Executive Summary
Travelers who spend a night near Keflavík International Airport frequently encounter a striking contrast with Reykjavík. In the capital, hotels, restaurants, cafés, bakeries, and shops sit side by side in walkable streets. In the airport zone, hotels may offer little or no evening food service, some rely on outside restaurants a considerable walk away, and delivery options are limited to a small number of venues, often international fast-food chains. This paper argues that the isolation of airport-area guests is not an accident or simple oversight. It results from the area’s military origins, the peculiar demand profile of transit guests, Iceland’s high labor costs, the small size of the local resident market, and the recent and still-limited arrival of delivery platforms. Together these factors produce a zone that hosts many visitors but generates too little steady demand at the right hours and places to support the dense food ecosystem visitors expect.
1. The Contrast Between Reykjavík and the Airport Zone
Reykjavík’s downtown concentrates nearly every condition that supports a dense restaurant scene. Visitors stay several days there, residents live and work in the same streets, and foot traffic continues from morning into the night. A 2018 Icelandic Tourist Board study found that tourists spent the most in Reykjavík, or ISK 38,000 (USD 303, EUR 274) per person a day, where overnight stay, food and recreation made up the bulk of the cost, and that visitors stayed there 2.6 days on average. A restaurant in central Reykjavík can draw on hotel guests, office workers, residents, and day-trippers, so its dining room fills across many hours.
The airport zone offers almost none of these conditions. Keflavík Airport lies on the Reykjanes peninsula, roughly 50 kilometers from the capital, adjacent to the municipality of Reykjanesbær and the redeveloped former military area of Ásbrú. Hotels there are scattered across a spread-out, car-oriented landscape rather than clustered along a commercial street. A guest who arrives without a car finds that walking distances which would be trivial in Reykjavík become significant burdens in wind, rain, darkness, or winter weather, as in the observed case of a hotel that directs guests to a partner restaurant a fifteen-minute walk away.
2. Origins: A Landscape Built for a Base, Not a Town
Much of the airport zone’s physical layout was never designed for commercial life. The airport began as a military installation. U.S. Naval Air Station Keflavik was built during World War II by the United States Army as part of its mission to defend Iceland and secure North Atlantic air routes. American forces returned in 1951 under NATO, and at the height of the Cold War the air station was home to nearly 6,000 military personnel and their families and employed close to two thousand Icelandic civilian workers. The base was closed in September 2006 and turned over to the Icelandic government.
A military base is planned as a self-contained, inward-facing community, with its own commissaries, mess halls, and recreation facilities, and with security perimeters that separate it from surrounding towns. When the base closed, its buildings, including barracks and housing blocks, were converted to civilian uses. The redevelopment has been called the biggest recycling project in the history of Iceland. Recycling structures is economical, but it also means that the hotels and housing created from them inherited a layout of separated buildings, wide roads, and open spaces rather than a dense main street where restaurants could cluster.
Iceland’s international gateway, in other words, sits where it does because of mid-twentieth-century military geography, not because of urban planning around a commercial center. Many major airports are surrounded by sterile hotel strips, but in most cases a large metropolitan area lies close by to supply restaurants and delivery services. Keflavík’s distance from the capital leaves its hotels with only a modest town for support.
3. The Demand Profile of the Transit Guest
The single most important reason for limited food service is the nature of the airport hotel guest. Such guests typically stay one night, often arriving late or departing very early. Transatlantic schedules through Keflavík bring many arrivals from North America in the early morning and send many departures to Europe in the morning hours, with westbound flights later in the day. A guest arriving at midnight for a 7 a.m. flight wants sleep, perhaps a quick meal, and breakfast; that guest is not a reliable dinner customer.
Other guests use the airport hotel as a base for a single day, leaving for the Blue Lagoon, Reykjavík, or the South Coast and eating elsewhere. Rental car users, who make up the majority of visitors to Iceland, can drive to restaurants in Keflavík town or stop on the road. The guests left behind are disproportionately those without cars, and they are exactly the guests who find the zone most isolating.
For a restaurant, this demand pattern is poor. Customers arrive in irregular bursts tied to flight banks rather than at steady mealtimes, few return a second night, and much of the potential market leaves the area during the day. A dining room may be overwhelmed one evening and nearly empty the next. Breakfast, by contrast, is predictable, since nearly every guest wants it before departure, which explains why many airport hotels offer a breakfast buffet but little else.
4. Iceland’s Cost Structure
Iceland’s high labor costs magnify the problem. Restaurant staffing in Iceland is expensive, and collective agreements set wage premiums for evening, night, and weekend work. A hotel restaurant that must keep a cook, servers, and a dishwasher on shift for an uncertain number of diners can lose money on most nights. The costs of imported food, discussed in an earlier paper on island shipping costs, add further pressure.
