The annual average number of tourists is now just over 2.1 million. The forecast predicts the average will fall to 2 million people by mid-2020 and to 1.9 million people a year later. Despite slightly more tourists in December than Arev had predicted, this has little to no impact on Arev's forecast.
The left-hand axis of the chart to the side shows that, until mid-2017, the annual average continued to increase. In 2017, this reversed. In December 2019, there were 8.6% fewer tourists than the previous year. As a result, the annual average fell by 0.5%. The average is now just over 2.1 m. Arev plans for it to be down to 2.0 m. by mid-2020 and 1.9 m. a year later, as the chart shows.
Arev then set up two other scenarios. According to the optimistic scenario (the green line), the average will fall to just over 2 m. by mid-2021 and then start to rise again. According to the pessimistic scenario (the yellow line), the average will fall to just over 1.8 m. by mid-2021 before it starts to rise again.
Finally, to the side is a graph showing the relationship between the real exchange rate and the number of tourists. The yellow line shows the real exchange rate of the Icelandic króna and the brown line shows the number of tourists. The significant increase in tourists in recent years has greatly increased the demand for factors of production, such as labour, and pushed up the real exchange rate. There is no sign that a falling real exchange rate affects the number of tourists. Many have pointed out that the brown line in the three graphs is reminiscent of Butler's tourist model 1, which deals with the life cycle of individual tourist destinations. Butler's model is certainly worth its salt, and many tourist destinations reflect its concepts quite well. The model, however, has no statistical value, as Butler primarily put forward it to describe the life cycles of tourist destinations.