While the increase in tourism is good for the Icelandic economy at present, it should be remembered that it may not last.
Why? Well the current rate of exchange, UK Sterling to the ISK, is currently around ISK 186 to £1. At this rate I and many others can afford to visit Iceland. But I can remember a time when it was more like ISK 100 to £1, and if the exchange rate was ever to revert to a similar level I, and many others, would be staying away.
It’s not just the financial market that is causing the problem. Since ‘The Crash’ many retailers and hotel owners in Iceland have increased their profit margins to try to offset the burden of the collapse of the ISK.
Should the ISK improve are these retailers going to slash their prices back to pre-crash levels? I doubt it. What is more likely is that Iceland will once again become the second most expensive country in the world to visit, if not ‘the’ most expensive, leaving any new, shiny, hotels standing empty.
Tony Gomm, Winchester, U.K.