Faced with these numbers, hotels make rational choices. Some offer only breakfast. Some sell packaged snacks or frozen meals at the front desk. Some outsource dinner to a partner restaurant elsewhere, gaining a way to answer guests’ questions without bearing the payroll of a kitchen. From the operator’s viewpoint, sending guests fifteen minutes down the road is cheaper than staffing a kitchen for a handful of covers. From the guest’s viewpoint, especially one without a car, the arrangement shifts the cost onto the traveler in the form of time, effort, and exposure to the weather.
5. The Small Local Market
Restaurants in the airport zone cannot rely on residents to fill the gaps that transit guests leave. Reykjanesbær is a town of roughly twenty thousand people, and Ásbrú’s residents include students and families who mostly cook at home, as is common in Iceland where dining out is expensive. The town’s restaurant activity concentrates along its central streets in Keflavík proper, not near the scattered hotels.
This small market helps explain why international chains such as Subway and Sbarro appear prominently among available options. Standardized chains require less skilled kitchen labor, can operate with lean staffing across long hours, and draw both on locals seeking cheap familiar food and on travelers seeking a known product. Independent restaurants serving local cuisine need steadier, more predictable demand to cover their costs, and that demand is difficult to find in the airport zone.
6. The Late and Limited Arrival of Delivery
In many countries, delivery platforms have softened the isolation of airport hotels by bringing restaurant food from wider areas. In Iceland, this development is very recent. Wolt launched in Reykjavík in early May 2023 and has since added Hafnarfjörður, Reykjanesbær, Selfoss and Hveragerði. The company has since grown considerably, now offering delivery from more than 500 venues in the capital region, Reykjanesbær, Selfoss and Akureyri, but the great majority of those venues are in the Reykjavík area.
Delivery in a small town faces the same structural problems as restaurants themselves. The pool of participating restaurants is small, couriers are limited, and delivery zones are drawn around areas with enough orders to keep couriers busy. Hotels on the edges of town, near the airport or in Ásbrú, may fall at the margins of coverage, leaving guests with only the handful of venues whose delivery radius reaches them. Gas station food also plays a role in the region: Olís reports that its best-selling Wolt venue is the service station at Fitjar in Reykjanesbær, an indication of how much local delivery demand is met by convenience outlets rather than full restaurants.
7. External Shocks and Investment Hesitancy
The Reykjanes peninsula has experienced repeated volcanic eruptions since 2021, and the evacuation of the town of Grindavík in late 2023 disrupted the region and dampened tourism demand for a time. Although eruptions have not closed Keflavík Airport, they add uncertainty for anyone weighing long-term investment in hospitality on the peninsula. Combined with seasonal swings in visitor numbers, this uncertainty discourages the kind of risk-taking that a new restaurant near the hotels would require.
8. Planning Responses
Public planners recognize that the airport zone is underdeveloped. The state-owned Keflavík Airport Development Company, Kadeco, was founded in 2006 to lead the transformation of the former base, and in 2019 the company completed its initial main objective; to bring properties that the U.S. military left in Iceland to civilian use. It then turned toward broader land development. A master plan prepared by the Danish firm KCAP envisions Ásbrú becoming a campus-like area which includes aviation, research, and residential, which the architects liken to “a modern take on the cosy, lively village.” Kadeco’s development plan, known as K64, extends to 2050 and includes improved public transport between the airport and the capital and new housing in Ásbrú.
These plans address the root problem, which is density. A larger residential population, more workplaces, and a more compact mixed-use center would create the steady, all-day demand that restaurants need. Such changes take decades, however, and travelers staying near the airport today will continue to face the current gap.
9. Practical Implications
For hotel operators, several modest measures could reduce guest isolation without the cost of a full kitchen. Staffed or unstaffed micro-markets offering sandwiches, salads, and prepared meals, common in Nordic hotels, can serve late arrivals. Clear communication in booking listings about the absence of on-site dinner would allow guests to plan ahead. Shuttle service to Keflavík’s town center at dinner hours would connect car-less guests with the restaurants that already exist.
For travelers, the most reliable approach is to plan food in advance: eating at the airport or in Reykjavík before traveling to the hotel, stocking up at a grocery store in Reykjanesbær, or checking delivery coverage for the specific hotel address before booking.
10. Conclusion
The isolation of airport-area guests in Iceland is the predictable outcome of a gateway placed on a former military base far from the capital, serving guests who stay briefly and keep irregular hours, in a country where labor is expensive and the surrounding town is small. Reykjavík’s density of hotels, restaurants, and shops arises from steady demand across many hours from residents and multi-day visitors alike. The airport zone has volume without steadiness, visitors without dwell time, and buildings without a commercial center. Until planned development supplies the density the area lacks, airport hotels will continue to rely on breakfast buffets, outsourced dining, and a short list of delivery options, and their guests will continue to experience the gap between Iceland’s busy capital and its quiet front door.
