OECD Tourism Trends and Policies 2024

Iceland

Tourism in the economy and outlook 

Following two challenging years in 2020 and 2021, tourism reclaimed its position as Iceland's top foreign exchange-generating export industry in 2022. Tourism and passenger transportation together generated ISK 455 billion in international receipts in 2022, equivalent to 26% of total export revenue and 60% of total service exports (49% in 2019). The sector directly contributed ISK 293.0 billion in 2022 or 7.8% to the country’s GDP (compared to 8.4% in 2019) and accounted for almost 26 000 jobs or 12% of the workforce (28 800 in 2019).

Iceland welcomed 2.2 million international tourist arrivals in 2023, 30.4% above 2022 levels and 11.1% above 2019 levels. In 2023, the top three source markets were the United States (29%), the United Kingdom (13%), and Germany (6%).

Iceland recorded 1.3 million domestic tourists in 2022, 79% above 2019 levels. Around 84% of the Icelandic population travelled domestically in 2023, a similar number as in recent years.

Forecasts for 2024 anticipate 2.2 million international tourist arrivals. Growth is expected to continue in 2025, with 2.3 million international tourists, followed by 2.35 million in 2026. 

Tourism governance 

The Ministry of Culture and Business Affairs is responsible for developing tourism policy and co-ordinating the work of governmental bodies in Iceland. The Department of Business Affairs and Tourism is the lead department and oversees the operation and performance of the Icelandic Tourist Board.

The Icelandic Tourist Board is responsible for the implementation of government tourism policy, planning and support for regional development, licencing and monitoring of licenced activities, data collection, processing and presentation, safety, quality and consumer protection in relation to tourism, and administration of the Tourist Site Protection Fund and Route Development Fund.   

The Tourism Council serves as an advisory body to the Minister and is composed of representatives from the ministries of finance, environment, and infrastructure, as well the Icelandic Association of Local Authorities and the Icelandic Travel Industry Association.   

Visit Iceland is the official destination marketing organisation. It is part of Business Iceland, a public-private partnership established to promote Icelandic exports, foreign direct investments, and Iceland as a tourism destination.

Local municipalities are responsible for planning and management of many visitor attractions. With the support of the Icelandic Regional Development Institute, associations of municipalities operate development agencies which deliver tourism projects. Destination management organisations in each region are public-private entities responsible for developing and implementing regional destination management plans and co-ordinating tourism priorities. They do this in collaboration with stakeholders, including Business Iceland and the Icelandic Tourist Board, which provides financial support.   

The general overall budget allocated to tourism in 2022 was ISK 2.28 billion. In 2023, this was increased to ISK 2.38 billion, allocated as follows: ISK 724 million to the Icelandic Tourist Board; ISK 588 million to the Tourist Site Protection Fund; and ISK 1.065 million to tourism services, of which ISK 300 million was dedicated to marketing and promotion.

Iceland: Organisational chart of tourism bodies

Source: OECD, adapted from the Ministry of Culture and Business Affairs, 2024.

Tourism policies and programmes

Iceland's policy framework, Leading in Sustainable Development, Icelandic Tourism 2030, guides tourism policy development in Iceland, with the implementation of an action-oriented strategy underway. Originally developed in 2019, the framework was updated in early 2023 and aims to position the country as a leading sustainable tourism destination, fostering a profitable and competitive tourism industry in harmony with its country and its people. The framework is organised around four main guiding principles for the sustainable development of tourism in Iceland:

• Profitability above tourist numbers.

• Benefits for locals in all regions.

• Unique experiences, quality, and professionalism.

• A balance between utilisation and nature conservation.

Under the leadership of the Ministry of Culture and Business Affairs, seven expert working groups were assembled to implement the framework, formulating recommendations for specific actions for an updated Tourism Action Plan. The Action Plan was approved by Parliament in June 2024, following extensive public and private sector consultation. Until the implementation of the new Action Plan is fully underway, Iceland’s Government remains committed to improving tourism through the following programmes:

• Tourism Impact Assessment: A management tool relying on defined sustainability indicators to regularly evaluate the impact of tourism across the environment, infrastructure, society, and economy. To maximise its utility, the Tourism Impact Assessment requires ongoing development and is currently undergoing revision, as part of the efforts related to the Action Plan.  

