Executive summary – Hugarró Nature Retreats
Our mission:
Building & operating small environmentally sustainable 4-star hotsprings & wellness retreat in Iceland at stunning locations that maximize their natural surroundings to give guests the luxury to unwind.
Business objectives:
- Build a 7-pool, 350 m2 (pool m2) geothermally heated hotsprings facility including restaurant & meeting spaces. Hotsprings capacity: 350-400 daily visitors.
- Build a 31 room hotel and up to 31 freestanding hotel cabins to the property. Maximum guest capacity: 200.
- Reach an annual occupancy of at least 52% in 1st year of operation.
- Get certified in highest rating by relevant quality and environmental certification bodies in Iceland in first 2 years.
- Build the hotel and hot spring facilities according to BREEAM standard (“in-use”) and Nordic Swan and Greenkey and obtain certification within 18-24 months.
- Build Hugarró Wellness Retreats into a solid brand with goal to open 2 more retreats in Iceland in next 5 years to serve our clients at multiple locations.
- Protect and restore (birch) forest coverage on our properties to at least 100% of the current coverage.
Legal status
- The municipal council has recently (in June and, unanimously) approved our proposed master zoning plan allowing us to build up to 5.000 m2 (excluding pools) and (for now) accommodate maximum 200 overnight guests.
USP (unique selling proposition) – what makes our project so unique?
- A Stunning location with amazing views all around in a natural birch forest.
- A variety of pools that are designed to be operated to the highest health, energy-efficiency, environmental and safety standards.
- Circular cabins that can turn around (electrically) to enjoyed preferred view!
- Within an hour driving from Reykjavik.
- Visionary hotel design that applies principles of landscape hotel, meets the highest environmental and operational standards and has a smart modular design that allows fast (prefab) building and minimal maintenance.
- Highly accessible for disabled travelers (well above legal standards) – 10% of travel market…..
- Possibility to create hot springs facility (geothermal power) and offering a year-round destination in itself, not just a lodging facility.
- Less than 5 kms. from Glymur waterfall, with 198 m. the highest (accessible) waterfall in Iceland.
- Solid experience in management team with hospitality, customer service and restaurant business.
- 62% of our property is covered by trees, creating lots of privacy and protection for future cabins. This is very rare in Iceland
- Lots of forested land around our location, excellent for hiking and making it beautiful surroundings.
- Topography of land – 40 m. slope – allows lots of privacy and great views for future cabins.
- A very-supportive, pro-tourism municipality that wants to see our project become reality.
- Possible option to create a reforestation/hiking area project on a nearby location with spectacular views of the fjord to off-set carbon emissions of guests (and others) flying to Iceland.
- No permanent neighbors (except vacation homes) living within 2 km and no permanent neighbors within 15 km.
- At a safe distance (1.5 hr. driving) from volcanically active areas.
Industry analysis
Tourism has been a growing force behind Iceland’s economy in more than a decade, with opportunities for investors in high-end tourism, including luxury resorts and hotels. The number of tourists in Iceland reached more than 2.3 million in 2018. Tourism in Iceland contracted in 2019 and 2020 due to COVID-19, and the total number of tourists went down to 2 million in 2019 and then down to 486,000 in 2020. As of 2022, the tourism sector had recovered, with 698,000 tourists in 2021, 1.8 million tourists in 2022 and 2.2 million tourists arriving in 2023. The sector has been moving away from mass tourism to high-end tourism amid increasing demand for exclusive and luxury experiences.
For a more detailed report on the tourism industry, check this report on tourism numbers from Islandsbanki of February 2024 and this macroeconomic forecast of January 2024.
Upscale hotels in Iceland have very high booking rates (several sources mention high season to be sold out for 2 years). As one bank director put it: if you build it, you’ll fill it (see also Icelandic Tourist Board dashboard). And Iceland 2nd biggest airline Play is trying to double its fleet of aircarft.
- Tourism in Iceland has grown back to pre-COVID levels.
