Marketing actions due to seismic activity in Grindavik

Lilja Alfreðsdóttir, the Minister of Culture and Business Affairs, has allocated 100 million ISK in funds to Business Iceland to oversee marketing activities to promote Iceland as a destination in response to the seismic activity near Grindavík on the Reykjanes Peninsula. There has been a noticeable decrease in bookings, and the marketing campaign aims to counter this trend and increase bookings for early 2024. 

"The purpose of the funds is to encourage tourism following the seismic activity and the resulting international coverage. The marketing campaign aims to respond to the situation in Grindavík and the downturn in bookings for next summer and to meet next year's plans," says Minister Alfreðsdóttir.

The efforts will focus on providing accurate information about the situation, maintaining demand for Icelandic tourism, strengthening Iceland's image as a destination, and preventing a significant drop in foreign currency earnings from tourism. Since 2011, consumer marketing of Iceland as a destination has played a substantial role in building the interest and demand that Iceland currently enjoys. No funds for consumer destination marketing of Iceland have been distributed since 2023.

Cancellations during Christmas and New Year

The Icelandic Tourist Board has recently investigated the impact of seismic activity in Reykjanes and, consequently, the negative effect on tourism from this coverage in international media. The downturn includes reduced bookings and cancellations of flights, hotels and accommodations, car rentals, and leisure company reservations. Conversations with stakeholders in the tourism industry reveal that since the events in Reykjanes began on November 10, the impact on tourism has been considerable, especially in the short term.

Cancellations during Christmas and New Year have been significant, with only a few new bookings added during that period, given the short time left. This significant booking decrease applies equally to flights, accommodation, and leisure activities.

Therefore, there are specific concerns for the long term, including the summer of 2024. Icelandair and Play airlines have issued profit warnings and nullified their profit forecasts for this year.

This statement aligns with information received by Business Iceland from parties in the Icelandic tourism industry and foreign booking agents concerning a reduction of future bookings. The impact could be severe if this situation continues and affects traditionally weak months in tourism, such as April, but also if this trend significantly impacts the most popular months of the year. 

Significant booking window ahead

The most popular booking window of the year is coming up, from the end of December through mid-January. This period dramatically influences the 2024 summer travel season, as the largest markets for Icelandic tourism arrive in summer. If the current uncertainty and contraction extend into this period, it could have significant consequences for the booking status for summer 2024.

The export value of tourism and foreign currency earnings from tourists was about 455 billion ISK in 2022 (according to the Icelandic Tourist Board and Statistics Iceland), and based on similar revenues per tourist, the export value is estimated to be 650 billion ISK in 2024. However, if natural disasters cause only 1.5 million tourists to visit the country in 2024, the export value would decrease to about 390 billion ISK.

In response to the current situation, the minister proposed in a memorandum to the government that Business Iceland oversees marketing actions to promote Iceland as a destination in consumer marketing for tourism. 

News previously published by the Government of Iceland.