Reykjavik Airbnb Supply Falls Nearly 20% as Revenue Slips

Reykjavik’s Airbnb-listed rental market is entering the second half of 2026 with high nightly pricing but moderate occupancy. The latest dataset puts the average daily rate at $304, occupancy at 43.2%, estimated annual gross revenue at $30,780 per active listing and revenue per available rental night at $129. Active supply has fallen 19.4%, yet average annual revenue is down 3.3% year over year, indicating that a smaller pool of competing listings has not automatically translated into stronger host revenue.

Reykjavik maintains an average nightly rate above $300

AirROI’s dataset, updated on Aug. 8, 2026 and covering August 2025 through July 2026, includes 1,627 active listings in Reykjavik. The average daily rate is $304, occupancy stands at 43.2%, estimated average annual revenue is $30,780 and revenue per available rental night is $129. Average annual revenue is down 3.3%, while active supply has contracted by 19.4%. Median listing occupancy is about 44%; the top quartile achieves at least 70%, while the top 10% reaches 86% or more. The median nightly rate is roughly $242, the top quartile starts around $353 and the top 10% commands at least $526.

The gap between nightly pricing and occupancy is crucial for understanding the market. A $304 average rate applies to occupied nights and does not by itself measure the economic performance of a property.

Revenue per available rental night provides a broader benchmark because it combines pricing and realized occupancy. The market average is about $129, compared with $107 for a median property, at least $164 for the top quartile and about $240 for the top 10%.

Location, property characteristics, reviews, calendar availability and operating quality therefore create substantial differences in results even within the same city.

August remains the strongest revenue month

Seasonality affects revenue more dramatically than occupied-night pricing.

August, June and September form the strongest revenue period. Average monthly revenue during the peak season is approximately $5,439, with occupancy of 54.8% and an average daily rate of $312.

In the strongest individual month, estimated revenue reaches approximately $6,452, occupancy rises to 63.2% and daily rates reach around $380.

January, February and April form the softer season. Average monthly revenue falls to approximately $3,325, occupancy to 41.9% and the nightly rate to $281.

At the weakest monthly point in the dataset, revenue drops to around $2,947, occupancy to 30.8% and the daily rate to roughly $261.

The difference suggests that winter weakness is driven more by empty nights than by an extreme collapse in pricing.

Guests book roughly 80 days ahead

The average booking lead time in Reykjavik is approximately 80 days.

Summer stays are planned further ahead, at around 95 days on average. July bookings are made approximately 111 days before arrival, while March has the shortest window at roughly 58 days.

Average length of stay is approximately 5.3 nights.

Some 56.3% of listings show between 271 and 366 available days annually, while about 80% have at least 181 calendar days open for bookings.

Open calendar days should not automatically be interpreted as unwanted vacancy because owners may block dates, change availability or use properties personally. Still, the combination of extensive availability and 43.2% average occupancy indicates that Reykjavik does not face a continuous year-round shortage of bookable supply.

More than one-third of listings require 30-night stays

One of the most important qualifications in the dataset is that not every listing represents conventional short-stay tourism accommodation.

A minimum stay of 30 nights or more applies to 38.3% of listings. One-night stays are permitted by 23.2%, two-night minimums by 11.6% and three-night minimums by 12%.

Another 11.7% require four to six nights, while 3.1% have minimum stays ranging from seven to 29 nights.

The full pool of 1,627 listings therefore should not be treated as a pure vacation-rental market. It combines properties targeting traditional visitors with accommodation configured for monthly or extended stays.

This also limits direct comparisons between the number of Airbnb listings and conventional hotel-room supply.

Apartments dominate the market

Reykjavik’s online rental market is closely connected to conventional residential property.

Apartments and condominiums account for 77.9% of listings, while entire homes or apartments represent 83.1% of supply.

One-bedroom properties make up 41.1%. One- and two-bedroom units together account for 66.5%, while listings with three or more bedrooms represent 20.5%.

Accommodation for four guests is the most common capacity, accounting for 27.2% of listings, while the average property can host 3.7 people.

The structure makes rental regulation particularly important for the wider housing market because much of the tourism-oriented inventory consists physically of ordinary residential units.

Premium properties generate more than $300,000

Market averages conceal an exceptionally wide distribution of revenue.

A five-bedroom luxury penthouse in central Reykjavik shows estimated trailing 12-month revenue of $375,358, occupancy of 43.6% and an average daily rate of about $2,191.

A six-bedroom downtown villa records approximately $349,023 in revenue at 56% occupancy and a rate of about $1,663.

Another six-bedroom property produces estimated revenue of $328,547 at 66.6% occupancy and an average rate of approximately $1,352.

These properties belong to a specialized premium and large-group segment and are not representative of a conventional Reykjavik apartment. The dataset also shows professional-scale operators: its largest host controls 76 properties with estimated trailing revenue of roughly $3.7 million.

Iceland caps simplified home accommodation

Regulation is central to any investment analysis.

In 2026, Iceland’s simplified home-accommodation regime allows an individual to rent accommodation at their registered domicile. A second property may also qualify under specified conditions, including restrictions connected with its location.

The combined limit is 90 rental days per calendar year and ISK 2 million in annual rental income. Registration costs ISK 9,200 and must be renewed each year.