- The labor market in Iceland is tight. Finding Icelandic staff is a challenge when jobs are seasonal. Luckily being part of the European Free Trade Association and Schengen area, hiring European frontline staff at hotels is easy and very common. A solid in-house training program and attractive on-site housing will help us build and keep a strong team.
- Iceland is world-renowned for its economic advancement, social stability, and technological innovation and continually ranks as one of the leading societies in international comparative analyses of the quality of life, safety, and equality. The nation is young, educated, multilingual, and enjoys high living standards and a thriving cultural scene. Government services are digitally accessible to a large degree. To learn more about doing business in Iceland and economic numbers, see here.
- Iceland is ideally located midway between Europe and North America. Flight duration is 2.5-5 hours to Europe and 5-6 hours to the United States (East Coast) and Canada.
Our customers
There are clear developments in tourism where guests don’t define luxury by the availability of golden faucets or deep-rugged carpets. Our clients are looking for an authentic experience in contact with and respect for nature. Few countries are as suitable for this kind of tourism than Iceland.
But tourists don’t’ come to Iceland for the weather. They come for a unique immersion in majestic nature, unique anything they have seen before. They come to reload their battery enjoying stunning landscape, an untouched wilderness
What makes Hugarró different is that we will put all the dots on the ‘i’: making excellent use of an amazing location with a striking hotel design; top-class service by well-trained, motivated staff that truly understands the concept of personalized service; excellent food; a top-class hot springs facility and all that for a reasonable price. Exceeding expections every day is our goal.
24 years in the service industry has taught founder Thorwald Westmaas 2 things: your staff is your most important asset and if you continuously exceed your clients expectations, they will become your ambassadors.
Another great advantage of Iceland is its location halfway between continental Europe and the USA. This, together with the excellent and growing networks of several air carriers makes Iceland ideally positioned for both markets.
Strategic plan
Our marketing strategy rest on a combination of:
- A first-class website, tied into a top PMS (property management system), channel manager and RMS (revenue management system).
- Extensive use of the different social media platforms (and inducing clients into sharing their experiences)
- Build relationships with specialized travel advisors that serve our market.
- Actively promote our location to be used for retreats, training, team-building workshops, etc. and build long-term partnerships with the providers of such services.
Operations plan
At this moment we work with 2 leading and very experienced hospitality consultants (in DE and in the NL) to cover this topic in more detail. Given our goal to meet the highest standards on sustainable hotel management and design, our operations will be based on the standards of several certification bodies such as the Nordic Swan, Vakinn, Greenkey, Earthcheck and The long run / Preferred by Nature and we aim to eventually get certified at highest levels.
Management team
Thorwald Westmaas (founder) has over 24 years of experience in service industries including education, hospitality and tourism. While trained as an engineer, customer service is in his DNA. He takes a practical, no-nonsense approach to operational challenges and sees each of them as an opportunity to learn and improve.
Mario Hellemons
Generalist in de bouw- en vastgoedsector, als ondernemer,
(project)manager en vastgoedadviseur. Met 23 jaar ervaring in
vastgoedontwikkeling heeft Mario verschillende projectteams en
organisaties geleid in de bouw van utiliteit, hotels, scholen en
woningen. Belangrijkste persoonlijke kenmerken zijn energiek,
sportief, daadkrachtig en pragmatisch. Doelen realiseren op een
duurzame creatieve manier, teamwork bevorderen en mensen
motiveren zijn zijn drijfveren.
Financials
Ask for our investor prospectus. Estimated return 8-15%. In 2nd phase cabins and rooms will be sold to individual investors and leased back exclusively to management company. Estimated yearly return 7-11%.
The 2nd stage – selling of cabins and rooms – can start when all architectural drawings are approved. The sales income will cover expenses such as drilling for geothermal water, building and shipping the hotel, the hot springs facilities, a small hydropower plant (if feasible).
Details on the building cost of the hotel on request. It covers the cost to build the buildings + the associated cost of transport to Iceland, placement and other common costs. We plan to charter our own vessel to ship all units in one time.
