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Iceland Hotels: Accommodation Guide

Contrary to popular belief, Icelanders don’t live in igloos. Like the rest of the western world, they live in well-built, well-insulated brick homes. A decade or two ago, these Icelandic homes would have been the only option for visiting tourists. Now, however, tourist accommodation has sprung up in every town in the country, and there are a variety of options. Whether you’re budget traveling or searching for the peak of Nordic luxury, Iceland’s hotels have what you’re looking for.

hotel in Iceland reception desk

How Much are Hotels in Iceland?

This, of course, depends on what type of hotel you choose to stay in, and their location. Hotels in the capital, especially those in or close to downtown, will cost more; you’ll be in the activity’s center. Those in the smaller towns and villages of Iceland will generally cost less, but you’ll also have less choice. Hotels in Keflavik can also be a good choice if you don't plan on spending much time in Reykjavik.

Some of the country’s villages are home to 200 people or less, so they may only have one hotel. Let’s take a look at some accommodation types and typical amounts you can expect to pay.

Important note: Reykjavík is not the same as the Capital Region. The Capital Region encompasses the city of Reykjavík and its six surrounding municipalities: Kópavogur, Hafnarfjörður, Garðabær, Mosfellsbær, Seltjarnarnes, and Kjósahreppur. None of the municipalities, however, are far of a drive from the city center if you have a rental car in Iceland.


If you are visiting Iceland on a budget, hostels are great! Not only they are affordable, they’re also a great way to meet other travelers. If you’re still looking for the hotel vibe, some hostels offer private rooms with an en suite bathroom. Otherwise, you’ll have 4, 6, 8, and 10+ bed rooms in which you’ll be sharing with other guests.

Hostels also have shared kitchens, and the community vibe forces you out of your comfort zone and into engaging conversations. There is one hostel chain that is worth particular mention: Hostelling International (HI). They have 29 locations around Iceland, and the brand is committed to environmentally friendly practices. They also have a great online booking service where you can easily select your room type and membership discounts. With HI, you can book a bed in a dorm, in Reykjavík, for as little as ISK 2.850 per night. Have a look at their accommodation options here:

BnBs in Iceland

With a modern BnB, you can enjoy the comforts of home in a foreign place. Many Icelanders have turned either parts of their apartments and houses, or the whole thing, into tourist accommodation. This is great for groups of friends or families who want their own kitchen and private space to relax in. These spaces will generally have free parking, Wi-Fi and be ideally located near to bus routes or landmarks. The site is of course a popular resource for this type of accommodation. In the capital region, private rooms are as little as USD 58! per night for two people. You will find Icelanders to be very welcoming and accommodating hosts. Once you’re in the more rural areas, some BnB hosts will have other facilities that you’re welcome to use. For example, in a BnB apartment that I stayed at in Akureyri, the hot tub came in handy in mid-February.

Iceland airbnb in the wilderness


In terms of luxury, the best hotels in Iceland are located on or near to the capital region. Arguably the most spectacular are the two hotels at the Blue Lagoon spa, the Retreat Hotel and the Silica Hotel. Of course, their placement at Iceland’s most famous geothermal spa gives them extra points. Additionally, the Lagoon is already in a remote area, with many hiking trails to explore. With floor-to-ceiling windows to maximize viewing pleasure and a design that reflects the surrounding landscape, you’ll undoubtedly love your stay.

From ISK 81.200 or USD 610, you can book a room in the Silica Hotel, which includes Premium entry to the Blue Lagoon. For the Retreat Hotel, expect to pay at least ISK 180.000 or USD 1397, which includes entry to the Retreat Lagoon. This is a more exclusive section of the Blue Lagoon, inside which is located the Retreat Spa.

For accommodation with a great location and great price, check out Reykjavík’s Icelandair Hotel Natura. It’s a short drive from the center and is near to a small forest, Perlan museum, and Nauthólsvík geothermal beach. Get yourself booked in for as little as ISK 13.000 / USD 100 a night and have your Reykjavík stay covered.

Icelandair also manages hotels around the country, if their style is to your taste. You can check out their range of accommodation here.

