Inexpensive flights and free stop-overs between the US and Europe have made Iceland a prime tourist destination in recent years. Iceland towns are few and far between, and budget travelers lured in by the low cost of flights may be surprised at the high cost of food and lodging in Iceland. However, if you look hard enough, you will find accommodation for almost any budget and to help you out, we’ve compiled this list of tips on where to stay in Iceland.
The combination of an exploding tourist industry within very small villages means you definitely need to plan ahead, as many towns can book up quickly, especially during the high season. There are no shortage of unique places to stay in Iceland due to its diverse scenery.
We will cover off all types of Iceland accommodation options from Hostels to luxury Iceland hotels as well as how to decide where to stay in Iceland, the best Iceland hotels, best places in Iceland to visit, the best places to stay in Iceland, hotels near Iceland attractions, Iceland neighborhood guide and many more.
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Urban Adventurers Looking for Nightlife
Reykjavik – Best places to stay Iceland
Reykjavik is Iceland’s capital and largest city, and is most likely where you will begin and end your Iceland vacation and is best location to stay in Iceland. For a capital city, Reykjavik is relatively small and most attractions are well within walking distance of the downtown area. For this reason your budget will be the leading factor, rather than location, in choosing where to stay in Reykjavik.
Laugavegur is main street through Reykjavik, where you’ll find shopping, eating and lodging. To be in the heart of everything, you’ll want to stay close to Laugavegur. Be warned if you stay right on Laugavegur, you may hear partiers well into the wee hours. Slightly outside this area are East Town and West Town, each no more than 20 minutes walking from the city center, below is a list of Reykjavik hotels.
Where to stay in Iceland Reykjavik
Luxury Hotels in Reykjavik:
Reykjavik Konsulat Hotel, Curio Collection By Hilton
Canopy by Hilton Reykjavik City Centre
41 – A Townhouse Hotel
Business Travelers or Short Stopovers
Keflavik – Best place to stay Iceland for the famous Blue Lagoon
Keflavik, 50 km from Reykjavik, on the Reykjanes peninsula, is where Iceland’s international airport is located. While most visitors to Iceland will choose to stay in Reykjavik, Keflavik offers many hotel options as well for those wishing to be close to the airport. The popular Blue Lagoon as also just 20 km from Keflavik, offers on-site lodging and is on most visitor’s Iceland bucket list. If you have a late arrival or early departure, staying in Keflavik might be the right choice for your itinerary.
Where to Stay in Keflavik
Luxury Hotels in Keflavik:
Golden Circle Travelers
Selfoss and Hveragerði – Where to stay in Iceland around the Golden Cirlce
For those travelers touring the Golden Circle drive, and prefer not to return back to Reykjavik at the end of the day or take a day trip, Selfoss and Hveragerði are good locations for an overnight stop, or an extended stay to explore the southern area of Iceland. These small towns, just 40-50km from Reykjavik, offer plenty of overnight options, usually a bit less expensive than Reykjavik and have a good assortment of dining options as well.
Where to Stay in Selfoss and Hveragerði
Affordable Luxury Hotels in Selfoss and Hveragerði:
Hotel Ranga (best places to stay in Iceland for northern lights)
Hikers wanting to explore Skaftatell National Park and Jokulsarlon Glacier Lagoon
Höfn – Where to stay in Iceland near the Glacier Lagoon
Höfn is a fishing town along the Southeast coast of Iceland, and is the nearest sizable town to find overnight accommodation close to Iceland’s largest glacier, Vatnajökull, as well as the Jokulsarlon Glacier Lagoon and Skaftatell National Park. You may be able to find lodging closer to these destinations, but Höfn is a good central location for exploring this region for a couple of days or more. This is also a great spot for glacier hiking, which is fairly popular in Iceland due to all the glaciers.
Where to Stay in Höfn
Budget Hotels in Höfn:
Nature Lovers wanting to explore the East Fjords
Egilsstaðir – Where to stay in Iceland for nature lovers
If you are touring the East Fjords, one of the more remote spots in Iceland, Egilsstaðir is the main town where you will find accommodation in this region. Egilsstaðir actually sits inland, on a river, and is close to Iceland’s largest forest, with access to several major fjords. While Egilsstaðir is a small village, with under 3,000 residents, visitors to the East Fjords will find a small range of hotel and hostel options for an overnight stay. The small population and abundance of nature here make Egilsstaðir a great place for wildlife spotting as well.
Where to Stay in Egilsstaðir
Cheapest Hostels in Egilsstaðir:
Ring Road Travelers Looking for Urban Amenities
Akureyri – Where to stay in North Iceland
Akureyri is Iceland’s second largest city, and is located in north Iceland. This town of 20,000 residents makes for a great stop along Iceland’s Ring Road. In addition to the natural beauty found all over Iceland, visitors to Akureyri will find museums, churches, botanical gardens and of course, many hotels and restaurants.
Where to Stay in Akureyri
Scenery seekers who don’t have time for the Ring Road
The Snæfellsnes peninsula is just 90km long, and contains some of Iceland’s most spectacular scenery. This is a detour from the Ring Road, and often overlooked by visitors to Iceland, but those wishing to venture into the peninsula will be rewarded with scenery and many small villages from which to choose an overnight stay. There are no large towns in the pensinsula, but towns like Helnar, Olavsvik and Rif have a few options.
Where to Stay on Snæfellsnes Peninsula
Northern Lights Seekers
Vik – Where to stay in Iceland to see the northern lights
When the timing is right, the Northern Lights can be seen from all over Iceland, even in Reykjavik! You could also be unlucky and not see them in all of Iceland. That said, those wishing to see the Northern Lights will probably visit several spots in Iceland, but Vik, 180km from Reykjavik, is a good option for those wishing to get out of the “big city,” but are still looking for an assortment of amenities. The black sand beaches of Vik make for a cool foreground in your Northern Lights photography, just make sure to not get too close to the ocean as it can be extremely rough. Vik is one of the best towns to stay in Iceland.