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July tourist numbers exceed expectations

More tourists visited Iceland this July than in the same month of 2019. As in the recent past, Americans outnumber other nationalities by a healthy margin, in a strong indication that interest in travelling to Iceland is anything but diminishing in the US. For 2022 as a whole, the outlook is for tourist visits to outstrip our May forecast.

Foreign nationals’ departures via Keflavík Airport topped 234,000 in July, according to recently published figures from the Icelandic Tourist Board. It is worth noting, though, that this figure does not include the many cruise ship passengers who arrived in the country during the month. By this count, slightly more tourists came to Iceland this July than in the same month of 2019, and only on three prior occasions has the July total exceeded last month’s.

In keeping with the recent pattern, Americans were by far the largest group in terms of nationality. A total of 79,000 US visitors came to Iceland in July, nearly 35% of the total for the month, followed by travellers from Germany (7.3%), Denmark (5.6%), the UK (5.1%), Poland (5.0%), and Italy (3.6%).

Interest in visiting Iceland appears to be buoyant in the US at present. According to a newly published article in Markaðurinn, an Icelandic business news webpage, a recent YouGov poll indicated that Iceland ranks in the top five countries Americans want most to visit. The article included an interview with Sigríður Dögg Guðmundsdóttir, head of Visit Iceland, which is part of the Business Iceland agency, in which she notes that Iceland jumped between years in the YouGov poll and that other data likewise indicate strong interest in Iceland.

In this context, it is interesting to use Google Trends to examine online search data relating to travel to Iceland. We looked at the frequency of three types of search strings that users are likely to enter into Google when considering a trip to Iceland.

We saw that by this measure, interest in travel to Iceland has been on the rise ever since spring 2021 and, on a global level, appears about the same as it was three years ago, if not stronger. In the US, developments are even more positive, with interest in Iceland travel approaching the highest measured by Google in the past five years.

Travellers from the US have demonstrated an above average appetite for spending while in Iceland, in addition to staying longer than visitors from Europe generally do. Not only is it positive for the tourism industry that Americans should be as keen to travel to Iceland as they are at the moment, it is a good sign for the coming winter and even for next summer. Certainly it helps matters that the US dollar should be as strong against the ISK as it has been this year, making it relatively economical for Americans to travel to Iceland – at least in comparison with most Europeans.

2022 tourist total set to overtake our forecast

In 2022 to date, more than 870,000 tourists have travelled to Iceland via Keflavík Airport, dwarfing the full-year totals for 2021 (just under 690,000), and 2020 (just under 480,000). Comparing the first seven months of 2022 with the same period in the years before the pandemic, however, shows that the seven-month totals for 2018 (1.3 million) and 2019 (just over 1.1 million) are still well out of reach, largely because of how few visitors came to the country early in 2022.

In our macroeconomic forecast from May, we projected that Iceland would welcome 1.5-1.6 million tourists this year. As the chart shows, developments since then have exceeded our expectations – particularly in July.

As is noted above, there are signs of keen interest in Iceland as a travel destination at present. Hardly will the new volcanic eruption dampen that interest, either, unless it wreaks havoc on infrastructure on the Reykjanes peninsula or interrupts air travel in the months to come. In any event, we think it likely that at least 1.6 million tourists will visit Iceland this year – and perhaps even more, if the current trend persists. Increased tourist numbers will play a major role in flipping the current account from deficit to surplus, as we expect to happen in H2, and if anything, the data described above strengthen that expectation.


Jón Bjarki Bentsson

Chief economist