Iceland has a wide range of accommodations to suit different budgets and preferences. The country has hostels, hotels, and luxury resorts, but the best way to engage with the culture and the surroundings is at eco-friendly, family-run places tied in with the culture. Below you’ll find lodgings in the heart of Reykjavík as well as the more rural parts of Iceland. There are guesthouses, spots to see the northern lights and stars, and places where the bars are right around the corner.
Budget Stays
Image courtesy of Reykjavík - Loft HI Hostel.
There are many different ways to stay in Iceland that are affordable and immersed in the culture. If you want to stay in the capital city, there’s a hostel called Reykjavík - Loft HI Hostel, which is a non-profit Hostelling International network of 18 hostels in Iceland, focusing on sustainable and community-focused travel. Located in the heart of Reykjavík on Bankastræti, this social hostel is known for its lively rooftop terrace, bar, and central location within walking distance of many of the city’s top sights. Regular events like live music and pub quizzes make it especially popular among solo travelers. The property also holds the Nordic Swan Eco-label and participates in carbon offset initiatives such as their annual tree planting and opportunity for guest donations towards carbon restoration. Beds in the women-only shared dorm average around $52 per night, with mixed-gender dorms often slightly cheaper. Prices rise during peak season but typically remain under $80 for shared accommodations, while private rooms are significantly more expensive.
If something outside of Reykjavík is more appealing, there is a family-owned hostel in Gimli in Dalvík, North Iceland. They don’t offer shared rooms, but rooms with one or two beds and a shared bathroom range from $115/night to $139/night. This hostel is in the center of Dalvík, about five hours from the city center. The hostel includes a communal kitchen and a shared comfortable living room for guests to enjoy, as well as free Wi-Fi available on premises.
Midrange Options
Moar Guesthouses, Image courtesy of Booking.com.
For people who want a little more comfort or a family-run business, Iceland has some wonderful options. Moar Guesthouse is a family-run accommodation set in the peaceful countryside of Akranes, West Iceland which is about 45 minutes north of Reykjavík via a car. They have a garden to wander, free Wi-Fi to stay connected, and a few friendly residents such as their curious chickens and much-loved farm dog, Táta, who's always happy to greet guests. It is very rural but just a 5-minute drive from the nearest supermarket, Bónus. They offer rooms in a guesthouse that are slightly more during peak season and slightly less off season, but are on average $160/night.
Another family-owned and operated option is Blue Vacations, which has both a hotel and cabins near the center of the Golden Circle in South Iceland. The Golden Circle is Iceland’s most famous sightseeing route. It is a roughly 190-mile (300-kilometer) loop that begins in Reykjavík, ventures into the southern uplands, and loops back to the capital. It can be comfortably completed in a half-day to a full-day road trip (6 to 8 hours). A hotel room at this accommodation for two is usually $203/night unless it’s peak season (Late June-August), then the prices rise. Their individual cabins are another, more private and rural option, and a cabin for two starts at $253/night. This offers a serene hotel in Reykholt and a collection of private cabins surrounded by open nature. Basic amenities include a private bathroom, a flat screen TV, linens, towels, and a hairdryer, tea and coffee provided, and access to a hot tub.
Image courtesy of Bubble Hotel Iceland
For an especially unique stay that blends seamlessly with Iceland’s incredible nature, visitors could become guests at the Bubble Hotel by Air Mango. This hotel has two different locations, both about an hour or so outside of the capital city in South Iceland. The hotel stays are designed as an escape from the chaos and everyday life, allowing guests to recharge and reconnect with the natural environment. Guests sleep under a sky full of stars and can watch the northern lights at the right time of year from their very own private bubble. Prices are generally $300/night, but in the off-season, prices can dip down to $268/night. The bubbles themselves only contain a bed; guests also share a centralized, heated service house, which is usually a short walk away. This building includes toilets, showers, and a small shared kitchen area. This hotel focuses on eco-friendly tourism by using renewable energy for heating and prioritizing minimal environmental impact. The structures are designed for low energy consumption and are located in remote areas to avoid harming the surrounding ecosystem, offering a "glamping" experience.
Luxury with a Conscience
Image courtesy of Trip Advisor
For a hotel and spa experience at the same time, the Blue Lagoon Retreat is one of the most luxurious accommodations Iceland has to offer. Located on the Reykjanes peninsula this retreat is a luxury resort encompassing a 60-suite hotel, a subterranean spa, Michelin-starred dining, and a private lagoon sourced from the same healing waters as the Blue Lagoon. The hotel stay includes unlimited access to the Retreat Spa and the Retreat Lagoon. The retreat provides an a la carte breakfast, morning yoga, and icelandic coffee. Each room features luxury linens, blackout curtains, heated floors, coffee machine and a selection of tea, and bluetooth speakers. The private bathrooms within each room also include walk-in shower and free-standing bathtub, quality bathrobes, slippers, and flip flops, hair dryer and hair straightener, and selection of Blue Lagoon Skincare products and other bath amenities. This retreat’s prices vary from $2,000-$5,000/night depending on the time of the year.
Another beautiful, luxurious, and sustainable option is the Fosshotel in the Westfjords region. Nestled in a village in the Northwest of Iceland, Fosshotel Westfjords serves as an ideal base for experiencing the unique wildlife, such as prime puffin sightings, and the breath-taking landscapes of the Westfjords. Nearby to the hotel are many amazing sites such as Látrabjarg Nesting Cliff, Dynjandi Waterfall and Rauðisandur red sand beach. The rough and jagged coastline of the Icelandic Westfjords accounts for about a third of the total coastline of the entire country, it’s definitely a unique and often neglected area of Iceland. The prices for hotel rooms began at $300/night but rise to $900+ during peak hours or when booking rooms with views. As of August 2024, all of their hotels have received Green Key certification from FEE (Foundation for Environmental Education), making them the first fully sustainability-certified hotel chain in Iceland.