In Iceland, a crash, an eruption then a boom

Financial crisis, volcano spurred its tourism industry.

REYKJAVIK, ICELAND — Iceland has discovered the secret to a booming tourist industry: First have a mammoth financial implosion, then an enormous volcanic explosion.

The collapse of the Icelandic krona after the 2008 financial crisis transformed this Arctic island packed with 35 active volcanoes into a top destination by making it cheap for visitors.

Two years later, Eyjafjallajokull erupted, spewing thick ash clouds into European skies. Millions of passengers were grounded for days and airlines suffered financial losses.

But the explosion put Iceland on the map. The foreign news media descended on the island, beaming images around the world of spectacular landscapes, even as journalists struggled to pronounce the volcano’s name.

“Iceland has been saved by the crash and the eruption,” said Fridrik Palsson, who owns Hotel Ranga, a luxury resort just 19 miles from the slopes of Eyjafjallajokull, the 16-letter volcano that is often shortened to E-16 by foreigners. “I have never seen anything take off so fast,” he said.

The combined effect of the catastrophes has been an invasion on a scale possibly unseen since Vikings raided the island hundreds of years ago. Tourists are expected to outnumber the local population of 330,000 by seven to one next year, according to official data. By comparison, last year visitors to France outnumbered the French by two to one.

Tourism is now the island’s biggest industry, taking over from fishing and aluminum smelting, much as the financial sector did in the years before the crash.

The influx could be even higher following the rise of the Pirate Party. With its black pirate flag and anarchist leanings, it recently gained more seats in parliament and even more attention, helping to burnish Iceland’s image as cool and alternative.

The number of tourists has risen by as much as 30 percent every year for the last four years, according to Iceland’s Tourist Board. They brought in revenues of $3.2 billion in 2015, a third of the country’s export earnings. Tourism is the single biggest employer, and many Icelanders are pouring money into services and new construction.

But there is growing concern that uncontrolled tourism is placing too large a burden on this small island. Housing prices and rents are rising quickly, forcing young people to live with their parents. Car rentals have tripled, clogging traffic. Littering and light pollution are spoiling parts of the landscape, many Icelanders say.

“It’s like the city is not my city anymore,” Birgitta Jonsdottir, the leader of the Pirate Party, complained last month. “It’s like Disneyland downtown.”

A poll in October conducted by the national broadcaster RUV reported that 87 percent of Icelanders want the government to raise fees or taxes on tourists.

The tourist boom is making some Icelanders uneasy. Another crash like the one that hit the banks is just a matter of time, and many said they are saving money or investing in hard assets.

Pessimists say all it takes to prick the tourism bubble is a sudden drop in visitors, triggered by something like a financial crisis overseas or the adverse effects of Britain’s exit from the European Union.

“It’s happening all over again,” said Kristjan Asjaersson, 51, a cabdriver. During Iceland’s short-lived heyday, he recalled having to crisscross the island just to deliver fish caught by Icelandic billionaires — they had forgotten to pack their catch before flying off in their private jets.

“Too many people rely on tourism,” he said. “When tourist numbers fall, the economy will collapse again. I know it will happen. But I will be prepared.”

BARA KRISTINSDOTTIR/THE NEW YORK TIMES Diddi Bardarson put his financial security into breeding Iceland’s famous horses on his ranch in Hella, southeast of Reykjavik.