The Iceland National Þjóðhátíð Festival is a festivity celebrated during Verslunarmannahelgi. Verslunarmannahelgi also called The Merchants Holiday or Businessman's Holiday celebrated during the first Monday of August. Because of this extra day off this long weekend is referred to as The Merchants Weekend.
The Þjóðhátíð Festival dates back to 1874 when the people of the Westman Islands could not travel to the main celebration of the 1000 year anniversary of the settlement of Iceland because of the difficult weather. Instead of accepting their defeat they held their own party.
The Þjóðhátíð Festival consists mostly of hundreds of people gathering around Herjólfsdalur valley on the island of Heimaey to participate in various fun activities like dance and sing along to Icelandic pop and rock at very high volumes in a volcano crater while drinking booze in the cold. It is very common for tourists to camp out in a tent with their friends or family to really get the whole 24/7 outdoor party experience. However, there are also people who may prefer a more stable sleeping space.
There is also a long held tradition to compose a Thjodhatid song which is a sort of theme song for the festival each year. And of course, along with all the music and alcohol, there is also food. Common Icelandic delicacies include Puffins, Harðfiskur and Graflax. There are also many fast food places in the area as well