The Icelandic government has once again implemented a tourist tax on hotel and alternative accommodation rooms, reviving a fee that applied to visitors before the onset of the COVID-19 pandemic.

Iceland’s Tourism Tax Changes

Beginning on January 1, 2024, visitors to Iceland will once more be required to pay taxes for their lodging while on the island nation. Furthermore, this year marks a significant extension of the tax's reach as it will now encompass passengers on cruise ships.

Impact of Iceland's tourism tax on travel cost

The new policy imposed the following fees per visitor room:

• For reservations made at hotels, guesthouses, and different lodging establishments, guests will be charged an extra €3.98 per room.

• Campsites, mobile homes, & caravans will now cost €1.99 more per night than they do now.

• The cost of cruise ships calling at Icelandic ports will increase by €6.63.

Vice president of G Adventures Yves Marceau expressed worries regarding the added financial burden on travellers, stating that the imposition of the levy will further escalate the already high travel expenses to the island.

Iceland is renowned for its adventurous and natural tourism. The Best locations in Iceland include the South Coast, the Golden Circle, hiking routes, lava flows, and the captivating Northern Lights. This week saw a partial reopening of the Blue Lagoon, one of Iceland's most visited tourist destinations, allowing guests to utilise the spa.

What is the goal of Iceland's new tourism tax?

The goal of the tourist tax's reintroduction is to address the adverse social & environmental effects of Iceland's rapidly expanding travel sector, which has encountered issues with over-tourism. Intrepid Travel's general manager of Europe, Kristijan Svajnzger, emphasised the need to control how tourism affects society and the environment.

In September, Prime Minister Katrin Jakobsdottir emphasised the burden of excessive tourism on Iceland's natural resources. The move to reinstate the tax is a component of a plan to lessen the negative consequences of the nation's tourism boom.

The sudden growth in Icelandic tourism

Despite the difficulties caused by the epidemic, Icelandic tourism had a strong year in 2023. Over 800,000 foreign visitors arrived nationwide throughout the summer, a significant rise of approximately 25% over the same period in 2022.

Data from the European Travel Commission shows the nation saw one of Europe's fastest recoveries in tourism for 2023, with an increase in arrivals and overnight stays that surpassed levels seen in 2019.

Sustainable tourism in Iceland after tax increase

According to Guy Bigwood of the Global Destination Sustainability Movement, more destinations are trying to align their sustainability goals with increased taxes. The destinations may raise more money to achieve their environmental objectives by charging these fees.

Prime Minister Katrín Jakobsdóttir forewarned the public about this change earlier in the day, stating that the tax will be modest and support sustainability programs, in line with Iceland's objective of becoming carbon-neutral by 2040.