PRODUCT DEFINITION Strategic direction: You will explain what the vision / mantra of your resort is and how it will guide all the stakeholders to success. You will also state your positioning and how the positioning answers the needs and wants of the target markets. Support Detail Market area characteristics: This section provides a geographic definition of the area, along with a summary of the area’s political, economic, socio-demographics forecasts. The focus is on an analysis of the supply and demand and the area’s present and future economic potential, typically covering tourism arrivals by country, tourism growth potential, transportation, actual and future infrastructure, income, retail sales, employment (analysis of the local labor market), commercial development, etc. You should present here the need and the opportunity that you have identified in the market. The purpose of this text is on the first hand is to describe briefly Iceland’s political, economic and socio-demographic landscape. And on the other hand is to look at the country’s tourism industry and to highlight a potential opportunity. Iceland is an island in the north atlantic sea covering a total land area of 100.000 km2, it has glaciers, volcanos and the famous northern lights among others. Iceland's official language is Icelandic, its capital is Reykjavik and the total number of inhabitants is 334.000. “The Icelandic economy is an open developed economy operating under the Nordic model, combining a free market economy with a welfare state. It is the smallest economy within the OECD, with 16.7 billion USD in annual gross domestic production. This is equal to about 1/1000th of the size of the US economy”(VÍ, 2016). Although Iceland is a rather small economy they rank highly among other nations when it comes to competitiveness, being ranked first in Gender Equality and Global Peace Index. See figure 1.1 for further information on rankings in relation to political and socio-demographics. Iceland has superb infrastructure ranked number 1 for basic infrastructure in IMD’s report on competitiveness. Iceland’s labour force is highly educated, there are 197,000 workers in the labour force and unemployment was 6,7% in May 2016.(Invest.is) Taxes in Iceland are relatively low compared to other nordic countries, the following is a list of the major taxes and their percentages. Income tax 20%, Capital gains tax 18%, Value-added tax 24% however food and hotel accomodation fall into the lower VAT of 11%. (RSK, 2016) As aforementioned Iceland’s currency is the Icelandic króna, in the 2008 crash the icelandic króna lost more than 108% of its value, in an effort to minimize the devaluation of the Icelandic Króna the government put on capital controls. These capital controls have been being lifted in phases and the final phase of the capital controls is scheduled to be lifted in the spring of 2017 (VÍ, 2016). When the Icelandic króna lost so much of its value in contrast to foreign currencies the Icelandic tourism destination became very appealing to foreign visitors, however within the safety of the capital controls they Icelandic króna has grown stronger and could be a potential risk for the tourism industry if it continous to do so after the capital controls will be lifted. Next I will analyze the rapid growth in Icelandic tourism over the last years. Iceland is located midway between North America and Northern Europe, Keflavík international airport connects Iceland with daily flights all over the world. Flight time to mainland Europe is approximately 3 hours and 4 ½ to North America. Currently there are 25 different airlines flying to Iceland up from 5 airlines in 2005 (Pressan, 2016). This Increased supply of air seats has facilitated Iceland’s tourism growth and is essential to its future. In 2010 Iceland had 459.522 foreign visitors entering the country this year they are expecting 1.7 million that is an increase of 370% over a 6 year period. This growth is expected to continue and reach a whopping 2.5 million in 2018. But where are all these tourists coming from, well the 3 largest nationalities are from the United States(14,7%), British(14,5%) and Germans(11,76%). This rapid growth has had a positive effect on hotels occupancy and RevPar, average occupancy in Reykjavik was 79% last year and RevPar 108 euros, the fifth highest for major european cities. (Arion banki, 2016) The supply of hotel rooms, has not been able to match the growing demand and if the growth continues as expected there will be a huge gap between hotel rooms supplied and the demand for accommodation. See figure 1.3 Although this gap has recently been supplied by alternative accommodation options there is still a clear demand for additional hotel rooms. In the next few years two five star hotels are scheduled to open in Iceland, The blue lagoon hotel resort and the Marriott edition in Reykjavik. These two hotels are located in the capital and close to the international airport. However there is no five star hotel or resort in the south of Iceland which is the second most popular destination for tourist after the capital. We know that opening a five star spa resort in this area would meet a market demand, therefore we encourage you to read further on where we will describe our product offering and target market in great detail.