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Third-biggest tourist November on record

Just over 138,000 foreign tourists visited Iceland in November, making it the third-busiest November ever. In another month-on-month shift, the number of Icelanders travelling abroad fell markedly relative to October. Foreign payment cards account for a steeply rising share of total card turnover within Iceland, or about a fourth of card turnover for the period from June through November. Tourist arrivals in Iceland will probably top 1.7 million in 2022 as a whole, although uncertainty relating to economic setbacks abroad could have an adverse impact in coming quarters.

Iceland has enjoyed a bountiful autumn tourist season, and November was no exception. Over 138,000 foreign nationals visited the country in November, according to newly published Icelandic Tourist Board data on passenger departures via Keflavík Airport. Only twice before – in 2017 and 2018 – have November passenger numbers overtaken this past month.

Visitors from the English-speaking world predominated in November, as they have in the recent past. The US accounted for the largest share (31%), followed by Great Britain (25%). As the chart shows, and in keeping with the pattern of recent years, visitors from the UK have been keen to visit Iceland as the days grow shorter. Following the US and UK were travellers from Germany (5%), France (3%), and Poland (3%). The Nordic countries combined accounted for 4% of the visitor total during the month. In a noteworthy shift, tourists from China have begun to visit Iceland in greater numbers. About 2,500 Chinese nationals (2% of the total) visited Iceland in November, more than in any single month since December 2021. It should be noted, however, that these figures include people from Hong Kong as well as mainland China.

Foreign payment cards account for a rapidly rising share of turnover

Foreign tourists are definitely making their mark on payment card turnover in Iceland now that they have begun to visit the country in numbers similar to the pre-pandemic level. According to data released by the Icelandic Centre for Retail Studies, turnover using foreign cards totalled nearly ISK 17bn in November, or 15% of total card use in Iceland. Over the past six months – from the beginning of June through the end of November – foreign cards have generated revenues in Iceland in the amount of ISK 167bn, an all-time record, as compared with the pre-pandemic peak of ISK 155bn over the same six-month period in 2018.

Obviously, the total in ISK terms falls far short of telling the full tale, as both prices and exchange rate have changed substantially in the recent term. For instance, foreigners’ card use in Iceland accounted for just over 24% of total card turnover in June-November 2022, down from nearly 29% for the same six-month period in 2018.

Canary Island selfies passé?

After much public discourse this autumn about the number of toes featured in sunbathers’ selfies sent home from Tenerife, it must come as a relief to the Central Bank and other policy-makers that Icelanders’ overseas trips declined in number by half from their all-time peak in October. Just over 34,000 Icelanders departed Iceland via Keflavík Airport in November – the lowest monthly total since COVID-19 began to abate this past May. In order to find a November with fewer total departures, one needs to go back to 2014. So it appears that Icelanders beat the Christmas rush, as it were, and scratched a fair share of their itch to travel earlier this autumn.

Most likely, Icelanders’ spending while abroad declined between October and November at broadly the same rate as their departures for points abroad. Pulling in the other direction, however, is online shopping with foreign merchants, which was presumably robust in November, not to mention the many seasonal sales during the month, which probably catalysed an unprecedented Christmas shopping spree. We will see a clearer picture of this in the next few days, when the Central Bank (CBI) publishes card turnover data for November.

Tourist numbers set to top 1.7 million this year

In our macroeconomic forecast, published in late September, we projected that 1.7 million tourists would visit Iceland this year. As the chart shows, the past few months have been well in line with that forecast – outperforming it, if anything – with almost 1.59 million foreign arrivals in the first eleven months of the year. Based on the seasonal pattern during the last three years before the pandemic struck, it is reasonable to project that around 130,000 tourists will visit the country in December, bringing the total for the year to 1.715 million.

Back in September, we also projected year-2023 tourist visits at around 2 million. Based on developments to date in flight offerings, bookings, and other indicators of the coming quarters in the tourism sector, this forecast is quite likely to materialise. In fact, some indicators suggest that our forecast will prove to be on the low side. That said, we have yet to put aside our concerns about a potential economic setback in trading partner countries.

Prospects are particularly uncertain for the UK, an important source of winter tourists, as it is not a given that they will visit Iceland is such large numbers this winter. That being the case, we think it safest for now to be prepared for headwinds in coming quarters, although developments in the post-pandemic period to date have proven that Iceland has come into its own as a destination of choice for visitors from all over the world.


Jón Bjarki Bentsson

Chief economist