If you want to be at the absolute center of the action, check out the Center Hotel Miðgarður. It’s on the main shopping street in the city, Laugavegur, and right next to a wonderful food court, Hlemmur Mathöll. The Center chain operates eight hotels in the capital, so head to their website and pick your favorite: for ISK 24.000 you could be staying in the very heart of Reykjavík.

Laugavegur street sign, the main shopping street in Reykjavik

Unique Hotels in Iceland

The first hotel in Iceland opened in 1884, when Hótel Tindastóll began offering rooms to the merchants traveling from Denmark to the North of Iceland. Since then, Iceland has become home of some pretty unique hotels: whether you are looking for a luxurious stay, a relaxing yoga retreat, or a traditional Viking experience, you'll definitely find what you were dreaming of.

The Bubble Hotel

Known as the five-million-star hotel, this accommodation offers an immersive experience with Iceland’s nature. You’ll be staying in a completely transparent plastic bubble in Iceland’s wilderness, with all it has to offer. In the summer, you can watch the midnight sun as it barely drops below the horizon. And in the winter, if Oðinn smiles upon you, you’ll get to see the northern lights. This is the ultimate in solitude and serenity, with only a few other bubbles nearby but out of sight. You’ll need to bring your own food, but there is a nearby service house with bathrooms and showers. The bubbles are clustered in two locations: in the Golden Circle and on the south coast. Visit to book your stay.

Bubble hotel in Iceland at night with a starry sky

Hotel Viking

This Viking-themed hotel has 42 furnished rooms, each with an en suite bathroom. It’s the only one of its kind in Iceland and part of a larger attraction, Fjörukráin - The Viking Village. Take this as an opportunity to learn about the Viking culture through furnishings, music, food, and stories. A standard double room is ISK 21.200 / USD 160 in the low-season and ISK 25.200 / USD 195 in the high season. The Viking Village is located in Hafnarfjörður, a 20-minute drive from the city center. Visit for details.

The Wilderness Center

This rustic collection of old buildings feels like a step into the past. With old farmhouses and wooden buildings, you’ll get a taste of an Iceland before your time. The true wonder of this accommodation, however, is its location on the east side of the island. It’s found in Egilstaðir, far from any big towns and at the doorstep of the highlands—Iceland’s completely uninhabited interior. The Center offers guided tours around the local area, on foot, and on horseback, and has their own hot spring. With home-made, locally sourced food and an exhibition showcasing life for early Icelanders, you’ll feel wonderfully detached from modern-day stresses. Head to to lock in your visit; note that the Wilderness Center is only open from May to September.

Panorama Glass Lodge

This is another accommodation in which you can enjoy the land of ice and fire’s sky without restriction. Cross your fingers that the aurora borealis appears during your stay, but if it doesn’t, there’s still plenty to experience. You’ll be amazed by the scenery filled with lava fields, mountains, and rivers, uninhibited by pollution. Iceland has some of the cleanest air on earth; on a clear day, you’ll see for miles in every direction.

That’s where the Panorama Glass Lodge fits in, for its bedrooms have transparent walls and ceilings. It’s found in an area with almost no light pollution, and side-curtains are available to cover the walls if needed. You’ll have a private bathroom, hot tub, and a king-sized bed, for ultimate luxury and comfort. This is the perfect hotel for a couple on a romantic getaway, and it’s not too far from the capital. The Lodge is close to the town Hella, 120km (75 miles) from Reykjavík in total.

Panoramic hotel in Iceland with a wide window overlooking the majestic landscape

How Easy is it to Find Hotels in Iceland?

With websites like being so accessible and having so many partners, it’s very easy to find hotels in Iceland. You can find last-minute deals and choose filters to narrow your search. Hostels, guesthouses, and hotels list their availability on the site, and bookings are shown to you in real time. Alternatively, whilst you are booking your rental car with us, you could ask where we recommend you to stay. We’ll be happy to offer our advice based on your requirements.

Whether you want to stay in a conventional hotel or mix it up with somewhere unique, Iceland has it all. Your accommodation could just be somewhere you sleep in between your adventures, or it could be part of the experience. It could lead you to places you weren’t planning to visit, to see sights you didn’t expect to see. In the capital, you’ll always find a place to stay, but you’ll have competition for accommodation in the smaller towns. New hotels are currently under construction in Reykjavík; keep an eye out and be among the first to enjoy them.

Samuel Hogarth, Cars Iceland.


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