Iceland Mag

7 Reykjavik

Iceland Mag

Economy

Construction of new hotels in Reykjavík continues apace: 50% more hotel rooms by 2020

By Staff

  • Downtown Reykjavík New construction in and around downtown Reykjavík is primarliy hotels. 2,400 new hotel rooms will be added in the next few years. Photo/GVA

To keep up with growing demand created by the booming tourism industry a large number of new hotels are either in the last stages of planning or already under construction in Reykjavík and the capital region. According to a report by the Icelandic National Broadcasting Service RÚV the number of hotel rooms in the capital will rise in the next 2-4 years from 5,000 today to 7,700.

Read more: Overnight stays at hotels sets new record in December: 56% year-over-year increase

Since 2010 the hotel industry has been playing catch-up with the rapidly growing number of foreign travellers. New hotel rooms simply cannot be added as fast as the number of travellers grows. This has created a shortage of accommodation for travellers in the capital region. Hotels in Reykjavík are close to capacity year-round with guesthouses and airbnb apartments barely able to meet the growing demand.

The unavoidable result has been that prices of hotel rooms and aribnb rentals have risen while real-estate prices and rents have been pushed up and the supply of long-term rental properties has shrunken.

New hotels planned outside the city-center 

Several new hotels are under construction in the city center, including the 250 room four star Marriott Edition by Harpa, and 160 room Icelandair hotel by Austurvöllur square. A third major hotel construction will soon start by Lækjargata street where Viking ruins were unexpectedly discovered in the summer of 2015. The ruins will be preserved in the basement of the 120 room hotel.

Most of the new construction will take place outside the city center, as the city has declared that no new hotels will be approved in the center of town. Instead, any further increase will take place outside the city center. These include what would become two of the largest hotels in Iceland, a 350 room hotel at the east edge of Laugardalur valley recreational area and a 360 room hotel on the west edge of Öskjuhlíð hill.

The eight largest hotel projects already underway will add 1,360 rooms. An additional 12 smaller projects which are either already underway or on the drawing board will bring the total in Reykjavík to 2,400 new rooms. An additional 300 rooms are being added in neighboring suburban municipalities.

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