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Where To Stay In Iceland: Best Hotels In Reykjavik & Beyond

The Best Places to Stay in Iceland

Accommodation In Iceland

Iceland has become an incredibly popular travel destination over the last few years. Learn where to stay in Iceland for your vacation including the best hotels, budget hostels, and campgrounds.

As I’m sure you’re already aware by now, Iceland is an incredible holiday destination for all types of people, from families to adventurous solo travelers.

While flights have become increasingly cheap, food & lodging however are not.

There are tons of unique places to stay in Iceland due to its diverse scenery, and every time I visit I find something new to experience, which makes it one of my favorite countries.

Best Places To Stay In Iceland

When it comes to finding a place to stay in Iceland, hotels can be on the expensive side, and there aren’t a lot of options compared to other countries. Hotels can get booked up months in advance, especially during the high season.

It’s important to book your accommodation in Iceland early to get the best deals.

In this guide, I’ll cover everything from budget backpacker hostels to luxury Reykjavik hotels, family-owned farms, campgrounds, and even campervan rentals — you’ll learn exactly where to stay in Iceland to have a great time.

Best Reykjavik Hotels

Reykjavik Iceland Hotel Guide

Where To Stay In Reykjavik

Reykjavik is the capital of Iceland, and where most travelers base themselves from initially. The city welcomes guests with a cosmopolitan mix of restaurants, cafes, street-art, museums and tour company headquarters.

The busy heart of Reykjavik is the Miðborg neighborhood, especially Laugavegur Street, where you’ll find shopping, restaurants, nightlife and all sorts of fun things to do.

If you want to be where all the action is, stay close to Laugavegur Street. But there are some other great neighborhoods in Reykjavik too, which I share below.

Here are my suggestions for the top hotels, hostels, and campgrounds in Reykjavik depending on your budget.

Also, if you prefer a local apartment, Airbnb is a great option for finding a cool place to stay in Iceland. Check out my Airbnb post for a $35 discount!

Cheap Hostels In Reykjavik

Loft Hostel – With two Best Hostel awards, Loft is one of the best places to stay in Reykjavik when you’re traveling on a budget. Located in the heart of the city, it features a large balcony to admire the city from above. They often organize music and activities, have good wifi, and friendly staff.

Reykjavik Downtown HI Hostel 

Budget Hotels In Reykjavik

Rey Apartments – Rey Apartments is located in between the main shopping area and the trendy district of Skolavordustigur in Reykjavik. The modern, fresh looking apartments feature free wifi and fully equipped kitchens and living rooms. The geothermal Sunhollin swimming pool is just 10 minutes away!

Hotel Frón 

Mid-Range Hotels In Reykjavik

Hotel Ódinsvé 

Skuggi Hotel Reykjavík

Luxury Hotels In Reykjavik

Kvosin Downtown Hotel – When you want to be pampered, you can’t do much better than this Reykjavik hotel. Housed in a restored building from the 1900’s, this boutique hotel offers the largest rooms you can find in Reykjavik, decorated in modern Scandinavian style and featuring artworks by local artists.

Reykjavík Residence Suites 

Good Campgrounds Near Reykjavik

Reykjavik Campsite 

Hafnarfjörður Camping 

Reykjavik Neighborhood House

Cool Neighborhoods in Reykjavik

Best Neighborhoods In Reykjavik


Midborg is where all the action is in Reykjavik, and where to stay for the best nightlife in the city. Full of quirky shops, museums, restaruants, and the main walking district.


Located just west of the city center, Vesturbær is a mix of residential neighborhood and little cafes. It’s a bit queiter than downtown.


A local working-class residential area east of the city, with plenty of parks & playgrounds. The name means “the hills” and places out here are much cheaper than the city center.


Laugardalur is kind of the sports and recreation hub of Reykjavik. Known as “the hot spring valley,” this is where you’ll find the local sports stadium as well as a campground.

Where to Stay on the Golden Circle

Golden Circle Hotel Guide

Where To Stay On The Golden Circle – Selfoss & Hveragerði

The Golden Circle is a circular 300km route that takes you from the capital city of Reykjavik towards the center of Iceland, and back again in a single day. It’s the perfect introduction to Iceland if you’re short on time or on a layover.

