Published on
January 14, 2026
Iceland’s tourism industry saw a significant drop in foreign tourists in 2025, especially from important European markets like Poland, Estonia, Latvia, and Lithuania, which have historically made significant contributions. The country’s tourism sector has faced difficulties as a result of the decline in visitors from these nations, Iceland’s diminished marketing initiatives, and growing competition from other travel destinations. The future of Iceland’s tourism industry is being shaped by this change, highlighting the pressing need for the nation to reevaluate its marketing tactics and adjust to changing market conditions in order to preserve its appeal on a global scale.
Iceland, renowned for its breathtaking landscapes and unique tourist attractions, has experienced a slight decline in international visitor arrivals in 2025. Keflavik Airport, Iceland’s primary international gateway, has recently released its visitor statistics, revealing a moderate drop of 0.4% in the number of inbound passengers compared to the previous year. The total number of visitors arriving at the airport amounted to 2.253 million, down from 2.261 million in 2024. This marks the first decrease in arrivals after a period of consistent growth in Iceland’s tourism sector.
Market Breakdown: The Leading Inbound Markets
The five largest inbound markets to Iceland continued to dominate the visitor landscape, contributing to 54% of all arrivals. The USA remained the top source of visitors, with 0.65 million travelers arriving in 2025, accounting for 29% of total arrivals. The UK followed closely with 0.45 million visitors, making up 10.3% of the market share. Germany, China, and France also played significant roles, contributing 6.6%, 5.5%, and 4.4%, respectively, to the overall visitor count.
One notable trend was the rapid growth in arrivals from China. The Chinese market saw a remarkable increase of 29.2% between 2024 and 2025, marking it as the fastest-growing market for Iceland in that period. In contrast, other European markets showed mixed results. Switzerland experienced a growth of 20.9%, with an additional 35,000 visitors, and Sweden saw a 17.7% rise in arrivals, equivalent to 30,000 more travelers.
Declines and Challenges in Key Markets
Despite the positive performance from certain countries, Iceland’s tourism sector also faced significant declines. The most notable decrease came from Poland, where visitor numbers dropped by 28%. The sharp decline in Polish visitors was striking, as the country’s outbound traffic to Iceland nearly halved from 138,000 arrivals in 2023 to just 78,000 in 2025.
In addition to Poland, the Baltic States—Estonia, Latvia, and Lithuania—also experienced a considerable drop of almost 25%, contributing only 30,000 visitors in 2025, down from 40,000 the previous year. This reduction in visitor numbers from these European markets points to underlying challenges in maintaining Iceland’s competitive edge in the global tourism sector. Industry experts have raised concerns that the country’s limited efforts in promoting tourism could be contributing to these declines.
The Impact of Marketing Cutbacks
The most significant factor affecting Iceland’s tourism in 2025 appears to be its reduction in international marketing efforts. Between 2010 and 2022, Iceland benefited from consistent and targeted consumer marketing campaigns, which helped position the country as a must-visit destination for travelers. These efforts were credited with contributing to the steady growth of Iceland’s tourism industry over the past decade.
However, since 2022, Iceland has pulled back from its aggressive international marketing campaigns. The country has shifted its focus away from global promotion, a decision that some industry leaders argue is beginning to have a tangible negative impact. As competing destinations ramp up their branding efforts, Iceland’s withdrawal from such campaigns has left it vulnerable to losing ground in an increasingly competitive tourism market.
The decline in bookings, particularly outside the summer season, has raised alarm bells among tourism stakeholders. The first quarter of the year, along with the traditionally slower months of October and November, saw a notable dip in reservations, highlighting the challenge of maintaining year-round interest in the destination.
A Strategic Shift: The Role of National Branding
The tourism sector in Iceland has long been a vital contributor to the country’s economy, with a value of US$4.9 billion in export revenues recorded in 2024. This makes tourism a key player in Iceland’s economic performance, and its continued success is crucial for the country’s long-term growth. Experts argue that national branding is a critical long-term investment and that Iceland’s recent pullback in promoting its image on the global stage may be undermining its ability to attract consistent tourism traffic.
While private companies continue their marketing efforts to some extent, there is growing recognition that the government needs to take a more proactive approach to ensure the nation remains a top travel destination. A resurgence in national marketing campaigns could help maintain Iceland’s competitive edge and attract travelers year-round.
External Factors: The Play Airline Bankruptcy
In addition to the decline in marketing investment, Iceland’s tourism sector also faced a setback in 2025 with the bankruptcy of low-cost airline Play. The airline’s collapse disrupted travel plans for many, especially those seeking affordable flights to Iceland. Play had played a key role in making Iceland more accessible to budget-conscious travelers, and its closure left a gap in the market. This disruption further compounded the challenges faced by the tourism industry as it attempted to recover from the effects of the global pandemic.
Alternative Entry Points: Cruise and Ferry Visitors
While Keflavik Airport remains the dominant entry point for international tourists, Iceland also sees a steady stream of visitors through its seaports. The Port of Reykjavik, in particular, hosted around 322,000 cruise ship passengers in 2024, although these visitors are not classified as tourists due to their short stays of less than 24 hours. Additionally, the Seyðisfjörður seaport welcomed approximately 18,500 passengers via the MS Norröna ferry in 2024, offering a different travel route for those seeking an alternative to air travel.
Looking Ahead: A Critical Moment for Iceland’s Tourism
The tourism sector in Iceland stands at a critical juncture as it faces both internal challenges and external competition. The decline in arrivals from key markets and the reduction in marketing efforts have underscored the need for a renewed focus on national branding. As Iceland looks toward 2026, industry leaders are calling for a strategic shift to help the country regain its position as a premier travel destination. A reinvigorated marketing campaign, coupled with sustained efforts to strengthen its tourism infrastructure, could help Iceland weather these challenges and continue to attract visitors from around the globe.
In 2025, Iceland saw a decline in international visitors, particularly from Poland, Estonia, Latvia, and Lithuania, due to reduced marketing efforts and growing competition from other destinations, signaling a need for Iceland to re-evaluate its tourism strategy.
The future of Iceland’s tourism sector relies heavily on the government’s willingness to invest in long-term promotion and its ability to adapt to the evolving needs of travelers. By reasserting its presence on the global tourism stage, Iceland can secure its position as a leading destination for adventure seekers, nature lovers, and cultural enthusiasts alike.
