Published on
January 15, 2026
Lithuania has joined Poland, Estonia, and Latvia in dragging down Iceland tourism in 2025 as sharp declines in arrivals from these European markets, weaker visitor spending, and fading demand outside the summer season begin to bite. Fresh data from KeflavĂk Airport shows that while total arrivals slipped only slightly, the pullback from Central and Baltic Europe, combined with reduced international marketing and shifting travel choices, is reshaping Iceland’s tourism performance and raising concerns about its momentum heading into 2026.
Iceland’s tourism industry, long seen as one of Europe’s strongest post-pandemic success stories, has entered a fragile phase in 2025. Fresh data released by KeflavĂk Airport, the country’s main international gateway, shows that international arrivals have slipped slightly, but the underlying shifts reveal deeper structural challenges. While headline numbers suggest only a modest decline, changes in market composition, weakened demand from key European countries, and reduced marketing exposure are reshaping Iceland’s tourism outlook heading into 2026.
KeflavĂk Airport accounts for around ninety-nine percent of all international arrivals to Iceland, making its figures a near-complete reflection of inbound tourism performance. In 2025, total arrivals reached 2.253 million passengers, marking a decline of 0.4 percent compared with 2.261 million in 2024. On the surface, the drop appears limited. However, the real concern lies in which markets pulled back, which ones grew, and how visitor spending and seasonal demand have shifted.
Concentration of Arrivals Remains High
Despite the dip, Iceland continues to rely heavily on a small group of source markets. The top five inbound countries together accounted for fifty-four percent of all international arrivals in 2025, reinforcing Iceland’s dependence on a narrow visitor base.
The United States remained Iceland’s largest market by a wide margin. Around 0.65 million arrivals were recorded from the US, representing twenty-nine percent of total inbound traffic. Strong air connectivity and continued interest in Iceland’s nature-driven experiences helped maintain US demand, even as growth slowed compared with earlier years.
The United Kingdom ranked second, contributing approximately 0.45 million visitors, or just over ten percent of total arrivals. While still a core market, UK demand showed signs of stagnation, particularly outside the summer peak.
Germany followed with roughly 0.15 million arrivals, accounting for 6.6 percent of the market. France contributed about 0.10 million visitors, representing 4.4 percent, while China reached around 0.12 million arrivals, or 5.5 percent of the total.
China stood out as the fastest-growing market in 2025, recording a sharp increase of 29.2 percent compared with 2024. This growth reflected the gradual recovery of long-haul travel and renewed interest in Nordic destinations among Chinese travelers. Switzerland also posted strong gains, with arrivals rising by 20.9 percent, equivalent to around 35,000 additional visitors. Sweden followed with growth of 17.7 percent, adding roughly 30,000 arrivals year on year.
These gains, however, were not enough to offset significant losses elsewhere.
European Pullback Drives the Decline
The most damaging declines came from parts of Europe that had previously played an important role in Iceland’s growth story. Central and Eastern European markets, once reliable contributors to year-round travel, saw a sharp retreat in 2025.
Poland registered the single largest drop. Arrivals from Poland fell by around twenty-eight percent. Over a two-year period, from 2023 to 2025, Polish outbound travel to Iceland was almost halved, declining from approximately 138,000 visitors to just 78,000 last year. This contraction alone removed tens of thousands of visitors from Iceland’s tourism economy.
The Baltic States also recorded a substantial downturn. Combined arrivals from Estonia, Latvia, and Lithuania fell by nearly twenty-five percent. In 2025, only around 30,000 visitors arrived from these countries, compared with about 40,000 the year before. While smaller in absolute numbers, the Baltic decline reinforced the broader pattern of weakening European demand.
Countries Contributing to the Decline in 2025
Below is a clear breakdown of the countries and regions that contributed most directly to Iceland’s tourism slowdown:
Poland – sharp contraction, down around twenty-eight percentLithuania – part of Baltic downturn, declining demand and fewer departuresLatvia – reduced outbound travel contributing to Baltic lossesEstonia – weakened travel volumes, especially outside summerBaltic States combined – arrivals down nearly twenty-five percent overall
These markets had previously supported Iceland’s shoulder seasons and winter travel. Their retreat has had a disproportionate impact on occupancy rates, regional tourism businesses, and visitor spending beyond peak months.
Cruise and Ferry Arrivals Offer Limited Relief
Beyond air travel, Iceland receives visitors through sea routes, though these arrivals play a different role in the tourism economy.
Seyðisfjörður seaport remains an alternative entry point, primarily serving the MS Norröna ferry. In 2024, around 18,500 visitors arrived via this route, connecting Iceland with mainland Europe. While valuable for regional access, ferry arrivals represent only a small fraction of overall inbound travel.
Cruise tourism continues to bring large volumes of passengers to Icelandic ports, particularly Reykjavik. In 2024, close to 322,000 cruise ship passengers were recorded at the Port of Reykjavik. However, these travelers are not classified as tourists in official statistics, as they stay less than twenty-four hours in the country. As a result, their economic contribution is more limited, concentrated mainly on short excursions, retail, and port services.
Marketing Retreat Raises Alarm
Industry leaders increasingly point to reduced international marketing as a key factor behind Iceland’s weakened performance. Concerns are growing that Iceland is losing visibility at a time when competing destinations are aggressively promoting themselves.
During a recent interview on national television, the managing director of the Icelandic Tourism Board highlighted troubling booking trends, particularly outside the summer season. Declines were observed during the first quarter of the year and again in October and November 2025, periods that had previously shown steady growth.
Between 2010 and 2022, Iceland benefited from consistent consumer marketing that positioned the country as a year-round destination. That sustained exposure played a major role in building global awareness and demand. Since then, national-level image campaigns have largely been scaled back, even as rival destinations continue to invest heavily in branding and promotion.
While private tourism companies are still active in marketing Iceland, industry leaders stress that national branding cannot be replaced by fragmented efforts. Destination image-building, they argue, is a long-term investment that shapes traveler perception years in advance.
Economic Stakes Remain High
Tourism remains one of Iceland’s most important economic pillars. In 2024, the sector generated around 4.9 billion US dollars, equivalent to roughly 620 billion Icelandic crowns, in export revenues. Any sustained slowdown threatens not only visitor numbers but also employment, regional development, and foreign exchange earnings.
The decline in arrivals from price-sensitive European markets has also raised concerns about visitor spending. Fewer arrivals from Central and Eastern Europe typically translate into lower volumes across accommodation, transport, dining, and guided services, especially in rural areas that depend on steady flows beyond the summer rush.
Looking Toward 2026
As Iceland looks ahead, the challenge will be balancing sustainability goals with the need to maintain demand. The data from 2025 suggests that without renewed marketing investment and targeted recovery strategies, Iceland risks losing further ground to destinations offering similar nature-based experiences at more competitive prices.
The rise in arrivals from China, Switzerland, and Sweden shows that growth remains possible. However, the sharp pullback from Poland, Lithuania, Latvia, and Estonia underscores how quickly demand can fade when visibility weakens and travel choices expand elsewhere.
Lithuania joins Poland, Estonia, and Latvia in hammering Iceland tourism in 2025 as falling arrivals from these European markets drive lower visitor spending and weak demand beyond the peak season. The decline reflects reduced travel appetite, rising competition from rival destinations, and Iceland’s pullback from sustained international tourism marketing.
For Iceland, the story of 2025 is not one of collapse, but of warning signs. The numbers reveal a tourism industry at a crossroads, where strategic decisions made now will shape whether the country regains momentum or faces a more prolonged period of soft demand.
