Reykjavík is currently among the most expensive travel destinations, analysis by economists at Íslandsbanki bank. Prices in Reykjavík are on average 28% higher than in the other Nordic capitals, and Reykjavík hotels are the most expensive in the Nordics according to the research report.
High price levels to blame
The primary reasons for high hotel prices are the high price level in Iceland. Despite little to no domestic inflation prices in Iceland, calculated in foreign currencies, have risen significantly in the last couple of years due to the appreciation of the Icelandic Króna. As a result price levels in Iceland are higher than most visitors are used to from home. Prices in Iceland are on average 1.5 times higher than those in the US, France or Germany.
Read more: Why are hotels in Reykjavík so expensive? Simple: Supply and Demand
The other major reason for high hotel prices, the report argues, is limited supply of hotel rooms at the same time as demand is high. Occupancy ratios at Reykjavík hotels are the highest in the Nordic countries, suggesting a major demand push on prices. This suggests that a greater supply of hotel rooms would definitely help bring down prices.
The report argues that it is impossible to use the high prices for hotels in Reykjavík to draw conclusions about the profitability of hotels, as Icelandic tourism businesses and hotels are also faced with much higher costs than their competitors in other countries.
Reykjavík is currently among the most expensive travel destinations, analysis by economists at Íslandsbanki bank. Prices in Reykjavík are on average 28% higher than in the other Nordic capitals, and Reykjavík hotels are the most expensive in the Nordics according to the research report.
High price levels to blame
The primary reasons for high hotel prices are the high price level in Iceland. Despite little to no domestic inflation prices in Iceland, calculated in foreign currencies, have risen significantly in the last couple of years due to the appreciation of the Icelandic Króna. As a result price levels in Iceland are higher than most visitors are used to from home. Prices in Iceland are on average 1.5 times higher than those in the US, France or Germany.
Read more: Why are hotels in Reykjavík so expensive? Simple: Supply and Demand
The other major reason for high hotel prices, the report argues, is limited supply of hotel rooms at the same time as demand is high. Occupancy ratios at Reykjavík hotels are the highest in the Nordic countries, suggesting a major demand push on prices. This suggests that a greater supply of hotel rooms would definitely help bring down prices.
The report argues that it is impossible to use the high prices for hotels in Reykjavík to draw conclusions about the profitability of hotels, as Icelandic tourism businesses and hotels are also faced with much higher costs than their competitors in other countries.
