The best places to stay in Iceland: an expert's guide

written by Kirsten Powley

updated 20.12.2023

When looking for the best places to stay in Iceland, you may suddenly realise you've hit the destination jackpot. No matter where you are in the country, there is something spectacular nearby, whether that's great food, dramatic and rugged mountainous landscapes, powerful waterfalls or charming fishing villages.

Where to stay in Iceland

What can be much harder to figure out is where to stay in Iceland, depending on your priorities. Northern lights? City life? Dramatic landscapes? Fear not – when the choice gets a bit overwhelming, that's where we come in.

We've put together a list of the best places to stay for the best travel experiences in Iceland, whatever tantalising aspect of the country you're in the mood for. The information in this article is taken from The Rough Guide to Iceland your essential travel guide for Iceland.

Reykjavík the capital of Iceland for cultural cool

Despite being isolated in the Atlantic Ocean, Reykjavík is a city on par with some of the trendiest in the world. It's daubed with street art and offers mouth-wateringly good restaurants plus cute cafes and colourful buildings. Take a look at our guide to the best restaurants in Reykjavik.

With all the Icelandic culture we've come to love internationally, you'll be missing out if you don't spend at least some time here. And not only do we feature the city in our guide to the 30 best places to go with kids, it makes a great base for for all types of visitors and is one of the best places to visit in Iceland this summer.

    Where to stay in Reykjavik

  • For budget stays: Kex Hostel is not an average back-to-basics hostel. It's trendy, stylish and characterful, offers a choice of dorms or private rooms and features a cafe-bar, live gigs and a gym.
  • For luxury stays: Radisson Blu 1919 is 10 minutes Reykjavik's historic centre. Rooms are simple but modern and the excellent Grillið restaurant atop the hotel offers panoramic city views.
  • For romantic stays: House of the Snowbird is a charming, traditional house offering a range of one bedroom apartments in the historic heart of Reykjavik.

Find more accommodation options in Reykjavik

Prefer to leave planning and booking to experts? Have a look at our Iceland itineraries. All Tailor Made Trips can be modified together with your local expert, and then booked for a stress-free holiday.


Downtown Reykjavik © Edwin Verin/Shutterstock

Best for Iceland's second city, Akureyi

Sure, Reykjavik has the main international airport nearby and is effortlessly cool, but it isn't the only city to stay in that will give you an insight into Icelandic life. Take Akureyri, the second most populous city in Iceland, although its population is still less than 20,000.

Located at the base of a fjord in north west Iceland, this pulsing city offers excellent skiing, eclectic cafes and restaurants. It's also home to impressive, Akureyrarkirkja church and surrounded by stunning natural phenomena like Lake Mývatn and Dettifoss, which you can see in our 30 incredible photos of Iceland.

    Where to stay in Akureyi

  • For central stays: Hotel Kea is at the base of Akureyrarkirkja. Some rooms have views of Eyjafjördur Fjord and the hotel's Múlaberg Bistro serves Icelandic dishes with a French influence.
  • For cosy stays: Icelandair Hotel mixes minamalist design with cosy comfort. A good choice for ski breaks, guests have access to an indoor pool and most rooms come with stunning views.
  • For budget stays: innovative Hafnarstræti Hostel features single and double sleeping pods instead of rooms. The hostel also has a shared kitchen, its own shop and BBQ facilities.

Find more accommodation options in Akureyi


Akureyrarkirkja church © Francesco Dazzi / Shutterstock

Best places to stay in Iceland for the northern lights

The northern what? Just kidding – Iceland is pretty much synonymous with the northern lights, and with good reason. Between November and March, you're in with a pretty good chance of witnessing the colourful, wispy curtain dangling in the sky that makes up the sought-after Aurora Borealis.

And as long as you stay away from too much light pollution, and are blessed with some luck from the weather gods, you can choose from hotels all around the country where a focus on the phenomena makes them some of the best places and times to see Northern Lights in Iceland.

    Where to stay for northern lights

  • For pampered stays: Hotel Rangá in Hella is known for comfortable viewing experiences and offers a balcony that wraps around its bar, thick blankets and wake-up calls when it's showtime.
  • For light-sure stays: Hotel Húsafell in Borgarfjordur Valley can have several displays a week, so it's one of the safest bets if you're fully focused on seeing northern lights in Iceland.
  • For family stays: set on an Icelandic horse farm, Hótel Lækur in Hella offers a range of family rooms and a large outdoor terrace for guests to gaze on the northern lights.

Find more accommodation options in Hella


Thingvellir, one of the best places to stay in Iceland for Northern Lights © Daniel Schreiber / Shutterstock

Best for dramatic landscapes

From craggy mountains to thundering waterfalls, Iceland's landscapes are one of the main reasons people visit the country, so it only makes sense to stay within close vicinity of them. We recommend you pick your must-do attractions and go from there. Check out our guide to the best things to do in Iceland for inspiration.

By staying in places close to major sites you can be first on the scene and avoid the crowds, at least until the tour buses arrive. Plus quite a few adjacent hotels are design icons worth a visit in their own right. And if that puts you in the mood for Scandi-style, take a look at where to stay in Copenhagen.

    Where to stay for dramatic landscapes

  • For designer stays: ION Hotel, in Thingvellir National Park, juts out of rocks surrounded by lava fields. Here, Geysir, Silfra drift, Kerið crater and the Golden Circle are all within easy reach.
  • For comfortable stays: Fosshotel Glacier Lagoon is stylish and cosy, plus its dramatic near neighbours are Jökulsárlón Glacier Lagoon and Svartifoss Waterfall in Vatnajökull National Park.
  • For unique stays: a scattering of yurt-style pods set on an icy lake near Selfoss, Fjallsarlon Overnight Adventure is the type of inventive accommodation Iceland has made its own.

Find more accommodation options in Thingvellir National Park


Iceland's dramatic views draw thousands of visitors a year © Jan Miko / Shutterstock

Best for Iceland's geothermal hot springs

In winter, they provide a cozy respite from the cold, and in the summer, they're just pure luxury. Iceland's hot springs, powered by the geothermal activity that's so abundant on the island, are worth visiting any time of year.

The types of springs can range from huge, famous attractions like the Blue Lagoon, to secret hideaway pools dotted in the countryside. If you want to know more have a look at the top 10 hot springs in Iceland to take a dip.

    Where to stay for hot springs

  • For lagoon stays: Silica Hotel is part of the Blue Lagoon resort. Rooms are minimalist and modern and there's a private, much less crowded, thermal lagoon just for guests.
  • For romantic stays: Hotel Budir sits on a beach on the Snaefellsnes peninsula. It's a good base for Landbrotalaug pool, an intimate hot spring big enough for 2 or 3 people.
  • For family stays: Harbour View Cottages sit close to the Blue Lagoon, each lodge is detached and features a double bedroom, living area and patio with sea views.

Find more accommodation options On Snaefellsnes Peninsula


The Blue Lagoon © Bhushan Raj Timla / Shutterstock

Ready for a trip to Iceland? Check out the Rough Guide to Iceland. If you travel further in Iceland read more about the best time to go and the best places to visit. For inspiration use our Iceland itineraries or speak to our local experts. A bit more hands on, learn about getting there, getting around the country and where to stay once you are there. 

We may earn commission when you click on links in this article, but this does not influence our editorial standards - we only recommend services that we genuinely believe will enhance your travel experiences.

Kirsten Powley

written by Kirsten Powley

updated 20.12.2023

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