The Best & Most Incredible Places to Stay in Iceland

Where to Stay in Reykjavik

Reykjavik, Iceland’s capital, is where most visitors start their journey. Some people even choose it as a base and then travel to different areas of the country to discover the natural wonders. The city offers a mix of modern design, rich history, and vibrant nightlife.

Hotel Borg

Located in Austurvöllur Square, Hotel Borg is a landmark in Reykjavik. This luxury hotel combines Art Deco design with modern amenities, offering nice rooms and suites. It also offers a great breakfast and fine dining at its in-house restaurant. The location is fantastic, close to Reykjavik's best attractions, including the Harpa Concert Hall and the National Museum.

KEX Hostel

For a more budget-friendly experience, the KEX Hostel is a popular option. Situated in a former biscuit factory, the hostel is known for its relaxed atmosphere. You can choose both private rooms and dormitory accommodations. The hostel’s vibrant social scene, along with its proximity to Reykjavik’s main attractions, makes it a great choice for younger travelers or solo adventurers.

ION City Hotel

With its minimalist Scandinavian design, ION City Hotel offers a good urban option in Reykjavik. Located in the city's heart, it’s perfect for travelers looking for both luxury and convenience. The hotel’s design is elegant and comfortable, with modern amenities such as a gym, sauna, and restaurant. It has a great location, close to bars, shops, and some of the best restaurants in the city.

Canopy by Hilton Reykjavik City Centre

For travelers seeking a blend of modern comfort and classic Icelandic design, Canopy by Hilton is an ideal choice. Located in the city center, it offers spacious rooms, a rooftop terrace with stunning views, and bicycles for guests to explore the city.

Where to Stay in Other Urban Areas

While Reykjavik is Iceland's largest city, several other urban areas across the country can be used as excellent bases for exploring different island regions.

Akureyri - Hotel Kea

Akureyri, Iceland’s second-largest city, is a charming town in the north, surrounded by mountains and fjords. Hotel Kea, in the city center, is an excellent option for travelers wanting easy access to the many spectacular places that can be found in this region or exploring the Diamond Circle. The hotel has a restaurant specializing in Icelandic cuisine and spectacular views over Eyjafjörður fjord.

Höfn - Milk Factory Hotel

Höfn, a fishing town in southeast Iceland, is usually picked by tourists as a stop to explore the area, especially Vatnajökull National Park. The Milk Factory Hotel, a modern hotel in what used to be a dairy factory, has comfortable rooms with big windows, providing spectacular views of the mountains. It’s a great place to spend the night if you’re visiting nearby attractions like Jökulsárlón Glacier Lagoon or those looking for fresh seafood in the local restaurants.

Egilsstaðir - Gistihúsið Lake Hotel

In East Iceland, Egilsstaðir is the largest town and serves as a great base for exploring the region. Gistihúsið Lake Hotel, located near the beautiful Lagarfljót lake, offers comfortable accommodations and easy access to Iceland’s largest forest, Hallormsstaður, and Hengifoss waterfall.

Vestmannaeyjar - Hotel Vestmannaeyjar

The Westman Islands, located off the south coast of Iceland, are an archipelago with amazing volcanic landscapes and the largest puffin colony in the world. Hotel Vestmannaeyjar, located in Heimaey, the biggest town on the islands, provides cozy accommodations and offers guided tours of the island’s unique geology, including the Eldfell volcano and lava fields.

Where to Stay in Rural Areas

One of the things many visitors look for in Iceland is staying close to nature. There are plenty of options around the country to stay near some of the most amazing landscapes and natural monuments in the world.

Frost and Fire Boutique Hotel

Just outside of Reykjavik, in the geothermal village of Hveragerði, Frost and Fire Boutique Hotel is a nice little hotel in the middle of an astonishing landscape. Guests can enjoy geothermal hot tubs, an outdoor swimming pool, and stunning views of the nearby Reykjafjall Mountain and the Varma River. Its proximity to the Golden Circle makes it a great choice for exploring nearby attractions like Þingvellir National Park, Geysir, and Gullfoss.

Hótel Búðir

Traveling to West Iceland, Hótel Búðir, located on the Snaefellsnes Peninsula, is an excellent choice. With dramatic views of the Snæfellsjökull glacier and nearby lava fields, this hotel offers a remote and peaceful setting. The hotel is known for its excellent restaurant, serving meals made from local ingredients.

Eleven Deplar Farm

Eleven Deplar Farm, located on the Troll Peninsula in northern Iceland, is one of the country’s most exclusive retreats. This former sheep farm has been transformed into a luxury all-inclusive resort. With its remote setting, guests can enjoy a variety of outdoor activities. The natural hot springs and spa facilities make it a perfect place to relax after a day of adventure.