Our per-room development costs are well within the average for our category as this from report from HVS shows. It’s actually low when taking into account that the average hotel in the US has at least 2-3x as many rooms as we have planned.
The cost of the hotsprings development are also available on request.
A revenue 2-year projection is also available. Based on what we hear hotel owners with a similar property we feel that our occupancy rates are realistic if not somewhat conservative at 52% average during the first year. Needless to say the sales & marketing to make this occupancy rate reality has to start a year in advance. Check out some of our competitors and their pricing at this page.
Using an industry rule of thumb to calculate the value of the hotel we come to an amount of € update… million, based on the ADR. Of course this formula only takes room revenue into account (room rates + breakfasts per room). We also have income from the cabins, hot springs and food & beverage sale.
A breakdown of revenue and expenses, several important hotel and financial KPI’s and proves the capacity to pay investors an attractive return.
Finally, here are documents with location images and the most recent draft the drawing showing the hotel floor.
Other milestones:
The municipality has accepted our proposal for review and published (March 20, 2024) it on their website (see item 6; use Google translate 😉). Several government institutions and individuals have given their opinion during 8-week publication period. There was nothing that could substantially change our plans and the municipality building committee has unanimously requested us to elaborate the required change of master zoning plan and a detailed ‘local zoning plan’.
This new masterplan has been presented to the municipality on October 10 and the planning ministery We have received comments for review that have been addressed and the updated plan has now been published on the municipal website and planning ministry for public consult (use Google Translate). The public and relevant institutions had until March 13 to comment. Of the 8 comments, 6 where institutional and posiitive. Two comments by neighbouring landowners (we don’t have permanent neighbours in the valley and nearest vacation home is 2 km. away) were less positive but had no legal substance.
We are confident none will bring up issues that can effectively challenge the planned development. It helps of course that municipality is very pro-development and we are doing it in a very sustainable way.
While we don’t want call it a formality, the fact that our coverage of the land with buildings will be only 4.1%. (currently 3% is allowed); the already mentioned lack of nearby neighbors and the fact we are dealing with a municipality that is very eager to see more tax revenue and employment, we expect it to be a smooth sailing.
Update May 2025
The municipality has approved our proposed masterplan change ! See this document. We will now continue to work on the more detailed so-called “deliskipulag”. Since this will comply with the demands of the masterplan we are sure this also will get approved.
This is aided by the fact that we have hired Icelands most prominent engineering/consulting company what actually wrote the original zoning plan for the municipality. Our local architect is also very familiar with the staff in the municipality. These are factors of real importance in Iceland; more so than in NL or DE.
The expectation is that the total process will we wrapped up by end of April early May. In the meantime we can of course work finish the construction drawings, engineering of cabins and foundations and many other tasks.
Actual construction can begin after approval of construction drawings by Icelandic authorities. Depending on our funding we expect this to be by the Q4 of 2025. According to consulted builders, there is capacity to build in 1st half of next year. This will take several months making the opening planned for fall of 2026.
Final remarks:
Questions can be directed to thorwald@naturallyiceland.com or daniel@naturallyiceland.com or you may contact us at +31-6-2717-6969.
Board questions
We plan to use Microsoft Business Central (BC) for our accounting and budgetting needs.
While BC is an ERP package and might seem overkill for a start up, it offers a few essential advantages:
- One accounting system for all our companies: a single source of truth.
- BC offer localization for Netherlands and Iceland which means our bookkeeping software in both countries is totally adjusted to the practices and requirement in both countries.
- Deep integration possible with PMS software, access control software (like Vintia) and much more, including of course all MS Officee products.
Implementation of BC is normally a very expensive (20K+) project that is handled through autorized resellers. We have, however, located an independent Dutch BC consultant who can do the job in cooperation with our accountants (PwC in Iceland) and bookkeepers (Abaki ehf in Iceland and Cashflow Administrations in NL) for a considerable lower amount. Our primary focus is currently on getting the basics going and use BC for budgetting and scenario creation.
