Best Places To Stay In Iceland: Reykjavík, Ring Road & More

From family-friendly guest houses to deluxe hotels, there are some great places to stay in Iceland. Most are found in the southwest around Rekjavík, but there are some real gems along the Ring Road. Here’s our guide to the best accommodation in Iceland.

By: Paul Healy | Last Updated: November 12, 2025 | Jump to Comments

Since our first trip to Iceland over 25 years ago, the land of fire and ice has become a popular tourist destination.

Fortunately, accommodation options have significantly improved since those early days, and many of the best places to stay in Iceland now combine beautiful locations with modern Icelandic style.

While Iceland is not cheap, hotels are of a high standard with comfortable beds, clean, communal spaces, and friendly, efficient service.

We have visited Iceland several times on different itineraries [see all our Iceland itineraries] and have experienced a mix of accommodation styles.

There are some wonderful hotels and guesthouses along the Ring Road, which loops around the country. Read this guide in conjunction with our Road Trip Itinerary to help you plan your perfect trip.

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TIPS FOR BOOKING YOUR ACCOMMODATION IN ICELAND

Iceland is an expensive destination, and accommodation takes up a big chunk of your vacation costs, so it’s a good idea to plan ahead.

Prices rise dramatically over the summer months, with many places booking out well in advance. Look for accommodation at least 6 months before your Iceland trip.
Christmas is also a busy time, particularly in and around Reykjavík.
There are fewer hotels in Iceland’s more remote regions, such as Studlagil Canyon and Skaftafell, so options are limited, and it pays to book even earlier.
Accommodation with kitchen facilities can help keep costs down by allowing you to cook meals or take lunch out on day trips.

There are a few different types of accommodation to suit different price brackets and tastes.

HOSTELS IN ICELAND

Hostels in Iceland are generally of good quality and offer a mix of dormitories and private rooms. Prices start at around 35 EUR per person per night but can rise quickly in summer.

HOTELS IN ICELAND

There is a wide range of choices of hotels in Iceland, with many modern and cool places to stay. Prices can be high, and some rooms are very small. In some of the places we stayed in, we couldn’t even fit our bags in the room!

But bargains can be found, and most include a breakfast, which can reduce your daily spend.

GUESTHOUSES IN ICELAND

Guesthouses are a great way to meet other travellers and friendly locals. Many guesthouses include meals prepared in-house and served at communal tables.

Expect to pay roughly US$150 upwards for a room for two people, with dinner charged on top of the advertised room rate. (Unless otherwise stated).

MAP: ICELAND ACCOMMODATION

We have mapped all the guesthouses, hostels, and hotels we recommended on the map below. Each of the main regions is in a different colour.

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USING OUR MAPS. Click on the top right corner to open in the Google Maps app. Click on the star to save to your Google account.

WHERE TO STAY IN ICELAND?

1. REYKJAVÍK

Reykjavík is Iceland’s largest settlement with the widest selection of hotels.

It is an attractive city with charming old streets, museums and a cool Icelandic attitude. A 3-day Reykjavik itinerary allows you to enjoy the compact city and visit the Golden Circle on a day trip.

In the city, you’ll find budget hostels, mid-priced guesthouses, and a range of hotels catering from high-end luxury to family-friendly.

Most of the action in Reykjavík takes place in the downtown area near the Laugavegur shopping street; however, it’s not a large place and finding something a little further out will provide better value for money.

RECOMMENDED HOTELS IN REYKJAVÍK

Hotel Borg by Keahotels ($$$$) – Located right near the Laugavegur shopping street, Hotel Borg is an elegant Art Deco-styled hotel, perfectly located to explore the centre of Reykjavik.
Loft HI Hostel ($) – A friendly hostel in the centre of Reykjavík with a bar, roof terrace and great eco-friendly credentials.
Reykjavík EDITION ($$$$$) – All the luxury you’d expect from an international hotel with a cool cocktail bar, a great buffet breakfast and a modern spa.
Black Pearl ($$$$) – A family-friendly hotel in the centre of Reykjavík with large rooms containing heated marble floors, contemporary furnishings, and city views.

2. SELFOSS & SOUTH WEST ICELAND

Just a stone’s throw from Keflavík airport and the capital of Reykjavík, southwest Iceland is one of the best places to stay to see many of the unique sights the country has to offer.

The main highlight is the Golden Circle – a circular drive that visits Þingvellir National Park (the historic site of Iceland’s first parliament); the geothermal geyser at Geysir; and the wonderful waterfall at Gullfoss.

But there’s more tucked into this lovely region. Nearby is Fagradalsfjall volcano, which spewed lava into the air in both 2021 and 2022, the geothermal pool of the Blue Lagoon, and one of our favourite thermal hot pots in Iceland, Reykjadalur Hot Springs.

