Investor Relations

Arion Research has published its annual report on the status and prospects of the tourism industry in Iceland. The main findings are:

• The number of tourists to Iceland has declined by roughly 13% YoY in 2019. A change in Icelandair´s passenger mix has mitigated the effect of WOW air bankruptcy on the number of tourists. YTD number of passengers travelling with Icelandair to Iceland rose by 30% YoY while total number of passengers only rose by 11%.
• We expect tourism in Iceland to recover gradually following WOW air´s bankruptcy. Our base case assumes 2% growth in number of tourists in 2020. Grounding of Boeing MAX 8 aircrafts hinders Icelandair´s growth ambitions in 2018 and 2019. Stronger growth in number of tourists mostly rests on whether a new airline or airlines begin operations.
• On average each tourist visiting Iceland in 2019 has stayed greater number of nights and spent more money, whether in ISK or in their own currency. Therefore, contraction in the tourist sector is likely to be less severe than we were concerned with at the beginning of the year. We highlight three contributing factors; progress has been made in attracting more affluent tourists, changes in Icelandair´s passenger mix and more reliable data on number of actual overnight visitors.
• The demise of WOW air and subsequent contraction in number of tourists has caused number of tourist related jobs to contract. Despite that net migration to Iceland could exceed 4,000 people in 2019. Fewer jobs coupled with a growing work force increases competition in the labor market and contributes to a growth in unemployment. We expect that at the end of 2019 tourism related jobs will be around 2,000 fewer than at the end of 2018 and that unemployment rate will climb to around 4% by the end of the year.

Tourism in Iceland 2019.pdf

Sources: Icelandic Tourist Board, Arion Research