Where to Stay in Iceland: Expert Guide to Reykjavik, Golden Circle, South Coast & Beyond
Reykjavik, Iceland
Plan your Iceland itinerary with my expert recommendations on the best places to stay in Reykjavik. Discover top neighborhoods, hotels, and hostels tailored to your budget and travel style.
Based on my multiple visits to Iceland, this stunning destination captivates families, adventure seekers, and solo travelers alike with its dramatic landscapes and unique experiences.
While flights to Iceland are now more affordable, accommodations and dining remain premium—planning ahead is key.
Iceland's diverse terrain offers endless unique stays, from geothermal retreats to roadside guesthouses. Each trip reveals new gems, whether chasing waterfalls, hiking volcanoes, or embarking on the iconic Ring Road.
For travelers seeking the best places to stay in Iceland, this comprehensive guide—drawn from firsthand experience—covers prime locations and vetted accommodations across budgets.
Best Places to Stay in Iceland
Table Of Contents- Best Places to Stay in Iceland
- Best Neighborhoods in Reykjavik
- Where to Stay in Reykjavik
- Where to Stay on the Golden Circle – Selfoss & Hveragerði
- Where to Stay on Iceland’s South Coast – Vík
- Where to Stay Near the Glacier Lagoon – Höfn
- Where to Stay in East Iceland – Egilsstaðir
- Where to Stay in North Iceland – Akureyri
- Where to Stay on Snæfellsnes Peninsula
- Keflavík Airport Hotels & The Blue Lagoon
- Renting a Campervan in Iceland
Hotels in Iceland can be pricey with limited availability compared to other destinations, but guesthouses, farms, and campsites offer excellent value.
Book early, especially for summer peak season, to secure the best rates and options.
This guide details everything from backpacker hostels and luxury Reykjavik hotels to family farms, campgrounds, and campervan rentals—ensuring you find the perfect base for an unforgettable trip.
Best Neighborhoods in Reykjavik
Miðborg
Reykjavik's vibrant downtown Miðborg, centered on Laugavegur Street, buzzes with shopping, dining, nightlife, and attractions.
Vesturbær
West of the center, Vesturbær blends residential calm with cozy cafés—ideal for a quieter stay.
Hlíðar
This working-class area east of downtown, meaning “the hills,” offers affordable stays amid parks and playgrounds.
Laugardalur
Known as “hot spring valley,” Laugardalur is Reykjavik's recreation hub with sports facilities and a campground.
Where to Stay in Reykjavik
Iceland's capital, Reykjavik, serves as the ideal starting point with its blend of cosmopolitan dining, street art, museums, and tour operators.
For maximum convenience, choose spots near Laugavegur Street—though other neighborhoods shine too.
Below are my top picks for hotels, hostels, and campgrounds by budget.
LUXURY: Kvosin Downtown Hotel
Indulge at Kvosin Downtown Hotel in a restored 1900s building. It boasts Reykjavik's largest rooms in sleek Scandinavian style with local art.
MID-RANGE: Hotel Ódinsvé
Hotel Ódinsvé offers stunning city views, Danish cuisine at Snaps Restaurant, and proximity to Laugavegur shopping (just 200m away).
BUDGET: Rey Apartments
Nestled between shopping and trendy Skólavörðustígur, these modern apartments include free WiFi, full kitchens, and are 10 minutes from Sunhöllin pool.
BACKPACKER HOSTEL: Loft Hostel
Award-winning Loft Hostel, centrally located, features a balcony, events, strong WiFi, and welcoming staff—perfect for budget travelers.
CAMPING & CAMPGROUNDS NEAR REYKJAVIK
- Reykjavik Campsite – In Laugardalur, with kitchen, laundry, accessible facilities, free parking/WiFi, and dog-friendly.
- Hafnarfjörður Camping – Family-oriented with lush grounds, modern amenities, and internet next door; 30min from Keflavík Airport.
Where to Stay on the Golden Circle – Selfoss & Hveragerði
The 300km Golden Circle loop from Reykjavik showcases history and nature—perfect for day trips or layovers via guided tours or self-drive.
Base in Reykjavik or overnight in Selfoss/Hveragerði for immersion.
Top picks by budget:
LUXURY HOTELS
Frost & Fire Hotel – Geothermal paradise near Thingvellir with hot tubs, pool, sauna; cook eggs in hot springs!
Ion Adventure Hotel – Northern lights views from Mount Hengill, plus pool, spa, and communal lounge.
MID-RANGE HOTELS
Eldhestar – Eco-retreat with private entrances, hot tub, near horse farm.
Guesthouse Bjarney – Shared facilities, BBQ terrace, unique caravan option.
