecast that 2.1 million tourists will visit Iceland in 2023, followed by record numbers in 2024 and 2025
Departure figures from Keflavík Airport show that nearly 1.7 million tourists visited Iceland in 2022. This total does not include those who arrived via the Akureyri airport and those who came with cruise ships and the Smyril Line ferry. The combined total for the year was the largest since 2019. Although travellers from Asia are far fewer now than before the pandemic, visitors from the US and Europe have made up the shortfall.
The outlook for the coming term is quite good despite significant uncertainty about the economic situation in the UK and mainland Europe. Fortunately, energy prices in Europe have abated recently and the general short term economic outlook has improved somewhat, thanks to an unusually mild winter so far.
Bookings, growth in the number of scheduled Iceland-bound flights, and an uptick in cruise ship arrivals all suggest that growth will remain buoyant this year. Results from Google Trends on relevant internet searches paints a similar picture with an apparent rise in Iceland interest in recent weeks. That holds not least true for Great Britain, an important source of winter tourism in Iceland as tourists from Britain have at times been the single largest nationality in the dead of winter.
In our recently published macroeconomic forecast, we project that over 2.1 million tourists will arrive via Keflavík Airport this year, about the same number as in 2017, if our forecast materialises. We expect tourist numbers to rise to over 2.3 million in 2024 and 2.4-2.5 million in 2025. If this forecast is borne out, the next two years will set new records for the tourism sector. It is worth noting that this forecast is based solely on departures via Keflavík Airport, but a large number of visitors will travel through the airport in Akureyri or by cruise ship or Smyril Line ferry.
The slower rate of growth in tourist arrivals further ahead is due, among other things, to a shortage of accommodation and other related infrastructure and to the possibility that a rising real exchange rate could cut into demand for Iceland as a travel destination. Even so, tourism is clearly back as the number one export sector in Iceland.