From ancient historical sites to beautiful natural landmarks, the Golden Circle has a bit of everything. You can join an organized tour of the Golden Circle or rent a car and self-drive at your own pace.

Most people base themselves from Reykjavik for this drive, however, you can also spend the night somewhere along the Golden Circle. The towns of Selfoss and Hveragerði are good options for this.

Here are my suggestions for the top hotels, hostels, and campgrounds on the Golden Circle depending on your budget.

Cheap Hostels On The Golden Circle

Selfoss Hostel – Everything you need to get a good night’s of sleep before you continue to explore Iceland. The clean, functional rooms have free wifi and a view over Ingolfsfjall mountain. There’s free parking, which is a big plus when you’re renting a car in Iceland. There’s a big common kitchen and a hot tub too.

Hot Springs Hostel

Budget Hotels On The Golden Circle

SKYR Guesthouse

Mid-Range Hotels On The Golden Circle

Eldhestar – Located only half an hour from the capital, this Iceland eco-hotel provides everything you need to relax. You can have a cup of hot tea in the lounge next to the fireplace or enjoy a cocktail at the bar. Each room has a private entrance with nature-inspired décor. Eldhestar has an outdoor wooden hot tub and is located next to an Icelandic horse farm.

Guesthouse Bjarney

Luxury Hotels On The Golden Circle

Frost & Fire Hotel – This unique luxury hotel in Iceland is near a geothermal area, giving you the feeling of being in the middle of nature. Thingvellir National Park is only a 40-minute drive away. Relax at the spa-like facilities including two hot tubs, an outdoor pool, hot spring powered Jacuzzi and sauna. You can even cook an egg over a natural hot spring for breakfast!

Ion Adventure Hotel

Best Hotels in Vik Iceland

Where to Stay in Vik, South Iceland

Where To Stay On Iceland’s South Coast – Vik

Iceland’s South Coast is filled with natural wonders, making it perfect for an adventure outside the capital. If you’re driving around the entire Ring Road on Route 1, this is usually the next stop after a trip around the Golden Circle.

The South Coast is home to some of Iceland’s most famous waterfalls, like Seljalandfoss and Skogafoss. Reynisfjara Black Beach, Sólheimajökull Glacier, and the Eyjafjallajokull Volcano are other highlights.

One of the larger towns tourists stop at is called Vik [MAP], with many different lodging options, restaurants, and activities nearby. So it’s a great place to stay for a night or two.

Here are my suggestions for the top hotels, hostels, and campgrounds along Iceland’s South Coast depending on your budget.

Cheap Hostels On Iceland’s South Coast

Puffin Hostel – Located in the center of Vik, this hostel is only a 10-minute walk from the fabulous black beaches. It offers a fully equipped kitchen and a shared seating area. The functional rooms have shared facilities and bathrooms.

Budget Hotels On Iceland’s South Coast

Hotel Geirland

Mid-Range Hotels On Iceland’s South Coast

The Barn – Located near Vik and provides a great base for exploring the South Coast of Iceland. It features parking and free wifi,  being great for travelers who tour the island by rental car. The rooms offer enough privacy, which makes this hostel a great option for couples. Some of the rooms have a view over the mountains and there are dormitory beds with drapes available.

Luxury Hotels On Iceland’s South Coast

Hotel Kria – For a luxurious stay near Vik this new hotel opened in 2018. The rooms have a modern design and all the facilities one can expect from a high-class hotel. During your stay at Kria you can enjoy amazing mountain views, a cocktail at their bar or a delicious meal at their restaurant, which serves Icelandic specialties. The breakfast buffet features food from local farms.

Glacier Lagoon Hotels

Best Iceland Hotels Near Hofn

Where To Stay Near The Glacier Lagoon – Hofn

Continuing your drive on Iceland’s Ring Road, you’ll eventually reach the fishing village of Höfn. Höfn means “harbor” because it sits on one of the few natural harbors found in Iceland. This is the next major town after Vik, about a 4-hour drive away.

