In recent years, Iceland has emerged as a tourism hotspot, showcasing one of the most remarkable air travel recoveries among destinations since the pandemic. The nation’s stunning landscapes, geothermal wonders and sustainable approach to tourism have made it an attractive choice for travellers from around the world. However, in the face of intensifying global competition and the potential impact of natural events like earthquakes and volcanic eruptions, Iceland’s tourism industry must rely on accurate data to gauge the real influence on traveller interest, shifting preferences, and industry dynamics.  

A top-class recovery conditioned by natural events 

In 2022, Iceland topped the charts of most recovered European destinations, receiving only 17% less international visitors than in 2019. Key markets for the destination such as the USA and Germany posted better results than average, with arrivals down by 5% and 3% respectively thanks to Iceland´s proactive open-border policy for vaccinated tourists and the strength of the American dollar. Arrivals from the USA surged above 2019 levels in July and October of that year, growing by 8 and 20% respectively versus the pre-pandemic comparable months, highlighting the strength of the demand from its main source market and a marked seasonality. 

In parallel to Iceland’s notable post-pandemic recovery, the nation has been the stage for a series of volcanic eruptions in the Reykjanes peninsula since spring 2021. These events have piqued global interest in the country’s unique offering but have also raised concerns among potential travellers, echoing memories of the Eyjafjallajökull volcano eruption in 2010, which caused significant travel disruptions globally. Despite the recent eruptions being largely harmless, the spectre of potential disruption has deterred some visitors as shown by ForwardKeys latest analysis.  

Upon reviewing the week-on-week evolution of global flight searches for trips to Iceland, it is evident that many noteworthy changes in searching patterns coincided with the beginning or ending of volcanic activity and natural occurrences associated with it. These include the typical earthquake swarms that precede volcanic eruptions, often extensively covered by international media. These events sometimes deter tourists from searching or booking trips to Iceland while there is ongoing volcanic activity. 

International flight searches experienced a significant decline for trips during the week starting August 3, 2022, coinciding with the onset of the second volcanic eruption in Fagradalsfjall. The week-on-week drop in searches was substantial, decreasing from +39% on the previous week to -5%. This downward trend continued, reaching -17% by the week of August 21, 2022, when the volcanic activity ceased.  

Fast forward to 2023, during the eruption of Litli hrutur, minor week-on-week declines ranging between 2-4% were observed. Interestingly, the week of July 31 saw a notable uptick of +33%, highlighting the interest of some tourists in these natural phenomena.  

The end of 2023 saw the seismic and volcanic activity moving closer to the town of Grindavik and the Blue Lagoon. The earthquake swarm that preceded the first eruption in November, forcing the evacuation of Grindavik, pushed searches down by 3% week-on-week, with a further decline (-18% WoW) on December 18, due to the beginning of the new eruption. 

The most recent data reveals a substantial and alarming drop in searches during the week of the second eruption in the vicinity of Grindavik, on January 14, with international searches for travelling to Iceland plummeting to -62% versus the previous week. 

Measuring the impact of natural events on visitor arrivals 

Despite the positive results in international arrivals last year, only 1% below 2019, Iceland’s journey to full recovery faced a momentary setback relatable to some of these volcanic occurrences, including the eruption of Litli-Hrútur in July and subsequent earthquake swarm in November preceding the eruption near Grindavik and the Blue Lagoon thermal resort in December.  

International year-to-date arrivals in Iceland prior to Litli-Hrútur eruption in July were in line to those during 2019. International arrivals in August, however, dropped to be 9% below 2019 levels (tickets confirmed for international arrivals in August before the eruption were also in line with 2019 levels). September to November witnessed a recovery, with international arrivals surpassing 2019 levels by 6%. However, December saw yet again a dip in international arrivals, down 10% on 2019 levels, associated with the widely covered earthquake swarm and subsequent evacuation of Grindavik and temporary closure of the Blue Lagoon, which preceded a harmless volcanic eruption in the area. August and December were the only months in 2023 that experienced a decline in arrivals compared to 2019 levels but, considering their importance in Iceland’s seasonal tourism – in 2019, international arrivals in these months represented 14% and 6% of Iceland’s total international arrivals respectively – this decline constituted a drag to the overall performance of the country in 2023. 

Harnessing real-time travel has become crucial to make informed decisions 

In response to these events, the Icelandic government has actively implemented measures to mitigate the decline in interest and reassure travelers. Key milestones include the establishment of improved monitoring systems and communication strategies to promptly address safety concerns. Additionally, the government has invested in infrastructure development, enhancing accessibility to popular tourist destinations while ensuring preparedness for potential natural events. However, travel interest continues to be highly influenced by the media coverage of these events. 

These events continue to impact traveller confidence into 2024, highlighting the interplay between the nation’s intrinsic natural phenomena and its status as a sought-after travel destination, and underscoring the need for the tourism industry to closely monitor data. Harnessing real-time travel data has become crucial for Icelandic authorities and businesses to make informed decisions, dispel misinformation, and proactively shape strategies that align with the evolving market conditions in a rapidly changing world, mitigating the potential challenges posed by the perception of these events.