BUDGET HOTELS
SKYR Guesthouse – Spacious rooms, free WiFi/parking, bike rentals.
Guesthouse Inga – Northern lights views, clean communal areas.
CHEAP HOSTELS
Selfoss Hostel – Mountain views, kitchen, hot tub, free parking.
Hot Springs Hostel – Hiking access, play area, WiFi.
Where to Stay on Iceland’s South Coast – Vík
Home to Seljalandsfoss, Skógafoss, Reynisfjara Beach, and glaciers, the South Coast is Ring Road essential post-Golden Circle.
Vík offers lodging, eateries, and activities [MAP].
Top picks by budget:
LUXURY HOTELS
Hotel Kría – Modern 2018 opening with mountain views, bar, farm-fresh breakfast.
Black Beach Suites – Sea/mountain terraces, kitchenettes, near beach activities.
MID-RANGE HOTELS
The Barn – Private rooms/dorms, free WiFi/parking for road trippers.
Icelandair Hotel Vík – Beachfront near attractions, varied room types.
BUDGET HOTELS
Hotel Geirland – Mountain views, garden cabins, on-site dining.
Guesthouse Reyir – Family-run, sea views, communal kitchen.
CHEAP HOSTELS
Puffin Hostel – Central Vík, 10min to black beaches, shared kitchen.
Where to Stay Near the Glacier Lagoon – Höfn
4 hours from Vík, harbor town Höfn gateways Jökulsárlón and Vatnajökull—sunrise there is magical.
Top picks by budget:
LUXURY HOTELS
Aurora Cabins – Northern lights porch views, full amenities for couples.
MID-RANGE HOTELS
Hotel Höfn – Glacier/sea views, terrace dining, near lagoon.
Hotel Jökull – Aurora spotting, bar, free parking.
BUDGET HOTELS
Skyrhúsid Guesthouse – Lagoon-adjacent farmstay, museums on-site.
Höfn Guesthouse – Shared spaces, harbor walks.
CHEAP HOSTELS
Höfn Hostel – Glacier views, lounge, hiking/golf nearby.
Lilja Guesthouse – Private baths, mountain views, lounge.
Where to Stay in East Iceland – Egilsstaðir
Underrated East Iceland boasts fjords, waterfalls, wildlife, and folklore in young town Egilsstaðir.
Top picks by budget:
LUXURY HOTELS
Hótel Valaskjálf – Scenic lawns, en-suite rooms, breakfast, adventures nearby.
MID-RANGE HOTELS
Icelandair Hotel Herad – Plush lounge, steakhouse, premium décor.
BUDGET HOTELS
Laufás Guesthouse – Family-friendly, near pool/skiing.
CHEAP HOSTELS
Tehusid Hostel – Comfortable, kitchen/lounge, near nature.
Where to Stay in North Iceland – Akureyri
Northern hub Akureyri excels for whales, pools; nearby Mývatn offers volcanic wonders and birding.
Top picks by budget:
LUXURY HOTELS
Hotel Kjarnalundur – Aurora/panorama views, hot tub, sauna access.
MID-RANGE HOTELS
Icelandair Hotel Akureyri – Modern comfort, bar, near pools.
BUDGET HOTELS
Lónsá Guesthouse – Homely, views, shared amenities.
CHEAP HOSTELS
Town Square Guesthouse – Essentials, views, kitchen/terrace.
Where to Stay on Snæfellsnes Peninsula
"Iceland in miniature," Snæfellsnes packs waterfalls, beaches, glaciers—2 hours from Reykjavik.
Top picks by budget:
LUXURY HOTELS
Fell Holiday Home – Spacious apartment, garden for aurora.
MID-RANGE HOTELS
Arnarstapi Hotel – Sea views, restaurant, near rocks.
BUDGET HOTELS
West Park Guesthouse – Park setting, sea/mountain houses.
CHEAP HOSTELS
North Star Guesthouse – Central, self-check-in, activities nearby.
Keflavík Airport Hotels & The Blue Lagoon
LUXURY NEAR BLUE LAGOON
Northern Light Inn – Spacious rooms, seafood dining, walk to Lagoon.
BUDGET NEAR AIRPORT
The Base Hostel – Shared facilities, shuttles, Lagoon trips.
Brimarsbrú Sleep Inn – Artistic, kitchen-equipped.
Kef Guesthouse – 4km from airport, private/shared baths.
BUDGET NEAR LAGOON
Geo Hotel Grindavík – Clean rooms, lounge, 6km to Lagoon.
Renting a Campervan in Iceland
Campervans offer flexibility and savings on food/lodging versus hotels/cars.
Pros: On-the-go meals, spontaneity. Cons: Weather challenges, limited facilities for families.
From my experiences, Happy Campers is a top choice for reliable rentals.