In Iceland we will have 2 companies: the development company (PropCo) that owns the land (Hugarro Hvalfjordur ehf) and the operations company (OpCo) that will operate the resort(s): Hugarro Hospitality ehf. Both are fully owned daughters of the Dutch company Naturally Iceland BV which is owned by Thorwald and Daniel via individual holding companies.
We plan for the future investors to get equity stakes in the Icelandic PropCo which will have a hybrid lease agreement with the OpCo that will balance the financial interests of investors and operator. We are currently (Dec. ’25) consulting on a hybrid lease agreement so we can put relevant numbers in feasibility projections.
The anchor of our development and major revenue source will be the geothermal pools. While previous exploratory drillings in the area indicate excellent potential for geothermall water sources with a temperature gradient of 120 degrees C. / 1.000 m. the real challenge is to hit the hot water source. It’s typically located along cracks in the rock layers below.
We are consulting with one of Iceland’s premier geothermal experts, to make sure we minimize the chance of failure to find geothermal water and carry out the search in the most cost-effective way.
This means we start with 3-4 exploratory drills of up to 80 meters, followed by a magnetic survey (done with a drone). This will give us an indication on where to start drilling the production well that we expect to go 900-1.500 m. deep). It will also give us guidance on the drilling method to use: straight down, under an angle or directional. Each have pro’s and con’s. Directional drilling give most flexibility and highest chance of success but it’s also a factor 40-60% more expensive.
A typical small geothermal well in Iceland – say producing 10 liters/sec. watrer of 90 C. that is cooled down to 30 C. can easily produce about 2.5 MW, enough to heat hundreds of homes. Certainly enough for our project.. But just in case our well’s production is a lot less, our heat-exchanger pool heating system (more on that in other post) will allow us to meet our heating needs with even 3 liters/sec.
Below a breakdown of the cost of our drilling project based on actual quotes and estimates received from local companies. A lot cheaper than in the Netherlands! Probably one of the few things that is cheaper in Iceland😂.
The drinking water production cost include drilling a well, building a water intake in the nearby creek, a filter installations, UV desinfection equipment, a 58 m3 water silo for storage and (remote) monitoring equipment.
Since finding and retaining good staff is a challenge even under ideal circumstances, we have allocated a considerable amount of money to provide staff housing on-site.
This will appeal especially to non-Icelandic workers who don’t have housing in the area or (very) Rekjavik. Housing is expensive in Reykjavik and it would be very convenient to avoid a daily 55 min. commute. With a nearly 100% occupancy rate of such facilities we can also make it very affordable.
For workers going on (weekend) leave, we plan to acquire a house or piece of land close to Reykjavik where they can also rent an affordable room and relax outside the work environment.
To avoid eating into our max. 5.000 m2 bulding limit (RevPAM of our cabins will be 10x higher than that of our staff cabins 😊) we plan to use mobile units like these.
Not only will it save on foundations, we can also easily move them to other (project) locations when needed. We could even make a ‘sales office’ or ‘coffee café’ version to support our local marketing efforts.
Ideally we will be able to acquire some land nearby in the future to accommodate more of these cabins if needed.
The current projection provides for approximately 10 units that can accommodate one person or a couple. To save expenses we plan to acquire them directly from a manufacturer, possibly in Eastern Europe.
We would also like to budget some extra money to buy in building plot near Rekjavik. For instance in the Mosfellsbær area. and later build a staff ‘AirBnB’ for those who are on a (weekend) break and want an affordable place to stay. Or we could include say 8 days a month for non-Icelandic employees. Most likely a newly build pre-fab house with say 10 small private rooms with shared showers and a nicely equiped common area. It would easily pay for itself.
For now, the masterplan change limits us to building maximum 5.000 m2. This represents only 4% of the total land area because structures without a roof such as parking spaces, roads and pools don’t count (don’t you just love that?).
Mobile structures (like our planned staff housing on wheels) don’t count initially but may be considered permanent structures after 2 year (after which we can move them to another location).