It also makes a good base for taking day trips to Landmannalaugar and Thórsmörk in Iceland’s Highlands.

RECOMMENDED HOTELS IN THE SOUTH WEST

The Northern Light Inn ($$$$) – Located just 5 minutes from the Blue Lagoon with a wellness spa, comfortable lounges and an excellent restaurant.
Hotel Rangá ($$$$) – Modern and spacious room with comfortable beds and stylish details. They have 3 hot tubs perfect for watching the Northern Lights.
Hotel Gulfoss ($$$) – Gulfoss waterfall is just 1.9 miles away, Geysir is a 10-minute drive, and Thingvellir National Park is 35 minutes away. The in-house breakfast is excellent.
Álftröð Guesthouse ($$$$) – A great value guesthouse with all the facilities you need for a comfortable stay, including an outdoor hot tub. The rooms are basic but well-sized, and the complimentary breakfast is a good start to the day.

3. VÍK & SOUTHERN ICELAND

Vík is a seafront village in the south of Iceland. Occupying a remote location near the Mýrdalsjökull Glacier, Vík has become a popular stop on the Ring Road and a great base for visiting the Reynisfjara Black Sand Beach and the Dyrhólaey Peninsula – home to puffins and sublime rugged scenery.

The region around Vík is a great place to stay in Iceland for hiking tours and caving activities on Mýrdalsjökull Glacier, and to see some of the best waterfalls in Iceland.

As one of the only settlements in this part of the country, it’s also a great base on our 5-day Iceland itinerary to allow you to see more in southwest Iceland.

The lodging options around Vík include several properties with great sustainability credentials and some cool stays with great facilities.

RECOMMENDED STAYS IN SOUTHERN ICELAND

The Garage ($$$) – A cool Icelandic stay with fully equipped kitchens, private bathrooms, laundry facilities and scenic terraces with lake views.
Hotel Vík Í Mýrdal ($$$) – One of the best accommodation options in the centre of Vík. The rooms are spacious and well-appointed. Breakfast is simple but does the job.
The Glacier View Guesthouse ($$$$) – Spacious and well-decorated room with a patio and superb glacier views. They do an excellent home-cooked buffet dinner on communal tables in their lovely home.
Hotel Katla ($$$) – A modern hotel with clean, comfortable rooms and friendly service. The buffet breakfast is substantial, and they have a hot tub and sauna.

4. HÖFN & SOUTHEAST ICELAND

Towards the southeast of Iceland, the massive glacier of Vatnajökull dominates the horizon. There is little civilisation here, and accommodation books up fast. But it’s one of the best places to stay in Iceland to experience the unique icy geology of the country.

The area includes Vatnajokull, the largest ice cap in Europe, Skaftafell National Park (which has excellent hiking and views overlooking the glacier), as well as the mesmerising Jökulsárlón Glacier Lagoon.

The southwest is also a great base for visiting Vestrahorn, a rocky mountain peak overlooking the ocean. It’s basic Icelandic accommodation, but a fantastic experience.

Visit Höfn and the southeast on our 7-day Iceland itinerary.

RECOMMENDED HOTELS IN THE SOUTHEAST

Höfn Hostel ($) – Basic accommodation with simple rooms, shared bathrooms and access to the guest kitchen and laundry facilities. It’s spotlessly clean with excellent showers.
Vikingcafe ($$$) – This hotel owns the Vestrahorn area, and staying here is the only way to see it at sunrise or sunset, when it’s simply spectacular. The hotel offers basic, but clean, accommodation with private bathrooms. There’s a café for dinner and breakfast.
Guesthouse Nypugardar ($$) – A clean, bright stay on a working farm with a home-cooked dinner and hearty breakfast. This is a great place to see the Northern Lights.
Fosshotel Glacier Lagoon ($$$) – A smart hotel with an on-site restaurant and bar, free Wi-Fi and several rooms with a luxurious private hot tub. It’s not the cheapest hotel in Iceland, but you can save a little by catching happy hour every night.

5. SEYÐISFJÖRÐUR & THE EASTFJORDS

Seyðisfjörður is a charming, colourful village in the east of Iceland and the most attractive base for visiting the Eastfjords on our 10-day Iceland itinerary. It’s beautifully set, perched on the end of a narrow fjord and surrounded by snow-capped mountains.

The entire region is characterised by dramatic coastlines, narrow fjords, and a slower, more local pace. Although it gets fewer visitors than the southwest, there are plenty of standout attractions, including Hengifoss – one of the best waterfalls in Iceland – and the basalt columns of Stuðlagil Canyon.

There’s a good range of lodging in Seyðisfjörður and several great restaurants, making it an ideal base to explore the area.

