Luxury Hotel’s Impact on Protected Valley Raises Concerns


The company building a luxury hotel and baths in the protected Þjórsárdalur valley has yet to negotiate payments for water usage at the site. The Icelandic Institute for Natural History called it a mistake to permit the development, as it entails disturbing the landscape. The company building the hotel is a subsidiary of the Blue Lagoon and holds a 40-year lease on the land.

The hotel and baths are being constructed within a protected area, on a plot owned by the state. The company Rauðukambar ehf., a subsidiary of the Blue Lagoon, is leasing the 130,000 square metre plot for just over ISK 400,000 [$3,000, €2,800] per month. Payments to the state for water usage are yet to be negotiated.

Prime Minister’s Office authorised construction

Since the construction is on public land, it was subject to the approval of the Prime Minister’s Office, which has authorised the project according to the conditions of the protected area. Prime Minister Katrín Jakobsdóttir herself was present at the official start of construction, digging the first shovelful into Rauðukambar mountain alongside the mayor of Skeiða- og Gnúpverjahreppur municipality, where the hotel will be located, and the developers.

The hotel is being built into Rauðukambar mountain, reportedly to minimize its visibility. The Icelandic Institute for Natural History has stated its opinion that the hotel and baths do not comply with the objectives of protection of landscapes and natural monuments as they cause irreversible damage and change the natural landscape.

In Focus: Tourism Development in Protected Areas

The parent company of the Blue Lagoon is also constructing a luxury hotel in a second protected area in the Icelandic Highland, Kerlingarfjöll. According to original plans for the area, the new hotel was to be one of the largest not just in the Highland, but in all of Iceland. The ambitious nature of the project raised concerns about environmental degradation and in 2015, the Icelandic Environment Association (Landvernd) appealed the construction, the first stage of which had begun without any environmental impact assessment.

Another Record-Breaking June for Icelandic Tourism

tourists in reykavík

The latest numbers from Statistics Iceland show that June 2023 saw some 1,176,600 overnight stays in Iceland. This is a 17% increase from June 2022, which saw 1,012,300 overnight stays.

Of the total overnight hotel stays, foreign travellers accounted for 77% of the total, or 903,400. Domestic travellers accounted for 267,200 of these overnight stays.

Hotels and guesthouses accounted for some 703,000 or around 60% of total stays. 468,000 overnight stays, or around 40% of the June total, were registered in other accommodations, such as camp grounds and Airbnb apartments.

Airbnb alone is estimated to have accounted for 200,000 overnight stays last month.

Statistics Iceland notes that since last year, the supply of accommodation has remained more or less unchanged. The new 2023 June numbers show a 1.3% increase in occupancy rates across the nation.

So far, Iceland has seen just over 4 million overnight stays this year. The previous cumulative total for June was in 2018, with 3,534,000 accumulated overnight stays. This is a 15.5% increase from the previous record.

Statistics Iceland notes the following: "Due to abrupt changes in supply and occupancy rates, estimation for other types of accommodation than hotels is currently subject to a higher degree of uncertainty than usual and should therefore be taken with a special precaution until final numbers are available."

Kerlingarfjöll Construction Project One of Largest Ever in Highlands


The tourist facilities at Kerlingarfjöll in Iceland’s Highland are receiving an overhaul these days to the tune of ISK 2-3 billion [$14-21 million, €13-20 million], RÚV reports. The development includes a luxury hotel and renovations to the campsite. It’s possibly the largest single investment in the Highland region that is not a power station.

Kerlingarfjöll is a mountain range in Iceland’s Highland and one of the most popular tourist destinations within the region. It was operated as a summer ski resort in the 20th century which was dismantled in 2000 due to decreased snowfall. The site is known for the spectacular colours of its rhyolite mountains and hot springs. Kerlingarfjöll was declared a protected area in 2020 by the Icelandic government.

Hotel smaller than planned

The hotel has been downscaled from its original plan, which called for 120 double rooms. In 2016, the Icelandic Environment Association appealed the construction of the hotel to the Environmental and Natural Resources Appeals Committee as the first phase of construction had begun without an environmental assessment having been completed.

The luxury hotel will have space for 50 guests and hostel-like facilities for 30 campers. Along with renovations to the neighbouring campsite, a new restaurant will be opened at the site. The hotel buildings facades will be in dark, earthy colours in order to blend in with the landscape and the construction aims to limit vehicular traffic around the site to improve guests’ experience.

Highland an important breeding ground for birds

The Highland of Iceland is an uninhabited area that covers most of the centre of the country. It is only accessible to humans during the summer, as deep snow and wide rivers make its dirt roads impassable most of the year. The Highland is an important nesting area for many species of birds, with the Þjórsárdalur valley being the single most important breeding ground for pink-footed geese globally.

More Overnight Stays Booked This June Than Pre-Pandemic

Icelandair Marina Hotel

Foreign tourists booked 405,000 overnight stays in Icelandic hotels in June 2022, which is an increase of 6%, or roughly 23,000 more stays than were booked in June 2019, before the COVID-19 pandemic. Túristi reports that there was also a jump in hotel bookings among Icelanders, with just over 91,000 overnight stays booked in June 2022, as compared to 38,000 in June 2019.