Why this (voluntary) limit? Because this way we avoided the requirement of an environmental impact study (EIS). We would surely pass such an EIS but it could potentially be challenged, adding delay and more consulting costs.
Our consultants at ELFA recommended we start with our 5.000 m2. If after say 1-2 years of operation we need more m2, we won’t have trouble increasing the permited density as we will have a record of responsible and low-impact operation that will support the required EIS.
A property management system (PMS) is software that facilitates a hotel’s reservation management and administrative tasks. The most important functions include front-desk operations, reservations, channel management, housekeeping, rate and occupancy management, and payment processing.
To read more about the need for and advantages of a PMS, see this link.
The best PMS systems are ranked on the very informative website of Hotel TechReport: check the list here.
We don’t use any of them 😊. Not because they are not good but most of them (for instance MEWS from the Netherlands) are not supported in Iceland. This seems to have to do with the fact that Iceland is member of the
European Free Trade Association (EFTA) but not of the EU and has its own currency.
Update December 2026:
We are currently leaning towards StayNTouch but our techstack will be determined in consultation with Provision-Partners, a company of which Daniel a consulting partner and European rep.
The main reason we have decided to go with modular prefab construction is our desire to out-design the need for local labour to an absolute minimum and minimize the influence the weather can have on the building process and progress..
There are no Icelandic companies that can deliver the cost-effectiveness, quality and experience we can find in the Netherlands and Eastern Europe. In fact, most similar projects in Iceland are also pre-fab units coming from Eastern Europe and even China (but that hotel project gave a lot of headaches I was told).
Our hotel consists of 48 modules. The cabins are made up from 2 halves. We plan to charter a vessel to bring them from a Dutch seaport to Iceland. That’s a lot cheaper and convenient than ro-ro serices. Our own vessel can dock at the nearby port of Grundartangi from which it’s a 30 minute ride over a very quiet road.
If we are lucky, we can negotiate a deal with the owner of a nearby whaling station at less than 10 minutes away. That would make things a lot cheaper and faster but we’re still finding out the maximum draft possible at that dock.
Thorwald’s experience with shipping is definitely a great plus to make sure this logistical challenge will go smoothly.
BREEAM
BREEAM aims to promote buildings that are environmentally, socially, and economically sustainable, enhancing the well-being of the people who live and work in them while minimizing their environmental impact.
Recommended links:
What is BREEM and why is it important?
BREEAM Version 7 to focus on hotels and net zero carbon
Business objectives
First of all, to make best use of the available land, topography and tree coverage, we decided to build our circle hotel on the indicated place. This location means minimum loss of trees and trees lost will be mostly under 50 cm. Since we are building in what is a ‘protected area’, we really want to commit to low-impact building practices.
This location is also close to where we plan to build our parking space the location of which was choosen based on similar considerations.
In cooperation with our architects we then came to 48 modular units of which 29 will be guest rooms (drawing below is not totally up to date).
The law requires to also have 3 wheelchair accessible rooms. We decided – in close consulting with Sjálfsbjörg, the National Confederation of Physically Disabled People in Iceland – to create 2 wheelchair accessible guestrooms (WAG) in the hotel and 3 separate WAGs with their own parking. Thanks to the products of the Norwegian company Bano, we can create a compliant WAG in the existing hotel modules.
With 5 WAG’s in total we showcase our commitment to travelers with a disability and plan to actively pursue their business. They comprise of just over 10% of the traveling public and few hotels in Iceland will meet our standards of accessibility.
Between these guestrooms and the hotel entrance will be a heated pathway (to keep it snow free) as required by law.
Recommended link:
Accessible tourism (by Icelandic Tourist board)
Consumption in the tourism industry works differently than consumption in many other sectors. People look for fresh experiences, spectacular places and the beauty of the local area, instead of material possessionsor services.