Operating beyond either the 90-day or ISK 2 million threshold requires an accommodation operating licence. Companies and other legal entities cannot use the simplified home-accommodation regime and must operate under the commercial licensing framework.

Administrative fines for violations can reach ISK 1 million per offence.

For investors, this means that buying a conventional Reykjavik apartment does not automatically provide the right to operate it as year-round tourist accommodation. The permitted use and licensing position of the specific property need to be established before acquisition.

Registration indicators do not prove non-compliance

The third-party dataset finds registration evidence for roughly one-fifth of listings, with different sections of the page showing approximately 20% to 20.5%.

That should not be interpreted as evidence that the remaining listings are illegal.

Commercial accommodation can operate under a different type of licence, while an external analytics provider may not identify every registration or correctly associate it with an individual listing.

Platform analytics are therefore useful for evaluating pricing, supply and booking patterns but cannot determine the legal status of every property.

Capital-region hotels also recorded weaker nights

Moderate Airbnb occupancy is not occurring in isolation.

Icelandic hotels recorded approximately 532,000 overnight stays in June 2026, down 0.4% year over year. The Capital region posted the largest decline in absolute terms, with hotel nights falling by about 16,000, or 6.5%.

Hotel room supply in the Capital region nevertheless increased 0.9%. A total of 59 hotels were operating with 5,671 rooms, while room occupancy fell by 3.4 percentage points.

Foreign visitors accounted for 91% of hotel nights nationwide. US guests generated approximately 172,000 nights, Germany 48,000, China 34,000 and the UK 27,000. The June 2026 accommodation data are preliminary.

The figures indicate that softer occupancy in Airbnb-listed accommodation coincides with weaker year-on-year performance in part of Reykjavik’s conventional hotel market.

Reykjavik has about 140,000 residents

Reykjavik municipality had 139,804 inhabitants on Jan. 1, 2026, an increase of 0.7% from a year earlier.

By the end of the second quarter, the wider Capital region had 253,230 residents, compared with a national Icelandic population of approximately 396,500.

The metropolitan area therefore contains close to two-thirds of the country’s population.

That creates an unusual property market in which Iceland’s dominant residential, administrative and business centre is also its principal urban tourism base.

Iceland received almost 2.3 million foreign visitors

Just under 2.3 million foreign overnight visitors traveled to Iceland in 2025, equivalent to 97.6% of the record level recorded in 2018.

Around 2.27 million, or 98.7% of the total, arrived through Keflavik International Airport.

Cruise tourism is recorded separately. Around 322,000 foreign cruise passengers arrived at the Port of Reykjavik in 2024, a record for the city. Those passengers are treated as day visitors rather than foreign overnight tourists.

Reykjavik consequently serves two different tourism markets. Air arrivals support accommodation demand, while cruise visitors have a larger direct impact on restaurants, excursions, retail and local transport without generating equivalent overnight stays.

Tourism accounts for 8.8% of Icelandic GDP

Preliminary national accounts put tourism’s direct contribution to Icelandic gross domestic product at 8.8% in 2025, up from 8.2% in 2024.

Accommodation services alone contributed around 2.6% of GDP.

Internal tourism consumption by foreign and domestic visitors approached ISK 914 billion, rising 4.2% in current prices. Tourism expenditure excluding selected imputed components exceeded ISK 870 billion, up 3.9% in current prices but only 0.8% at constant prices.

At constant prices, expenditure on accommodation services increased 3.5%, while tourism gross value added grew by around 1%. Tourism accounted for approximately 9.5% of all hours worked in the economy.

The figures demonstrate the structural importance of travel demand while also showing how much nominal growth has been driven by higher prices.

A $304 rate does not equal a high investment yield

An average nightly rate of $304 can make Reykjavik appear exceptionally attractive to property investors, but it is not an investment-return measure.

The estimated $30,780 in annual revenue is gross revenue. Operating costs, utilities, cleaning, repairs, insurance, platform and management fees, taxation and financing costs still need to be deducted.

Acquisition price is equally important. Two properties generating identical gross revenue can produce very different investment yields if their purchase prices differ substantially.

The regulatory model creates another constraint. Simplified home accommodation is capped by both days and revenue, while full commercial operation requires the appropriate licence.

Falling supply has not lifted average revenue

The most significant combination of market indicators is the 19.4% decline in active supply alongside a 3.3% decrease in estimated average annual revenue.

With stable demand, a substantial reduction in competing supply would normally be expected to improve the economics of remaining properties.

That is not visible in the market average so far.

Nightly prices remain high, but 43.2% occupancy means a large share of available calendar nights is not being converted into bookings.

The composition of the dataset also matters: more than 38% of listings require stays of at least 30 nights, meaning the sample combines conventional vacation rentals with extended-stay inventory.

As International Investment experts report, Reykjavik remains an expensive and fundamentally strong tourism market, supported by Iceland’s almost 2.3 million foreign overnight visitors and tourism’s large role in the national economy. The available rental data, however, do not support an assumption of automatic outsized property returns. A $304 average nightly rate coincides with only 43.2% occupancy, while a nearly one-fifth reduction in active supply has not prevented average revenue from declining. Acquisition price, the legal operating status of the property, operating costs, seasonality and the ability to maintain winter occupancy are therefore more important to an investor than the headline nightly rate. Third-party platform estimates should also be treated as market indicators rather than substitutes for audited property financials or legal due diligence.