Blue Lagoon Rebounds as Iceland Loses Tourism Steam

12.09.2024 - 21:24 / skift.com / Dawit Habtemariam / Einar Örn Ólafsson

Blue Lagoon has been experiencing a recovery in guest bookings after repeated closures due to volcanic activity in southwest Iceland.

Occupancy for September and October at the retreat stood around 70%, which was in line with last year’s numbers, said Siggi Thorsteinsson, head of brand, business development, design & construction for Blue Lagoon. Occupancy in the summer was also in line with last year.

“If we could just be running business next year exactly like now, we are basically rebounded and be 5% more than in 2023,” said Thorsteinsson.

Between November 2023 and August 2024, the Blue Lagoon had multiple closures due to earthquakes caused by the volcano in southwest Iceland. The geothermal spa has been closed for a total of 100 nonconsecutive days.

“July was the only full month we were open,” said Thorsteinsson.  Blue Lagoon’s most recent reopening was on August 28 after closing for one day.

The spa hasn’t been damaged by the eruptions or earthquakes. A key road leading to the spa, however, was destroyed by the lava flow and has been replaced with a new one. The government has also installed a protective barrier for the spa and added more staff to the Icelandic Meteorological Office to improve eruption predictions and communication.

Blue Lagoon has seen a shift in guest mix with more individuals over planned tour groups. Travel agencies have been deterred from making bookings due to the uncertainty of future closures.

“We like that by the way because it’s actually a better business,” said Thorsteinsson. “Individuals have less negotiating power.”

This year, Iceland has been experiencing a slowdown in international tourism. Over 1.2 million foreign tourists came to the island by air between January and July, up 1% from the same period last year, according to the Icelandic Tourist Board.

“We have seen a bit of a drop in demand to Iceland compared to last year,” said Icelandair CEO Bogi Nils Bogason in an earnings call on July 18.

Total overnight hotel stays by foreign visitors decreased 6.6% year-over-year in July, according to Statistics Iceland. 

Excessive news coverage, especially in December and January, has left many potential tourists with the impression that Iceland may not be safe. Customers repeatedly ask if Blue Lagoon is safe to visit, said Thorsteinsson.

“Iceland, for too many of our possible clients, is no longer deemed safe to visit, although all Icelanders know that it is,” said Einar Orn Olafsson, CEO, interim chief financial officer and chairman of Fly Play, a low-cost airline, during a quarterly earnings call on July 25.