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Tourism and Bailouts

January 17th, 2009 · No Comments · Destination Marketing

Halfpriceland – “Are you here for the nature or the exchange rate?”

I won’t bore you with too much news or a bunch of statistics.  There is no doubt that Bailoutmania is in full-swing here in the USA.  Am I the only one that thinks our current leadership (local, state, and federal) has delusions of Keynes?  I don’t trust an educated Macroeconomist, let alone political dilettantes playing with my money.

No, I’m not asking for a bailout for tourism, but it is worth considering how others value this industry.  Almost every other country in the world assigns Tourism a level of importance equal to a cabinet or ministry level appointment.  The first thing that poor or developing countries OR THOSE IN CRISIS turn to when in need of CASH – tourism.  I hate subsidies and bailouts because they distort free-market forces.  However, we must differentiate between those and the need to recognize and operate tourism as a primary part of the economy, just like banking or real estate.

I think we as New Yorkers and Americans could take a look at the Iceland situation and learn from their experience.

Iceland became an attractive destination when the house of cards that constituted its banking system collapsed three months ago. Easy credit, rapid economic growth and broad deregulation of the country’s financial sector had spurred banks to expand abroad, despite heavy exposure to market risk.

When the global financial edifice toppled in 2008, Iceland was hit especially hard. In October, its three largest banks failed. For two days, trading on the country’s stock exchange was halted. And banking — until the crisis, Iceland’s third-largest source of income, behind fishing and aluminum exports — fell off the chart. It was replaced by, of all things, tourism.

Their economy is a bit different, but some of those things sound kind of familiar.

“Our message was: We’re still here, and our waterfalls are still running,” said Einar Gustavsson, head of the Icelandic Tourist Board in North America. “This immediately started to move people. It was a very pleasant surprise for Iceland, because we need foreign currency more than anything right now.”

It’s still not the cheapest vacation, but it doesn’t sound too bad.

You can fill up your rental car for a little more than $4 a gallon. An adult entrance fee to the Blue Lagoon — a steaming geothermal spa carved out of lava rock — costs about $22; a 90-minute Swedish massage at the spa will set you back $100.

Suddenly, Iceland is affordable for Americans


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