Despite recent reports suggesting a decline due to the high cost of living, Iceland’s tourism industry is experiencing an unexpected surge, putting the “Land of Fire and Ice” on course for a record year of international visitors. Data from Statistics Iceland reveals that foreign visitor numbers have consistently grown, with a 2.2% increase from 2023 to 2024, and a further 3.5% spike in the 12 months leading up to September 2025. Between January and August of this year, Iceland welcomed 1.792 million tourists, a significant jump compared to 2024 and pre-pandemic 2019 figures. This boom is evident across the sector, with the first seven months of 2025 recording the largest number of booked hotel and B&B rooms to date. This resilience is notable, coming despite operational setbacks like a volcanic eruption and the closure of a budget airline.
Jóhann Viðar Ívarsson, an analyst at the Icelandic Tourist Board, attributes Iceland’s exceptional growth—which has outpaced the European average—to its unique and unspoilt nature, including geothermal hot springs, glaciers, and opportunities to see the Northern Lights. He argues that the country’s rural settings offer tourists an experience “unique and different from everything they’ve seen before.” Furthermore, Iceland has become a “fashionable” bucket-list destination for higher-income travelers, with social media influencers playing a role in its soaring popularity. To prepare for this sustained influx, the country is proactively expanding its KEF international airport with a comprehensive masterplan that includes better facilities, improved traffic flow, and the addition of covered walking paths and a new 4-star hotel.
To manage the environmental impact of this booming popularity, Iceland reinstated its accommodation tax on January 1, 2024, charging guests at hotels, guesthouses, campsites, and cruise ship passengers. While Reykjavík remains a main draw, the tourist board is actively promoting stunning areas outside the typical hotspots to distribute tourism more evenly. Ívarsson particularly recommends exploring the Westfjords during the summer for its magnificent coastal mountains and small fishing villages. The accessibility of the North, facilitated by the ring road infrastructure, offers a unique opportunity for visitors to experience the surreal phenomenon of the non-setting summer sun, highlighting that Iceland’s appeal is about both its legendary natural wonders and its year-round, distinctive travel experiences.
Iceland’s Tourism Sector Heats Up: On Track for Record-Breaking Year