While four hours doesn’t seem like much, there’s so much to do in between these two Icelandic towns on the South Coast that you can easily spend a full day on activities, and may want to spend a night here.

Hofn is the town closest to Jökulsárlón glacier lagoon and Vatnajokull National Park. Watching the sunrise from Jökulsárlón was one of the highlights of my trip, so you might want to sleep nearby.

Here are my suggestions for the top hotels, hostels, and campgrounds near Hofn and the glacier lagoon depending on your budget.

Cheap Hostels Around Hofn

Lilja Guesthouse – This friendly guesthouse offers spacious rooms with a warm floor and private bathrooms. The quiet rooms are equipped with a coffee machine and free WiFi. The nearby mountains provide a great view for the guests, who can enjoy their coffee in the shared lounge.

Budget Hotels Around Hofn

Skyrhusid Guesthouse

Mid-Range Hotels Around Hofn

Hotel Hofn – Most rooms have views of the nearby glaciers and the sea. The hotel has private parking, a great bonus if you are traveling by rental car. You can dine on the restaurant’s terrace to admire the view as you enjoy Icelandic specialties. Jokulsarlon glacier lagoon is one hour away, while the Silfurnes Golf Club and Hofn Harbour are only a 10-minute walk.

Luxury Hotels Around Hofn

Aurora Cabins – If you’re lucky, you might catch the magnificent aurora borealis from the cabin porch at this awesome Iceland hotel. There’s a small hill nearby with a bench on top, another nice spot to admire the lights. The cabins are spacious and feature free wifi, a kitchen with microwave and toaster, terrace and a seating area. Great romantic place for couples!

Where To Stay In East Iceland – Egilsstaðir 

East Iceland is often overlooked by tourists, being so far from the capital of Reykjavik. But it has a lot to offer. The picturesque fishing villages which line the rugged landscape are dotted with waterfalls and glaciers, making the area perfect for hiking.

The main city people base themselves in East Iceland is called Egilsstaðir, one of Iceland’s youngest towns. It was built on the banks of the Lagarfljot River in a wide valley. It has good access to the Eastern Fjords too.

East Iceland is also rich in legends about the elves and other mythical creatures which were believed to populate the area. It’s a good place for wildlife spotting, including herds of wild reindeer, arctic foxes, and puffins.

Here are my suggestions for the top hotels, hostels, and campgrounds near Egilsstaðir and the East Fjords depending on your budget.

Cheap Hostels In Egilsstaðir

Tehusid Hostel

Budget Hotels In Egilsstaðir

Laufás Guest House

Mid-Range Hotels In Egilsstaðir

Icelandair Hotel Herad

Luxury Hotels In Egilsstaðir

Hótel Valaskjálf

Where To Stay In North Iceland – Akureyri

Akureyri is the largest and most important town in Iceland, after its capital. It is an old trading city and important fishing hub, it’s also a wonderful base for whale watching trips. The city has heated swimming pools too.

Travelers to Iceland generally end up staying in the city of Akureyri, or near Lake Myvatn, depending on where you end up after a long drive on Route 1.

Lake Myvatn is located in an active volcano area and is surrounded by amazing lava formations. There is a rich population of water birds living around the lake, making it great for bird watching.

Here are my suggestions for the top hotels, hostels, and campgrounds around Akureyri depending on your budget.

Cheap Hostels In North Iceland

Town Square Guesthouse – At Town Square Guesthouse you will find all the essentials for a decent stay. Some rooms offer views over the sea or the mountains, while all of them include access to a shared bathroom and free WiFi. Guests also have access to a fully equipped shared kitchen and a nice terrace.

Budget Hotels In North Iceland

Lónsá Guesthouse

Mid-Range Hotels In North Iceland

Icelandair Hotel Akureyri – This Iceland hotel in Akureyri offers modern rooms with wooden floors and comfortable beds. They have a cozy bar with a fireplace, and the restaurant cooks delicious meals with Icelandic and Mediterranean influences. The Akureyri swimming pool and geothermal hot tubs are only a 2-minute walk away from the hotel.