Likewise, as in the world of fashion or food, rends are always influencing the consumption choices in tourism. For example,choosing a destination based on the places that are currently in fashion, looking for the most Instagrammable corners or the places whose offer best suits our tastes and interests; which is indeed a decisive factor.
Here are some of the main trends that are busy shaping the tourism industry and the way people travel. As you will most likely agree, Iceland is perfectly positioned to tap into these trends.
MATCH with the destination
If you have a predilection for nature, you are more likely to travel to a wooded or rural area, rather than to big cities or urban areas. If you prefer to enjoy active sports, you will probably travel to places where you can practice your hobbies: coastal areas for water sports, ski resorts in winter… In this way, it is a question of orienting the tourist offer to the target group.
ECO mentality
Increasingly, travellers are taking into account factors such as travelling to nearby destinations to reduce their carbon footprint or opting for accommodation with sustainability certifications.
Millennial values
The younger generations, who are now making up the tourism target, have grown up in an educational culture with a strong environmental component and social struggle, giving importance to values that until now were not very present in the tourism industry, such as social integration and inclusion, the importance of the local, sustainability, among others.
Post-pandemic ecosystem
Covid-19 has left its mark on the tourism sector and is generating new trends, mostly related to alternatives to mass tourism, the discovery of new places with little influence from the tourism industry and respect for the destination’s environment, its identity and resources.
Public Concern for the Environment is Growing
Recent reports about climate change, together with the news about floods and fires, is raising social concern about this issue.
You yourself are probably already taking some measures to reduce your own
ecological footprint in your every-day life; recycling, driving an electric car or using cloth shopping bags are some of the most popular examples for people to express their environmental concerns.
However, are you keeping up with this responsible behaviour when on holiday?
Studies show that many people consider their holidays to be a time and place torelax and to forget about their environmental responsibilities, seeing them as time-consuming and a burden, assuming that companies should be the ones to ensure they are fulfilled instead.
This trend is shown by the results of the most recent surveys of booking portals, where most of the travellers prefer to choose “eco” options in order to feel fulfilled and happy in this respect, as long as these do not entail additional costs or responsibilities of any kind.
New generations are moving from “seeing” to “experiencing”
In modern-day tourism, a very visible trend is that the focus has shifted from “seeing” to “experiencing”. The main focus of tourism is not on physical high-lights, museums and monuments anymore, but on intangible elements such as culture, atmosphere and lifestyle.
One group playing a big role in this shift of trends is Generation Y (or Millennials) who are now between the ages of 25-35.
And we must be aware of their trends, as these are the present and future generations of the tourism sector and of society in general.
Do you know what their preferences are?
- Investing in experiences rather than material possessions.
- Investing in the present rather than saving for the future.
- Seeing travel as a priority and as a way of discovering the world and themselves.
- Young people give more importance than previous generations on environmental care, inclusiveness and social advocacy.
All in all important trends to consider as a hospitality provider.
BREEAM aims to promote buildings that are environmentally, socially, and economically sustainable, enhancing the well-being of the people who live and work in them while minimizing their environmental impact.
Recommended links:
What is BREEM and why is it important?
BREEAM Version 7 to focus on hotels and net zero carbon
Design
The main reason we have decided to go with modular prefab construction is our desire to out-design the need for local labour to an absolute minimum and minimize the influence the weather can have on the building process and progress..
There are no Icelandic companies that can deliver the cost-effectiveness, quality and experience we can find in the Netherlands and Eastern Europe. In fact, most similar projects in Iceland are also pre-fab units coming from Eastern Europe and even China (but that hotel project gave a lot of headaches I was told).
Our hotel consists of 48 modules. The cabins are made up from 2 halves. We plan to charter a vessel to bring them from a Dutch seaport to Iceland. That’s a lot cheaper and convenient than ro-ro serices. Our own vessel can dock at the nearby port of Grundartangi from which it’s a 30 minute ride over a very quiet road.
If we are lucky, we can negotiate a deal with the owner of a nearby whaling station at less than 10 minutes away. That would make things a lot cheaper and faster but we’re still finding out the maximum draft possible at that dock.
