Atli Arnarson, BS from the Faculty of Economics
It hasn't escaped anyone that the number of tourists coming to Iceland has been growing year after year. But why is it that Iceland has become such a popular destination? Atli Arnarson completed his studies in economics at the University of Iceland in the spring of 2017 with a thesis entitled 'The impact of the exchange rate on tourists. An analysis of the growth of tourism in Iceland.'
The increase in the number of tourists has been the subject of much discussion recently. It is said that it is now expensive again to visit Iceland, yet there has been no lull in the stream of tourists. This was the inspiration for Atli's research. "It's always fun to investigate something that everyone is talking about; it's easy to be interested in it," he says.
The research focused on examining whether and how changes to the strength of the Icelandic krona after the crash had an impact on the numbers of tourists coming to the country and their credit card use here in Iceland. Atli also considered the potential impact of other factors, such as the eruption of Eyjafjallajökull and the UEFA European Championship last summer, on tourist numbers, since these events drew global attention to Iceland.
Atli Arnarson
"The increase in the number of tourists has been the subject of much discussion recently. It is said that it is now expensive again to visit Iceland, yet there has been no lull in the stream of tourists."
The research used information on foreign tourists' credit card turnover as well as changes on Google Trends. With the help of Google Trends, Atli could see how often people searched for 'Iceland' on Google around these major events. It emerged that Iceland had never been Googled so much as around the Eyjafjallajökull eruption, and another spike occurred around the European Championship.
Atli's research revealed that the depreciation of the krona, meaning it was cheaper to visit Iceland than previously, did not tell the whole story about the rising popularity of Iceland as a tourist destination. According to his analysis, the Eyjafjallajökull eruption and the European Championship had a significant impact on tourist numbers. These events were good publicity for the country, attracted tourists and seem to have had more impact than the depreciation of the krona, Atli argues. He points out, however, that he used so-called regression analysis in his research, "and this methodology has its limitations. For example, the credit card turnover of foreign tourists is not a perfect gauge of their spending here in Iceland, though it provides a reasonable approximation, and this was the conclusion."
Supervisor: Gylfi Zoëga, Professor at the Faculty of Economics.