Luxury Hotels In North Iceland

Hotel Kjarnalundur – Just 2km away from Akureyri Airport and 5km from the city center. The panoramic views of the surroundings and the amazing Aurora Borealis can be enjoyed from all over the property. There is a hot tub on the deck of the cottage, which also provides a great spot to admire the scenic landscapes Cozy, modern design with wooden finishes. You also get free access to their sauna!

Where To Stay On Snæfellsnes Peninsula

Snæfellsnes Peninsula is nicknamed “miniature Iceland”, thanks to its vast diversity of landscapes. This also makes it perfect for a quick weekend getaway, during which you can enjoy the best of Iceland.

Driving around this peninsula you’ll find waterfalls, hot-spring pools, lava tubes, black sand beaches, old churches, fields of wildflowers in the spring, and massive glaciers.

Driving around Snæfellsnes is another day-trip option if you don’t have a lot of time in Iceland, as it’s located only 2 hours north of Reykjavik city.

Here are my suggestions for the top hotels, hostels, and campgrounds on Snæfellsnes Peninsula depending on your budget.

Cheap Hostels On Snæfellsnes

North Star Guesthouse – North Star Guesthouse offers spacious rooms and free private parking on the main street of Olafsvik. There is a self check in/check out which makes everything easier for the traveler who wants to get some rest before heading to the restaurants in the area for a drink and a meal. Popular activities for guests are golfing, hiking and fishing.

Budget Hotels On Snæfellsnes

West Park Guesthouse

Mid-Range Hotels On Snæfellsnes

Arnarstapi Hotel – Located only 200m from the Gatklettur rocks and offers views over the sea, which makes it ideal when you just want to relax and enjoy nature after a long day. The rooms are modern and feature private bathrooms. This new hotel also has an on-site restaurant where you can enjoy some of the most delicious Icelandic specialties.

Luxury Hotels On Snæfellsnes

Fell Holiday Home – This place has 6 separate bedrooms with 2 bathrooms, a fully equipped kitchen and a living room. The apartment also has a garden, which makes a great place to admire the Northern Lights and the Gatklettur rocks. There is free WiFi all over the modern property.

Keflavik Airport Hotels & The Blue Lagoon

Northern Light Inn

Campervan Tips for Iceland

Stay in a Campervan!

Renting A Campervan In Iceland

There are many ways to explore Iceland. Most people rent a car while staying in hotels, or rent a campervan while sleeping in the vehicle. Convenience is one of the main reasons people choose to rent a campervan.

Once you’ve rented the vehicle, you can start driving and exploring the country on your own terms. It’s a lot easier to find a campground with space for your van than it is to book a last minute hotel in Iceland.

Renting a campervan in Iceland can save you a lot of time and money. You can prepare your own food on the go and save money on accommodation. It also gives you a lot of flexibility to change your plans anytime you want.

But life on the road might take its toll, especially if you have small kids. Not all campervans will have a toilet and you might definitely miss showering on a regular basis.

The weather depends on luck and what time of year you visit Iceland. A worst case scenario is that you might have to cook in the rain, snow, or deal with high winds and cold temperatures.

I’ve traveled around Iceland both ways, and if you’d like to rent a campervan in Iceland, I highly recommend Happy Campers.

Travel Planning Resources For Iceland

Packing Guide

Check out my travel gear guide to help you start packing for your trip. Pick up a travel backpack, camera gear, and other useful travel accessories.

Book Your Flight

Find cheap flights on Skyscanner. This is my favorite search engine to find deals on airlines. Also make sure to read how I find the cheapest flights.

Rent A Car is a great site for comparing car prices to find the best deal. Also read my tips for driving in Iceland.

Book Accommodation is my favorite hotel search engine. Or rent apartments from locals on Airbnb. Read more about how I book cheap hotels online.

Protect Your Trip

Don’t forget travel insurance! I’m a big fan of World Nomads for short-term trips. Protect yourself from possible injury & theft abroad. Read more about why you should always carry travel insurance.

Recommended Guidebook: Lonely Planet Iceland
Suggested Reading: The Little Book Of Hidden People

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Have any questions about where to stay in Iceland? Which hotels in Reykjavik have you stayed at? Drop me a message in the comments below!

This is a post from The Expert Vagabond adventure blog.