Bankrupt Iceland Makes for a Bargain Vacation

We figured the driver taking us to a New York airport didn't know much about our destination when we said we were going to Iceland and he asked us to spell it.

"Oh," he said. "The bankrupt country."

Yes, the bankrupt country. Not the volcanic island south of the Arctic Circle with the near-lunar terrain that astronauts once practiced on. Not the home of a swinging Reykjavik nightlife, and other-worldly native musicians like Bjork and Sigur Ros. Not the land with spectacular scenery and bubbling geothermal pools.

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Our plans to visit Iceland with five other couples in December predated the onset of the nation's most crippling economic problems. They didn't deter us, since we figured Iceland's beauty wasn't going anywhere. And, hey, the drinks might be cheaper.

We booked rooms two months in advance as Iceland's currency, the krona, was collapsing. It was a bet: perhaps we could book later and find better prices, but since other tourists were sniffing for bargains we worried good rooms might be snapped up. Had we waited, the rooms would have been about $20 cheaper a night.

We made it up in one of Reykjavik's finest restaurants, the Seafood Cellar. The gourmet meal had waves of dishes that included moose carpaccio, tiny Icelandic lobster tails, char, tender lamb and multiple drinks - all for about $100 per person.

Iceland had 48,999 tourists from North America from January through November this year, down 13 percent from 2007. That was primarily due to the loss of air service between Baltimore and Iceland earlier this year, according to the Icelandic Tourist Board.

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But with the krona's value dropping, tourism began going up this fall, said Einar Gustavsson, the board's executive director for the Americas. One U.S. dollar was worth over 120 Icelandic krona at the end of 2008, double what a dollar was worth in Iceland in 2007.

One morning my wife and I ate breakfast in a tiny restaurant that looked liked a bookstore from the outside, with two men in the booth behind us. My curiosity got the best of me when one of the men went to the restroom and the other told someone on his cell phone that he was talking to a reporter.

Turned out it was The New Yorker magazine, in Reykjavik to do a story on how the country has been affected by the financial trauma.

There was a demonstration planned for a few hours later in front of the Parliament building down the street, they said. Check it out. The local scoffed at our intended destination, the Blue Lagoon geothermal pool outside of town. It's a tourist trap, he said. The water's not as warm as it used to be.

Yet we were tourists, and we disregarded the warning.

Maybe the idea of a steaming pool of therapeutic water carved out of volcanic rock and heated with underground energy was old hat to him, but not to us. It was an experience not to miss, swimming in a huge outdoor pool of salty, soothing water as occasional squalls of snow and sleet pelted our face and winter's slow dusk descended. The facilities around the Blue Lagoon are sleekly modern and designed with efficiency in mind.

We also tried one of the many "pools" of thermal-heated outdoor baths sprinkled around Reykjavik, those that the locals use. It's a luxury that should be experienced as much as possible. We never realized how important it was to pack multiple bathing suits for a winter's visit to Iceland.

Reykjavik was lovely for the holiday season, the store windows and streets festive. Half-finished construction projects dot the skyline, however, signifying work that started before the economy went sour and may or may not be completed.

The capital's reputation for a marathon nightlife is no myth, as we found out with a fourth-floor window overlooking pubs and clubs. Fun 'til 4 or 5 a.m. is routine on the weekends. Loud fun.

One of our drivers, even as he outlined how much money his family had lost in the financial tumult, said that Iceland's people had not surrendered to sullenness.

"People are realizing what is important," he said, and they're spending more time with their families.

He drove our party on a tour known as the Golden Circle. Starting before dawn (since dawn was 11 a.m., there was no choice), we left Reykjavik for the Pingvellir national park and one of Iceland's most historic spots. Landscape made jagged by the intersection of the North American and Eurasian tectonic plates was the site of the world's first democratic parliament in 930.

It has a stream into which visitors pitch coins and make wishes, the site of a tale told by our guide of a husband and wife who leaned over to toss their coins. The woman lost her balance and tumbled into the water.

"You don't often see wishes come true that fast," the husband supposedly said.

Other attractions include Gullfoss, a stunning double waterfall where water seems to cascade in every direction, and Geysir, a famed hot spot with pools and steam seeping through volcanic rock. The Great Geysir doesn't blow much anymore, but the Strokkur geyser shoots hot water every 10 minutes or less.

You can take a massive bus to these sites, but we preferred a Super Jeep ride. Our party rented three of the gigantic off-road vehicles, which gave us the freedom to book a snowmobile ride to the edge of a glacier and see chunks of blue ice the size of small cars. Our driver loved driving through rivers, too.

The temperature the day we toured was a few degrees shy of freezing, and there was a thick coat of ice on the ground frosted by a dusting of snow.

In other words, about as treacherous as you can get. Virtually everyone in our party slipped and fell at some point. It made you realize the difference between tourist spots in Iceland and, say, in the U.S. With these conditions, U.S. tourist spots would no doubt be closed, or the ice chipped, salted and sanded into messy oblivion.

Not in Iceland. You're responsible for your own safety. Gingerly heading down a path to get a closer view of Gullfoss, one woman slipped and if she hadn't grabbed a rope railing as she was sliding under it, she would have slid perilously close to the edge.

At Geysir, you can walk so close to the volcanic pools that if you're silly enough to stick your hand in to see if it's really as hot as they say, you can. Watch the kids.

On our last day, we shook off the cobwebs of a late night out for a trip to a farm and a ride on Icelandic horses. The beautiful creatures are unique to Iceland, about the size of a hefty pony. Our driver said they are as revered in Iceland as the cow is in India. But only to a point.

"We love our horses," he said. "But we eat them, too."

And more often, lately: sales of horse meat - cheaper than beef - have been rising with the bad economy.

The horses were mild-mannered, easy even for beginners. At the end, their saddles removed and the day's work done, the horses ran off to play in a meadow, rolling around in mud.

Our only disappointment was a failure to see the aurora borealis, the so-called Northern Lights. The weather was changeable during our brief trip, never consistently clear enough for our drivers to say it would be worth a ride into the countryside.

Even though the name Iceland sends shivers, we were told Reykjavik in December felt much like it did in New York at the same time, and that proved to be true. It has an intoxicating beauty - just like its intoxicating nightlife - and for a U.S. resident is as easy as the trip from one coast to the next.

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