• Tourist Site Protection Fund and the Icelandic Route Development Fund: Funds are allocated to support destination development, aligned with the goal of distributing tourists more evenly throughout the country. This approach aims to ease the strain on popular tourism destinations, while benefiting both the industry and residents. A working group has been established to undertake a thorough review of the Tourist Site Protection Fund's objectives and functions.  

• Tourism Skill Centre: Funded by the Ministry of Culture and Business Affairs, the Centre aims to promote competence and quality in the tourism industry in Iceland. Two ongoing initiatives until 2025 include the Training for the Future and Co-operation with regional destination agencies. The aim is to provide consultation and assistance to business managers in establishing targeted training programmes and monitor their effectiveness. The methodology, presentation materials, and digital tools, developed by the Centre are to be implemented in individual businesses through training provider partners. Funding for this work is sponsored by vocational education funds, as part of collective agreements. Performance evaluations will be undertaken in 2025.

• Co-operation with regional destination agencies: The goal is to foster co-operation to enhance the competence and professionalism of managers and staff, contributing to increased quality, a positive image, and profitability in the sector. This collaboration aims to keep the Tourism Skills Centre connected to grassroots discussions. Partnerships, contracts, and collaborative partnerships have been established. In 2024, co-operation will be strengthened through a needs analysis and digital tools. In 2025, performance evaluations will be undertaken.

• Car rental operators legislative update: In June 2023, a new legislation took effect, abolishing the requirements for car rental operators to have a fixed establishment. The impact of the legislation, along with other legislative changes in the tourism industry in 2022 following the OECD's competition assessment of the country’s tourism sector (see box below), has contributed to a more flexible environment for tourism related business and aims to create new employment opportunities, higher productivity, and stronger economic growth in the coming years.

Review of tourism and infrastructure legislation for flexible business environments in Iceland

The Icelandic tourism and construction industries hold significant macroeconomic importance and play a pivotal role in providing employment to a substantial portion of the population. In 2019, the Ministry of Culture and Business Affairs (previously the Ministry of Industries and Innovation) requested the OECD to conduct a competitive assessment of the regulatory framework, governing both the Icelandic construction industry and the tourism sector. The assessment involved screening the legislation in both sectors using the OECD’s Competition Assessment Toolkit. Under the assessment, 632 legal texts were reviewed resulting in 121 recommendations for change directly related to the tourism sector.  In 2021 the Ministry of Culture and Business Affairs responded to all but three of the 121 OECD recommendations. The impact of these legislative and regulation changes, such as abolishing prescriptive accommodation standards and requirements for car rentals to have fixed establishment, has contributed to a more flexible environment for tourism related business.  The OECD estimated that the implementation of the OECD recommendations for both sectors combined could generate more than EUR 200 million in benefits per year, around 1% of Iceland’s GDP.  