Thorwald’s experience with shipping is definitely a great plus to make sure this logistical challenge will go smoothly.
Finances
We plan to use Microsoft Business Central (BC) for our accounting and budgetting needs.
While BC is an ERP package and might seem overkill for a start up, it offers a few essential advantages:
- One accounting system for all our companies: a single source of truth.
- BC offer localization for Netherlands and Iceland which means our bookkeeping software in both countries is totally adjusted to the practices and requirement in both countries.
- Deep integration possible with PMS software, access control software (like Vintia) and much more, including of course all MS Officee products.
Implementation of BC is normally a very expensive (20K+) project that is handled through autorized resellers. We have, however, located an independent Dutch BC consultant who can do the job in cooperation with our accountants (PwC in Iceland) and bookkeepers (Abaki ehf in Iceland and Cashflow Administrations in NL) for a considerable lower amount. Our primary focus is currently on getting the basics going and use BC for budgetting and scenario creation.
In Iceland we will have 2 companies: the development company (PropCo) that owns the land (Hugarro Hvalfjordur ehf) and the operations company (OpCo) that will operate the resort(s): Hugarro Hospitality ehf. Both are fully owned daughters of the Dutch company Naturally Iceland BV which is owned by Thorwald and Daniel via individual holding companies.
We plan for the future investors to get equity stakes in the Icelandic PropCo which will have a hybrid lease agreement with the OpCo that will balance the financial interests of investors and operator. We are currently (Dec. ’25) consulting on a hybrid lease agreement so we can put relevant numbers in feasibility projections.
Geothermal
The anchor of our development and major revenue source will be the geothermal pools. While previous exploratory drillings in the area indicate excellent potential for geothermall water sources with a temperature gradient of 120 degrees C. / 1.000 m. the real challenge is to hit the hot water source. It’s typically located along cracks in the rock layers below.
We are consulting with one of Iceland’s premier geothermal experts, to make sure we minimize the chance of failure to find geothermal water and carry out the search in the most cost-effective way.
This means we start with 3-4 exploratory drills of up to 80 meters, followed by a magnetic survey (done with a drone). This will give us an indication on where to start drilling the production well that we expect to go 900-1.500 m. deep). It will also give us guidance on the drilling method to use: straight down, under an angle or directional. Each have pro’s and con’s. Directional drilling give most flexibility and highest chance of success but it’s also a factor 40-60% more expensive.
A typical small geothermal well in Iceland – say producing 10 liters/sec. watrer of 90 C. that is cooled down to 30 C. can easily produce about 2.5 MW, enough to heat hundreds of homes. Certainly enough for our project.. But just in case our well’s production is a lot less, our heat-exchanger pool heating system (more on that in other post) will allow us to meet our heating needs with even 3 liters/sec.
Below a breakdown of the cost of our drilling project based on actual quotes and estimates received from local companies. A lot cheaper than in the Netherlands! Probably one of the few things that is cheaper in Iceland😂.
The drinking water production cost include drilling a well, building a water intake in the nearby creek, a filter installations, UV desinfection equipment, a 58 m3 water silo for storage and (remote) monitoring equipment.
Location
Within an hour drive from Reykjavik yet surrounded by untouched nature and a few vacation homes (nearest at 2 km.) we have the best of both worlds.
Within an hour’s driving from Reykjavik on an excellent, partly 4-lane road. Our location used to be next to the ring road until about 20 years ago the tunnel was opened and this road lost its importance. However, it’s still kept snow-free all winter.
The airport is 45 min. from Reykavik city center and yes, we’re at a very safe distance from the recent volcanic activity near Grindavik.
After almost 2 years of searching for the right property we found it.
Most of all because of the views and surroundings:
- A hill-slope overlooking the Hvalfjörður fjord (whale fjord)
- 40% coverage with native birch trees, allowing to hide buildings all around the property. For instance, the hot springs facility building with not be seen (or at most part of its green roof) from the hotel. The different hot spring pools can all have an infinity edge yet not ‘see’ each other (when in the pool). The 20-25 cabins (dispered over 8-9 hectares) we plan in a later stage will mostly be hidden from each other and all have a fantastic view.
