Price thaw in Iceland makes it a vacation hot spot

The morning after they enjoyed a seven-course meal with wine pairings in a top restaurant, Chicagoans Howard and Jackie Brennan are mentally savoring the repast. There were scallops and roast lamb, ocean perch and Icelandic cheeses.

"I don't even remember dessert," Jackie says a bit wearily as she sips coffee in a downtown cafe.

Even better: The gustatory blowout cost less than $100 each, a tab Howard proclaims "quite reasonable."

About 40 miles east of the capital, Cody Martelli shows off sturdy new boots and a warm knit cap at Gullfoss, or Golden Falls, a massive two-tiered waterfall that leaves a powder-fine frozen mist in its wake. He has been on a shopping spree, stocking up on necessities for himself and gifts for friends back in Sydney.

And fresh off an overnight flight from New York, Sandy Sharma and Donna Lentol are luxuriating in the steamy Blue Lagoon, where massage therapists, dressed in thermal wear to ward off the chilly air, knead out the kinks as the duo float on foam mats in the milky 100-degree water. At $70 for an hour massage and admission to the popular attraction, the outing was a splurge. But it's an affordable one, they say, given that the cost of airfare and hotel for their week here will set them back only about $800 each.

Once one of Europe's priciest countries for foreign visitors, Iceland is on sale. American travelers who a year ago blanched at paying $25 for a hamburger are discovering in this North Atlantic island a rare European outpost where the dollar still garners some respect.

With the Icelandic króna worth less than half of what it was a year ago, more Americans (no strangers to economic struggles) are taking advantage of bargain getaways here.

The country's economic collapse began in September, a victim of the global financial crisis. By October, its banks had been nationalized. In early November, Icelandair was hawking $549 "Winter Madness" packages that included airfare from New York or Boston and three nights at the Reykjavik Hilton with breakfast. (That deal has expired, but the airline is offering other packages and airfares that start at $400, plus taxes and fees.)

Move fast for a deal

How long visitors will benefit from the devaluation is anyone's guess. Prices are bound to rise as the cost of imported goods go up. And even promoters acknowledge that Iceland isn't normally a bargain destination. But for now, many are reveling in Iceland's new affordability.

Take Sharma, a New Jersey software designer, who chose Iceland from a list citing the top five least-expensive vacation spots. He snagged a $620 airfare and monitored an online hotel reservations site, watching rates at a four-star hotel tumble to less than $40 before he booked.

Martelli, here for an Internet gaming fan fest, booked his lodgings last summer before the króna's free-fall and is paying $150 a night — which is fine by him. His digs are spacious and well-located and "the same price I paid to stay in Hong Kong on the way here in a room the size of a Balinese prison cell," he says.

The Brennans read an article about the three-night Icelandair package on a Friday and departed the following Monday.

"You hate to take advantage, but it's a good opportunity," says Jackie Brennan.

That's the sentiment tourism officials are aiming to tap into as they play up Iceland's lower prices in the hopes of filling incoming airline seats and attracting foreign currency.

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