Last updated: 02:30 PM ET, Thu September 22 2016

Can Iceland's Hotels Keep Up With Tourism Boom?

Hotel & Resort | Patrick Clarke | September 22, 2016

Can Iceland's Hotels Keep Up With Tourism Boom?

PHOTO: Reykjavik, Iceland. (Photo courtesy of Wiki Images)

The demand to see and experience Iceland is far outpacing the arrival of new hotels, a reality that threatens to derail one of the destination's top industries.

Citing a new tourism study conducted by Arion Bank, the Iceland Monitor reported Thursday hotels in and around the country's capital city of Reykjavik are likely to be filled to capacity by the first quarter of 2017.

According to a report from the Reykjavik Grapevine back in February, 1.6 million tourists are expected to visit Iceland this year. And on the flip side, only 290 new hotel rooms are scheduled to open this year.

"If we are going to welcome all of these tourists, they need somewhere to stay and things to do," study analyst Erna Bjorg Sverrisdottir told the Monitor.

While hotels are running out of room, Iceland is also in need of developing infrastructure tied to public transportation as well. According to the Monitor, by 2018 the destination expects to welcome as many as 2.5 million visitors on an annual basis.

READ MORE: Don’t Make These Mistakes When Traveling to Iceland

The issue of needing to enhance the nation's infrastructure in a short period of time is compounded by the country's limited number of available workers.

The Monitor reports that the growing number of tourists expected to visit Iceland over the next two years will warrant as many as 10,000 to 11,000 new jobs across the country. What's troubling, though, is that the figure represents approximately twice the number of jobs generated by normal economic growth, per the Monitor.

And considering Iceland already has a low unemployment rate, the boom is likely to put additional stress on Iceland's labor market.

Interestingly, RUV recently reported that as many as one-fifth of tourists to Iceland rely on Airbnb rather than traditional hotels for accommodations. Nonetheless, given the drastic percentage increase in anticipated visitors, it seems the destination's hotel and resort industry has some serious catching up to do if Iceland is going to continue to attract travelers from around the globe.

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