- Close to Iceland’s most spectacular Glymur waterfall. At 198 m. (600 ft.) the highest waterfall of Iceland (that is accessible without a helicopter).
- There is geothermal water below our land (according to the experts) providing us with endless heating of the building, pools and sidewalks (want to keep them free of snow).
- Good paved road all the way to the property (former national road).
Ask us for latest Google Earth KMZ file - A less than 3 km. drive to the public parking lot to start the hike to the Glymur waterfall. From the parking lot it’s a 3 km. hike.
- A lovely small creek next to the property, a bigger one 240 m. away with great potential for small hydropower plant (100-150 KVA).
Check the pictures here and some videos here.
This is easiest to see in Google Earth so request the KMZ file by contacting us.
But this 3D viewer also gives a great idea of the topography.
Staff issues
Since finding and retaining good staff is a challenge even under ideal circumstances, we have allocated a considerable amount of money to provide staff housing on-site.
This will appeal especially to non-Icelandic workers who don’t have housing in the area or (very) Rekjavik. Housing is expensive in Reykjavik and it would be very convenient to avoid a daily 55 min. commute. With a nearly 100% occupancy rate of such facilities we can also make it very affordable.
For workers going on (weekend) leave, we plan to acquire a house or piece of land close to Reykjavik where they can also rent an affordable room and relax outside the work environment.
To avoid eating into our max. 5.000 m2 bulding limit (RevPAM of our cabins will be 10x higher than that of our staff cabins 😊) we plan to use mobile units like these.
Not only will it save on foundations, we can also easily move them to other (project) locations when needed. We could even make a ‘sales office’ or ‘coffee café’ version to support our local marketing efforts.
Ideally we will be able to acquire some land nearby in the future to accommodate more of these cabins if needed.
The current projection provides for approximately 10 units that can accommodate one person or a couple. To save expenses we plan to acquire them directly from a manufacturer, possibly in Eastern Europe.
We would also like to budget some extra money to buy in building plot near Rekjavik. For instance in the Mosfellsbær area. and later build a staff ‘AirBnB’ for those who are on a (weekend) break and want an affordable place to stay. Or we could include say 8 days a month for non-Icelandic employees. Most likely a newly build pre-fab house with say 10 small private rooms with shared showers and a nicely equiped common area. It would easily pay for itself.
TechStack
A property management system (PMS) is software that facilitates a hotel’s reservation management and administrative tasks. The most important functions include front-desk operations, reservations, channel management, housekeeping, rate and occupancy management, and payment processing.
To read more about the need for and advantages of a PMS, see this link.
The best PMS systems are ranked on the very informative website of Hotel TechReport: check the list here.
We don’t use any of them 😊. Not because they are not good but most of them (for instance MEWS from the Netherlands) are not supported in Iceland. This seems to have to do with the fact that Iceland is member of the
European Free Trade Association (EFTA) but not of the EU and has its own currency.
Update December 2026:
We are currently leaning towards StayNTouch but our techstack will be determined in consultation with Provision-Partners, a company of which Daniel a consulting partner and European rep.
Zoning plan
For now, the masterplan change limits us to building maximum 5.000 m2. This represents only 4% of the total land area because structures without a roof such as parking spaces, roads and pools don’t count (don’t you just love that?).
Mobile structures (like our planned staff housing on wheels) don’t count initially but may be considered permanent structures after 2 year (after which we can move them to another location).
Why this (voluntary) limit? Because this way we avoided the requirement of an environmental impact study (EIS). We would surely pass such an EIS but it could potentially be challenged, adding delay and more consulting costs.
Our consultants at ELFA recommended we start with our 5.000 m2. If after say 1-2 years of operation we need more m2, we won’t have trouble increasing the permited density as we will have a record of responsible and low-impact operation that will support the required EIS.