EASTFJORDS ACCOMMODATION OPTIONS

Seyðisfjörður Guesthouse ($$$) – Comfortable, good-sized rooms, some with private bathrooms. They have a well-equipped shared kitchen and laundry facilities.
Hengifoss Guesthouse ($$$$) – 3.7 miles from Hengifoss waterfall. The rooms are spacious with either shared or private bathrooms, and a buffet breakfast is included.
Berjaya Hérað ($$$) – Comfortable modern rooms with tea and coffee-making facilities, private bathrooms, and complimentary Wi-Fi. The dinner menu, specialising in local fish, was surprisingly good.
Hotel 1001 Nott ($$$$) – Remote and tranquil, yet only a few miles from the Ring Road. The rooms overlook a lake and a forest, and there’s a hot tub with amazing views.

6. HÚSAVIK, MÝVATN & NORTH ICELAND

The central north region of Iceland is packed with natural attractions. Surrounding the area of Mývatn are interesting lava formations, a unique geothermal wasteland, pseudo craters and access to several prominent waterfalls. Read more on our guide to visiting Mývatn.

An hour north of the main Mývatn area, the charming seaside port of Húsavík is where whale-watching tours depart. Known as the whale capital of Iceland, up to 23 species of whale can be spotted here, and sightings are almost guaranteed in the month of July.

To visit the Mývatn area we’d recommend at least 2 days, which we have included on our Ring Road itinerary.

NORTH ICELAND HOTEL RECOMMENDATIONS

Fosshotel, Mŷvatn ($$$)- A modern, comfortable chain hotel with a good selection of facilities, including free Wi-Fi, private bathrooms and 24-hour reception.
Hótel Laxá ($$$)- Quality, modern accommodation with all the amenities you need for a comfortable stay. The restaurant/bar area is a nice place to hang out, and breakfast will sort you out for the day.
Fosshotel, Húsavik ($$$)- 24-hour reception, free Wi-Fi, tea and coffee-making facilities, plus plenty of other handy amenities.
Árból Guesthouse ($$)- Charming place to stay with home-cooked breakfast by friendly hosts in a central Húsavik location.

7. ÍSAFJÖRÐUR & THE WESTFJORDS

Stretching out into the Atlantic Ocean, the Westfjords are a series of rugged peninsulas and massive mountains including spectacular but remote scenery. It’s home to one of the best bird-watching areas in Europe and there are natural hot springs that feel isolated and supremely local.

Ísafjörður is the main town in the Westfjords. It has a cute high street, a respectable maritime museum, and a small but thriving café scene. Further afield, there are a few other small settlements that also make a great base.

Accommodation in the Westfjords is delightfully untouched by big hotel chains, so expect to stay in very local guesthouses where the service is friendly and thoughtful.

WESTFJORDS HOTEL SUGGESTIONS

Stekkaból ($$$)- A lovely guesthouse on the backstreets of Patreksfjörðurm, a small village in the southern section of the Westfjords. The rooms are a decent size and the shared lounge is bright with wonderful views over the fjord.
Holt Inn ($$$$) – Few places feel like you’re really getting away from it all as much as this one. All the rooms have private bathrooms, and the breakfast is excellent. The Vagninn Bar & Restaurant in Flateyri is just a short drive away, making it another great reason to stay here.
Malarhorn Guesthouse ($$$) – Have an excellent evening meal followed by a soak in the hot tubs overlooking the ocean, catching a glimpse of the northern lights.
Hotel Ísafjörður ($$) – All the comfort you need in a clean, central property. Breakfast is included, and all rooms have a private bathroom.

8. SNAEFELLSNES & WEST ICELAND

The Snaefellsnes Peninsula is often described as a mini-Iceland. Here you’ll find a large glacier, red craters, basalt columns, dramatic coastal roads, beautifully shaped mountains and the Kirkjufellsfoss waterfall.

At just 2 hours’ drive from Reykjavik, Snaefellsnes is an easy destination to get a taste of some of the remarkable scenery Iceland has to offer. The area can easily be covered on an extension to our 3-day Iceland itinerary.

The accessibility of the region means there is a wide selection of accommodation options, covering everything from budget homestays to high-quality hotels.

SNAEFELLSNES HOTEL SUGGESTIONS

The Bookstore Family Apartment ($$)- This quirky house, which was once a bookstore, is warm and inviting and a great accommodation option for families in Iceland.
Sýsló Guesthouse ($$$) – A very well-appointed shared kitchen and living space with smart decor and nice views. Features include a sun terrace, free Wi-Fi and freshly ground coffee for guests to make their own brew.
Kirkjufell Guesthouse & Apartments ($$$) – Excellent views of the Kirkjufell mountain. Each room has a private bathroom, and there’s a well-equipped shared kitchen to make your own meals.
Sodulsholt Cottages ($$$$) – Located on a horse training farm with over 70 horses over 1300 hectares. Each cottage includes a fully equipped kitchenette, a dining space and private bathrooms.