These were among the findings in a new report issued by Statistics Iceland on Friday.

Americans have had by far the most overnight bookings in Iceland over the years: 127,163 in 2019 up to 140,651 in 2022, for an increase of 11% between the years. Icelanders had the second most overnight bookings in June 2022, or 91,388 to be exact. Percentage-wise, this is the most significant increase by nationality since the pre-pandemic years. Germans had the third most bookings by total in June 2022: 58,453, or a 27% increase from the 46,170 overnight stays they booked in June 2019. In terms of percentage increases, however, Italians had the next highest increase in overnight June bookings after Icelanders: 11,728 in June 2022, or an increase of 89% from 6,200 in June 2019.

The new figures show that between June of this year and last year, 2021, occupancy rates around Iceland went up from 40% to 78.8%. Regionally, the biggest jump in hotel bookings was, unsurprisingly, in the capital region, with 5,400 hotel rooms booked in 2022 versus 3,277 in 2021. The second largest increase was seen in the Southwest: 1,017 in 2022, up from 880 in 2021. East Iceland has seen the least change in overnight stays in the last year, with only two more overnight stays booked in 2022 (441) than in 2021 (439).

Take a look at a summary of Statistics Iceland’s new overnight stay data on their website, in English, here.

Puff-Inn Welcomes Seabirds for Five-Star Stay

A new hotel is opening by the small town of Borgarfjörður eystri, East Iceland, but if you’re reading this article, its lodgings are probably not available in your size. The Lundahótel, or Puff-Inn, is a project hatched by illustrators Elín Elísabet Einarsdóttir and Rán Flygenring, offering luxury accommodations to Iceland’s most beloved birds. Iceland Review spoke to the artists as they were putting the finishing touches on the facilities, located at the farmstead Höfn, just east of the town.

The two artists opened a puffin shop last year at the same location, an answer to Iceland‘s many tourist shops filled with puffin-themed tchotchkes. “We made all sorts of puffin-related merchandise that was not for sale and were thinking a lot about the relationship between puffins, people, and puffin stores,” Rán told Iceland Review over the phone. “Opening a hotel is a logical continuation of that.”

“The puffin is the symbol of tourism in Iceland but it’s in danger,” Elín says, explaining that human-caused global warming is pushing the bird’s food source north and the puffins are following. “A hotel would be a good way to provide them with refuge.” Early birds can dine on the hotel’s breakfast buffet, complete with sardines and herring (humans are also welcome), and guests will enjoy all the usual offerings of luxury lodgings: “Bathrobes and postcards.”

The Puff-Inn is located by the town harbour across the road from a puffin colony, and the artists admit their new facilities are more of a “staycation” for the birds. Their feathered neighbours are nevertheless are showing interest in the hotel on their doorstep, say the two illustrators, as are the local townsfolk. While there are currently no rooms available for human guests, Rán says they’re welcome to make a booking for a friend of the puffin persuasion.

Rather than the traditional rooms, the Puff-Inn offers burrows to its guests. “We plan to offer burrows of various sizes so birds of all kinds can come and stay,” Elín adds. “All birds are facing difficult circumstances due to human causes, so we hope they all stop by for a visit.”

Interested people and avians can follow the hotel on Instagram.

Sizeable Hotel Rises Beside Harpa

Reykjavík Edition Marriott Hotel

The 253-room hotel currently under construction next to Harpa Concert Hall in Reykjavík is set to open next year, RÚV reports. Richard L. Friedman, one of the project’s main investors, says he is not concerned by tourist numbers dropping in Iceland. The hotel’s construction is expected to cost ISK 20 billion ($160m/€145m).

The Reykjavik Edition, as the hotel is to be named, will offer five-star accomodations under the Marriott trademark. The Edition was scheduled to be completed and opened this year, but construction has been delayed. Friedman is not surprised by the development. “I’ve done almost 30 hotels and I’ve never had one on time either,” he told a reporter. “It’s very common in this business.”

While the hotel was originally projected to cost ISK 16 billion ($128m/€116m) to build, the final cost will be closer to ISK 20 billion ($160m/€145m). “We’re not trying to save every penny because we want to build something that has incredible difference from existing hotels,” Friedman stated.

Not concerned about decline in tourists

As for the recent drop in tourist numbers, Friedman says the hotel’s investors are not concerned. “I don’t think it worries us at all. The previous boom, if you will, was likely based on Airbnb and WOW and those things, but we’ve never counted on that anyway. Everywhere I go, across America where I’m building lots of hotels actually, we find people say ‘I want to go to Iceland but I haven’t had the right place to go or stay’ and so I think we’re just fine, we’re not concerned about it at all.”

The project’s investors include several individuals as well as Icelandic pension funds. It is expected have 300-400 staff.

