REYKJAVIK, Iceland (eTN) – Visitors to Iceland get twice as many Icelandic krona (ISK) for their currency compared to October last year. The value of Iceland’s local currency has plummeted against all major currencies, starting at the end of September this year. The krona’s free-fall came in wake of three of the country’s largest commercial banks folding as a result of the world’s credit-crunch, and their own cash-flow problems.
Historically the ISK is at its lowest value relative to other currencies for the last 30 years which may present an opportunity for the local tourism industry. “It’s likely that Iceland will see a positive trend in visitor numbers as long as the ISK remains weak against major currencies and the local cost doesn’t increase phenomenally,” said Gunnar Rafn Birgisson, who is one of the owners of Atlantik DMC, which specializes in the incentive- and cruise ship market.
Mr. Birgisson added that the current exchange rate fluctuations are extremely difficult to deal with for all companies in the travel industry. “We are working on our pricing for next year but there are great many uncertainties regarding the value of the ISK and the development of local cost. Therefore, it is premature to conclude that the present devaluation of the ISK is going to benefit tourism businesses in Iceland in the long run,” he said.
Many voices within the tourism industry are calling for solutions to prevent future extravagant currency fluctuations and suggest the adoption of the euro as a currency instead of the ISK. However, should Iceland want to adopt the euro, the country would first have to apply for membership to the European Union (EU). This would be a step up from its current European Economic Community (EEC) status.
Icelandair Group, which own Icelandair, has, in the light of the current economic situation, announced positive figures from the group’s operations. Profit is up by 43 percent and revenue is up by 68 percent for the first eight months of this year, compared to the same period last year.
“It is imperative for all concerned with tourism in Iceland to pool their resources and work towards a mutual goal which is to communicate to the world that Iceland is proportionally less expensive now than it has been for a very long time,” said Thorarinn Thor, the sales and marketing manager of Reykjavik Excursions, a company that specializes in day tours from Reykjavik by bus.
Iceland is on sale right now because of the poor value of the local currency. Accommodation, food, excursions and souvenirs are all half-price compared to same time last year. Icelandair is trying to convey this positive message to prospective visitors to the country through the company’s website in the Netherlands, UK and the United States.