Photo by Axel Sigurðsson

When Grapevine started in 2003, we were in the midst of what at the time seemed like a considerable tourism boom. The number of tourists per year was fast approaching the number of the population as a whole, or 300,000. Earlier that year, Iceland Express (a precursor to WOW Air) started flying to London and Copenhagen (soon branching out to other destinations), making travel to the island more affordable. And yet the fledgling tourism boom went largely unnoticed by most. Everyone was putting their money in banks and aluminium plants to get rich quick.

A notable exception was Icelandair, with their “Fancy a dirty weekend in Iceland” campaign directed at British males. Slogans such as “Free dip every trip,” and “Pester a beauty queen,” led to the Centre for Gender Equality suing Icelandair, but the case was dismissed on the grounds that the campaign was intended to appeal to the British sense of humour.

Tourism as a percentage of GDP initially peaked in 2003 at 5.3%, but then fell behind the aluminium and banking craze. Those heady times came to an abrupt end in the autumn of 2008. In the same way that previous generations know exactly where they were when they heard that Kennedy had been killed or World War II had broken out, everyone who was living in Iceland on October 6, 2008, can remember that moment when they witnessed the Prime Minister bizarrely asking god to bless Iceland on live TV at five in the afternoon. Not only were our chances of getting immediately, horribly rich quickly fading into the distance, it appeared we were in fact totally bankrupt.

Foreign journalists started pouring in to observe the mess, while the duty free store at Keflavík airport started advertising “half-priceland .” Due to the collapse of the Króna, Iceland was suddenly a cheap destination to visit, relatively speaking. But as the focus of ongoing economic crisis moved on to warmer climes, Iceland quickly dropped out of the headlines again. It would take another momentous event to return it to the world’s attention.

Ben Stiller vs. the Volcano

Just as Icelanders tend to exaggerate the rest of the world’s interest in their banking collapse, they tend to make too little of the Eyjafjallajökull eruption. October 6, 2008, was surely a generation defining moment, far outstripping the importance of the volcano in Iceland’s national psyche. But the economic collapse was a mere blip in the international media compared to the miles of newspaper and hours of TV broadcasts dedicated to the volcano. And while money was being poured into the massive “Inspired By Iceland” promotional campaign, it was perhaps all the free volcano-related publicity that served as the biggest catalyst in creating the tourism boom.

As such, the eruption has already cemented its place in Western popular culture. Ben Stiller’s ‘Secret Life of Walter Mitty,’—one of many Hollywood films made here in the past decade (and incidentally one of very few to actually be set in Iceland)—inevitably features a live volcano.

And the French romantic comedy ‘Eyjafjallajökull’ from 2013 is about a divorced couple on their way to their daughter’s wedding in Greece, that wind up spending far more time together at the airport than they had intended due to the titular volcano.

Children of nature

In the long-term, however, the greatest effects of The Eruption That Touched Europe are probably felt here in Iceland. It’s hard to measure cause and effect when it comes to public perception, but it’s not unreasonable to suggest that the island’s tremendous exposure following Eyjafjallajökull is at least partly the reason for the tourist boom we’ve experienced in recent years. The timing fits. Even at half-price, the number of tourists declined in the years after 2008, dipping back towards 400,000, and only returning to the pre-crash high in 2011, when it again topped half a million. The numbers continued to grow by leaps and bounds, according to figures from the Icelandic Tourist Board.

“In Reykjavík, the bars are packed every night, hosting live bands or DJs; the restaurants are always full, and even if a store on Laugavegur goes under, something else pops up to take its place right away.”

During the banking boom, Icelanders tried very hard to present themselves a modern, sophisticated country with a sound grasp of finance—the Switzerland of the North. The collapse showed just how far off the mark we were, but it was the volcano that finally returned us the image we held for the previous 200 years—a wild, magical, mystical land, full of unpredictable natural occurrences such as these. In other words, exactly what people wanted to see.

Today, Iceland is hardly cheap, with prices creeping back towards pre-2008 levels (for us who get paid in króna it was always expensive, it is now even more so). Yet tourism keeps booming, with upwards of a million tourists projected to visit Iceland in 2014—three times the local population. So, just what are we to make of all of this?