More rooms in Reykjavík

The Reykjavík Edition is not the only hotel currently under construction in the heart of Reykjavík. Construciton of a 120-room hotel has begun just down the street from the Edition on Lækjargata, and a 160-room Icelandair Parliament hotel by Austurvöllur square a stone’s throw away. The number of hotel rooms in Reykjavík is expected to increase by 50% over the next couple of years.

Eight Hundred New Hotel Rooms In Reykjavík Next Year

City of Reykjavík

Seven new hotels are currently being built in Reykjavík, with 800 new rooms expected to open in the next year, Vísir reports. In addition, there are twelve hotels in development which will add 16,000 new hotel rooms to the city’s accommodations. One of the soon-to-open hotels is the Marriot currently under construction next to Harpa.

There are currently 5,000 hotel rooms in Reykjavík, all of which have had been very well utilized in recent years. Commenting on the new hotel developments, Mayor Dagur B. Eggertsson says there is no reason to be concerned about a decline in tourism in Iceland. “I think [the developments] reflects that Reykjavík and Iceland are sought after [destinations]. Other airlines are also rushing to fill the void left by WOW air and this bodes further growth in the coming seasons and years,” he remarked.


Cultural Heritage Agency Blocks Hotel Construction Again


The Cultural Heritage Agency of Iceland has temporarily protected the eastern section of the historic Víkurkirkjugarður cemetery, putting a halt to the construction of a much-debated hotel in the heart of downtown Reykjavík. The action prohibits all construction on the site, which overlaps the eastern part of the cemetery, for a period of six weeks. The agency hopes the Minister of Culture will agree to protect the area permanently. Vísir reported first.

In a press release published yesterday, the agency stated they had decided to temporarily protect the eastern part of the former cemetery, located inside the building lot. The reason cited for the decision was that the cemetery is a relic connected to Icelandic tradition and customs.

Víkurkirkjugarður, established in the 11th century, was one of Iceland’s first Christian cemeteries. Though it was officially demolished in 1838, burials continued on the site until 1883. The building lot, which is expected to be the future site of the Iceland Parliament Hotel, overlaps the eastern part of the cemetery. Originally set to open in 2018, the hotel’s construction has previously been delayed by the Cultural Heritage Agency after remains of a coffin were found on the site.

Disagree over hotel entry

According to their press release, the Cultural Heritage Agency asserts they had proposed changes to the design of the hotel entrance, which is to face the cemetery, and believed their proposal had been accepted by Lindarvatn, the property owner. The agency expresses dismay that the hotel’s design includes two entrances from the former cemetery, which they consider unacceptable. Lindarvatn CEO Jóhannes Stefánsson says the agency’s decision comes as a complete surprise. He points out that the area in question is currently open to pedestrians and houses bars, restaurants, and apartments, and the hotel would not change the area’s use.

Propose permanent protection

Minister of Education and Culture Lilja Alfreðsdóttir decided yesterday to accept the Cultural Agency’s proposal to protect the part of Víkurkirkjugarður that lies outside the hotel building lot. The Cultural Heritage Agency hopes to convince the minister to expand the protected area to include the section of the cemetery within the building lot, which they have now temporarily protected.

Hotel Construction Stopped by Cultural Heritage Agency

Excavation by Austurvöll

The Cultural Heritage Agency of Iceland stopped construction of a hotel in downtown Reykjavík after the remains of a coffin were found by the site yesterday, RÚV reports. Kristín Huld Sigurðardóttir, the agency’s director, says it is necessary to investigate the area where the remains were found, which served as a cemetery from the 11th century until 1883.

The lot, located between Iceland’s Parliament and the Settlement Museum, is the former site of Víkurkirkjugarður, one of Iceland’s first Christian cemeteries. Víkurkirkjugarður was established in the 11th century, shortly after Christianity was adopted in Iceland. The cemetery was officially demolished in 1838, but burials continued there until 1883.

The Cultural Heritage Agency would like to make the site a protected area. The City of Reykjavík has previously stated it does not consider there to be grounds for special protection.

The hotel under construction, named the Iceland Parliament Hotel, is to be operated by Icelandair Hotels under the brand Curio by Hilton. Originally set to open this year, the hotel is planned to have 160 rooms.

Fewer Foreigners, More Icelanders Booking Overnight Accommodation

Overnight accommodations booked by foreigners were down this June as compared with June of 2017, Kjarninn reports. This marks the first time since 2008 that June bookings among foreign tourists have been lower from one year to the next. At the same time that foreign bookings have been down, however, overnight stays booked by Icelanders have been on the increase.

Figures published by Statistics Iceland show that while the number of overall bookings has remained largely unchanged since last year—1.189 million bookings in 2017 to 1.195 million bookings in 2018—the number of overnight stays booked by foreign tourists (835,000 in June 2018) was down by 3% this year. By contrast, 163,000 Icelanders booked overnight stays in June 2018, which marks a 21% increase from the same time period last year. This represents the largest increase in domestic overnight stays as compared to those of foreign visitors since 2010, as well as the largest number of domestic overnight bookings that have ever been recorded in the month of June.