The Icelandic Tourism sector

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The Icelandic Tourism sector

Facts, figures and future prospectsFacts, figures and future prospects

February 2009February 2009


The objective

To promote the development of tourism as an economic sector and an important facet of Icelandic economic and societal activity.


The guiding principles

Economic efficiency Icelandic culture Environmental protection Professionalism Safeguarding of consumer interests


The focus of the government

Strengthening the ITB Better utilization of government funding Regional tourism offices Development of new tourism sites Emphasizing on tourism research New way of promoting Iceland abroad


Additional public funding

Regional tourism offices, 80 millj. IKR Development of new tourism sites, 100 millj. IKR. Regonal development fund 80 millj.


Number of visitors 1985 - 2008


Number of overnights in thous.



Tourism in numbers

One of the fastest-growing sectors of the Icelandic economy.

Is the second-largest foreign currency earner 19% of the country’s income from foreign sources.

Provided an estimated 8,200 jobs in 2006. Accounts for about 4.6% of the GNP (2000-2006).


The industry in numbers

Accommodations 692 Recreation 511 Museums etc. 214 Travel agencies 116 Tour operators 143 Tourist info. 30

January 2009


The characteristics

Strong self image More professionalism Flexibility Optimism – yes we can


Main Markets

Scandinavia UK US and Canada Europe Other


Visitors profile

Male 58%, female 42% Average age: 41 years

Household income low average 9% average 40% high average 39%, high 12%

Average length of stay 8,6 nights

Source: Icelandic Tourist Board. Survey Data 2007.

Profession (%)

•Professionals/university 41

•Managerial 21

•Clerical/service 10

•Vocationals/technicians 9

•Students 9

•Retired/housewives 5

•Other 5


Factors affecting people to visit Iceland

0

10

20

30

40

50

60

70

80

Icelandicnature

Icelandicculture/history

Friends,relatives in

Iceland

Price offer,low airfare

Business Stop overpossibility

Special event Conference,meeting

Source: Icelandic Tourist Board: Survey Data 2007

%


Outlook for 2009

Forecast 2009- international tourist arrivals between -2% and 0% Travel behaviour in crisis Some good news on global scale Some good news for Iceland


Changes to marketing

• The aim is to better utilise the funding available for marketing

• Increased collaboration will be undertaken with other parties involved in promoting Iceland - Trade Council of Iceland and the Ministry for Foreign

Affairs

•Greater possibilities in the utilisation of funding for direct marketing efforts

•Good relations with different agents within these key markets for Icelandic tourism will continue to be maintained

•Has worked well for the UK-market


Travel agencies

Security requirement for

package tours


Travel agency

Any party intending to operate as a travel agency shall obtain a licence from the Icelandic Tourist Board (ITB)

The licence is not subject to expire ITB maintains a register of those holding licences and publishes it on

www.ferdamalastofa.is Travel agency organises, offers, and sells package tours Package tour is predetermined combination of no fewer than two of the following items:

transportation, accommodation, and/or other services rendered to the customer


Security funds

The sale of package tours requires a security funds in the event of bankruptcy or the cessation of the travel agency´s operations.

Package tour has not taken place Transportation home from a package tour To complete a package tour in accordance with the original itinerary of that tour

Only direct financial loss is compensated by the security funds


Security amount

The amount of the security shall be determined from among the following items; the item yielding the highest security amount shall be used as the basis for the calculation:

60 % of the turnover for the two consecutive months with the highest sales; 35% the turnover for the four consecutive months with the highest sales; 15% of total annual turnover

The security amount shall not, however, be less than ISK 1 million Each year ITB determine whether the security amount shall be changed or

not


The situation today

On many occasions security amounts have been raised due to increased turnover in the years 2007/2008

The collapse of the financial system caused some problems for travel agencies

• Decreasing competency - decreasing turnover for 2009• The collapse of the banking system• Fewer tourists

Travel agencies have requested maintaining or decreasing present security amount

They think the security amount is unfair according to a schedule of activities planned for the operational year

ITB is not legally authorised to maintain or decrease the present amount if all the data have caused the amount to be increased.


Problems

• The problem today– Despite the ITB´s decision of raising security amounts, there

is a lack of returning securities to ITB– Travel agencies do not comply with the ITB´s decision to

increase the security amount – It is more difficult to obtain surety issued by a commercial or

savings bank or insurance company– Banks claim more guarantees for the surety– Difficult for travel agencies to submit guarantees to the

banks– Decreasing bookings i.e. fewer tourists

• ITB is authorised to revoke a license if a travel agency does not meet the requirements

Documents

The Icelandic Tourism sector