Heydalur Guesthouse

For a more rustic, authentic Icelandic experience, Heydalur Guesthouse, located in the Westfjords, offers cozy accommodations in a beautiful, remote valley. The guesthouse is family-run, and guests can go horseback riding, kayaking, and fishing. It’s the perfect place for nature lovers who want to experience Iceland’s untouched wilderness.

The Best Places to Stay and See the Northern Lights

Many travelers come to Iceland with the hope of seeing the Northern Lights. If that’s your case, choosing the right accommodation can make all the difference. The best places to stay for aurora viewing are located away from the light pollution of cities.

Hotel Rangá

One of the best-known hotels to see the Northern Lights is Hotel Rangá, located in South Iceland near the town of Hella. The hotel offers a unique wake-up service when the aurora is visible, ensuring you never miss a chance to see them. The hotel is a cozy log cabin with outdoor hot tubs, creating a perfect setting for viewing the lights. Hotel Rangá is also a great choice for exploring the Golden Circle and South Coast attractions.

Northern Light Inn

Situated near the Blue Lagoon, the Northern Light Inn is another great option that combines a great setting to see the aurora with proximity to geothermal baths. Its remote location, surrounded by lava fields, ensures minimal light pollution. The inn’s staff also offers an aurora wake-up call service, and the hotel provides shuttle services to the nearby Blue Lagoon.

ION Adventure Hotel

Another popular choice for Northern Lights seekers, ION Adventure Hotel is located in a remote area near Þingvellir National Park. With its sleek, modern design that blends with the surrounding landscape, the hotel offers stunning panoramic views, big windows, and a geothermal outdoor pool where guests can relax while watching the Northern Lights.

The Bubble Hotel

For a truly unique and immersive experience in nature, The Bubble Hotel, also known as "The 5 Million Star Hotel," is an unforgettable choice. Located in the heart of Iceland’s forests, this extraordinary accommodation offers the option to sleep in transparent bubbles with a direct view of the sky.

The hotel's bubble rooms are designed to maximize the chance of seeing the Northern Lights while providing complete privacy and comfort. Guests are surrounded by nature, allowing them to see the sky from the warmth of their beds. With heating and cozy bedding, the bubbles provide a unique and adventurous escape into Iceland's wilderness.

Accommodation with Spa

Iceland’s geothermal activity is one of the highlights of every trip to the country. Many accommodations offer spa facilities that allow travelers to relax after a day of exploring.

The Retreat at Blue Lagoon

Located within the iconic Blue Lagoon, The Retreat is a luxurious spa hotel that offers direct access to these world-famous geothermal waters. The hotel provides a private section of the lagoon for guests. There are also treatments using the lagoon’s mineral-rich waters.

Silica Hotel

Also located near the Blue Lagoon, Silica Hotel offers a more affordable alternative to The Retreat while still providing luxury spa experiences. The hotel has its own private lagoon for guests, and the modern design offers a peaceful and serene environment. With spacious rooms and beautiful views of the surrounding lava fields, Silica Hotel is a top choice for spa lovers.

Travel Tips

• Book in advance: Popular accommodations in Reykjavik, along the Ring Road, and near major attractions fill up quickly, especially during peak season. Make sure to book well in advance, particularly if you plan to visit during the summer months or Northern Lights season (September to April).
• Car Rental: Renting a car is the best way to move around Iceland. This way you can move from one place to another at your own pace, especially if your trip includes staying in different places. Iceland’s public transport options are limited outside Reykjavik, and having a car allows you to access more remote accommodations and attractions.
• Pack for All Weather: Iceland’s weather can change rapidly and is unpredictable, even in the summer months. It’s essential to pack layers, waterproof clothing, and sturdy hiking shoes if you plan on exploring the outdoors.
• Respect Nature: Iceland’s landscapes are fragile, and it’s everyone’s duty to help preserve them. Stick to marked paths, avoid driving off-road, and always follow local guidelines when visiting protected areas like glaciers, lava fields, and geothermal areas.

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Conclusion

From luxury hotels with geothermal spas to cozy guesthouses in the heart of Iceland’s wilderness, there are countless incredible places to stay in Iceland. Whether you're looking for a central location in Reykjavik, a peaceful countryside retreat, or a prime spot to see the Northern Lights, we hope we provided useful information for your trip.

With Iceland’s stunning landscapes and unique accommodations, your stay in the land of fire and ice will be just as unforgettable as the sights you explore.