The Athens of the North

The results have been largely beneficial. After the economic collapse, a decade or more of hardship was expected, as appears to be the case in Greece. But suddenly, everyone seems to be doing well again. Villages in the countryside are no longer demanding their own aluminium plants for job-creation, instead opening quirky little museums and hosting cultural festivals. And people are finally beginning to see the value of untouched nature, now that tourism has given them a way to put a price tag on it. In Reykjavík, the bars are packed every night, hosting live bands or DJs; the restaurants are always full, and even if a store on Laugavegur goes under, something else pops up to take its place right away. There are no bricked up windows to be seen, and scant evidence of a country suffering the fallout of an unprecedented economic crisis. Crisis? What crisis?

Culture is benefiting too. Local record shops were on the verge of going out of business a few years ago, but now stores such as Smekkleysa and Lucky Records cater to the discerning tastes of music tourists. Icelandic music, literature and films are doing remarkably well for a country of this size. If we are an Athens of the north, it’s more in a cultural sense than in a financial one.

Puffin shops and Palmolive

Iceland has been widely lauded for putting its bankers in jail, for refusing to allow its citizens to shoulder debts to foreign venture capitalists, for being a free press haven, and for crowd-sourcing its new constitution. But on closer inspection, this image is at the very best an exaggeration. We got off lightly from the economic collapse not due to our own ingenuity – it was mostly the tourism boom that saved us. If volcanic eruptions could be started the same way geysers were in my youth—by pouring soap into them—we would for sure be passing around the Palmolive and heading to the craters.

But life can’t all be Puffin shops and woolly jumpers. The Iceland of 2014 is starting to feel suspiciously like the Iceland of 2007. As if to prove the point, last year we re-elected the very parties that caused the collapse in the first place. What has sometimes been called a “2007 attitude,” in reference to the high-tide of the banking boom, has manifested itself once again in regards to tourism. As with the banks, everyone wants in on the action, with discretion never being the better part of valour. Everyone with a spare room is renting it out, or moving back in with their parents so they can auction it off to authenticity seeking travellers. Hotels keep popping up all over the place, sometimes obscuring the very things that people come here to see. It has become virtually impossible for young Icelanders to find a place to rent or buy, with property owners instead preferring to rent out short term during the ever-expanding tourist season.

The Mallorca of the North

So how much is enough then? Some people prophesise (with euro or dollar signs in their eyes) that we’ll see 1.5 to 2 million people arriving each year by the end of the decade. But how much footfall can our traditionally untouched countryside actually take? As we find out, the dark side of the tourism boom will become ever more apparent. Off-road driving tears up moss that’s been millions of years in the making, and thousands of hiking boots leave visible impact wherever they go.

And for that matter, how much can the infrastructure of Reykjavík itself take before it becomes a Mallorca of the North, reduced to a sorry collection of tourist shops, bars and restaurants that locals stay well away from? My local barber, to name but one example, is being pushed out of the salon he has worked in for decades as the building owners want to turn it into a hostel. And just this week, it was announced that the owners of the JL House in Vesturbær, which currently houses an independent academic institute, want to turn it into a hotel. Everything from our haircuts to what goes on inside our heads is in danger of being sacrificed (and marginalized) to the almighty tourist Króna.

Some people, remembering 2008, are afraid that the tourist boom is going to end just as suddenly as the banking one did. But this doesn’t seem likely, at least in the immediate future. When a place has been discovered as a popular tourist destination, it very rarely disappears from the map again. That said, the number of tourists cannot keep increasing exponentially—unlike the banks, whose imaginary wealth had no basis in reality, the things people come to see here are very real and aren’t going away anytime soon, even despite the increasing threat to their integrity.

There’s no sign of Iceland’s snowballing international profile slowing down. More and more movies are being made here, with the next instalments of two of the world’s biggest franchises, James Bond and Star Wars, set to be partially shot in Iceland. Icelandic culture continues to do well abroad, with Of Monsters and Men being our latest musical superstars; Icelandic literature has become fashionable in France after the success of Auður Ava Ólafsdóttir, and strongman Hafþór Júlíus Björnsson frequently appears in Game of Thrones. These successes all serve to remind prospective travellers of the wonders of Iceland, even if the prospective Bárðarbunga eruption lets us down.

All we really have to fear, then, is ourselves. For the time being, the most pressing question remains—how much tourism a small country can take? The gold-rush mentality of old is now returning in a new form, with predictable results—let’s just hope we manage this boom better than we did the last one.

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See Also: Growing Pains