Statistical Profile

Iceland: Domestic, inbound and outbound tourism

	2018	2019	2020	2021	2022
TOURISM FLOWS, THOUSAND
Domestic tourism
Total domestic trips	..	..	..	..	..
Overnight visitors (tourists)	701	699	890	1 191	1 253
Same-day visitors (excursionists)	..	..	..	..	..
Nights in all types of accommodation	1 105	1 090	1 468	1 939	1 968
Hotels and similar establishments	661	581	745	1 097	1 206
Other collective establishments	402	450	586	726	641
Private accommodation	42	59	137	116	122
Inbound tourism1
Total international arrivals	..	2 598	489	717	1 886
Overnight visitors (tourists)	2 316	2 202	486	698	1 715
Same-day visitors (excursionists)	..	189	2	19	171
Top markets
United States	695	464	53	227	458
United Kingdom	298	262	102	54	230
Nordic countries	165	149	39	41	133
Germany	139	132	44	64	132
France	97	98	28	37	89
Nights in all types of accommodation	7 444	7 317	1 828	3 072	6 579
Hotels and similar establishments	5 200	5 211	1 275	2 142	4 645
Other collective establishments	1 519	1 389	367	702	1 425
Private accommodation	724	716	186	228	509
Outbound tourism
Total international departures	..	..	..	..	..
Overnight visitors (tourists)	668	631	133	219	587
Same-day visitors (excursionists)	..	..	..	..	..
Top destinations
..	..	..	..	..	..
..	..	..	..	..	..
..	..	..	..	..	..
..	..	..	..	..	..
..	..	..	..	..	..
TOURISM RECEIPTS AND EXPENDITURE, MILLION ISK
Inbound tourism
Total international receipts	520 129	469 951	112 928	203 183	454 514
International travel receipts	338 026	330 364	86 740	165 375	336 170
International passenger transport receipts	182 103	139 586	26 188	37 808	118 344
Outbound tourism
Total international expenditure	207 322	203 449	73 724	101 607	217 400
International travel expenditure	183 305	185 122	70 802	96 336	204 897
International passenger transport expenditure	24 018	18 327	2 922	5 270	12 503

.. Not available

1. Arrivals from demand side surveys; Nights from supply side surveys.

Source: OECD Tourism Statistics (Database).

Statlink

Iceland: Enterprises and employment in tourism

	Number of establishments1	Number of persons employed2
	2022	2018	2019	2020	2021	2022
Total	..	..	..	..	..
Tourism industries	2 313	30 474	28 813	20 426	20 258	25 976
Accommodation services for visitors	674	6 768	6 663	4 051	4 076	6 206
Hotels and similar establishments	469	6 228	6 147	3 722	3 713	5 716
Food and beverage serving industry	624	9 815	9 269	7 286	8 163	10 064
Passenger transport	200	7 438	6 484	4 637	3 780	3 674
Air passenger transport	16	..	..	..	..	..
Railways passenger transport	0	..	..	..	..	..
Road passenger transport	163	..	..	..	..	..
Water passenger transport	21	..	..	..	..	..
Passenger transport supporting services	..	1 931	1 609	1 231	1 167	1 491
Transport equipment rental	62	1 210	1 131	793	774	1 098
Travel agencies and other reservation services industry	560	2 948	2 830	1 679	1 608	2 545
Cultural industry	55	559	550	532	522	582
Sports and recreation industry	112	791	839	720	737	823
Retail trade of country-specific tourism characteristic goods	..	..	..	..	..	..
Other country-specific tourism industries	26	946	1 047	730	598	985
Other industries	..	..	..	..	..	..

.. Not available

1. Data refer to number of employers.

2. Data refer to number of employees.

Source: OECD Tourism Statistics (Database).

Statlink

Iceland: Internal tourism consumption

Million ISK

	2022 e
	Domestic tourism expenditure	Inbound tourism expenditure	Internal tourism consumption
Total	244 942	390 438	646 641
Consumption products	..	..	..
Tourism characteristic products	204 192	324 795	540 196
Accommodation services for visitors	52 046	91 324	143 684
Food and beverage serving services	24 606	47 756	72 553
Passenger transport services	..	..	..
Air passenger transport services	27 216	73 372	103 154
Railways passenger transport services	..	..	..
Road passenger transport services	1 468	10 049	12 069
Water passenger transport services	577	2 532	3 239
Passenger transport supporting services	..	..	..
Transport equipment rental services	10 312	41 224	51 698
Travel agencies and other reservation services industry	62 368	42 112	104 861
Cultural services	7 968	3 701	11 669
Sports and recreation services	17 632	12 727	30 359
Country-specific tourism characteristic goods	..	..	..
Country-specific tourism characteristic services	..	..	6 911
Other consumption products	40 750	65 643	106 445
Tourism connected products	..	..	..
Non-tourism related consumption products	40 750	65 643	106 445
Non-consumption products	..	..	..

.. Not available; e Estimated value

Source: OECD Tourism Statistics (Database).

Statlink