Top 10 Cheap Places to Stay In Iceland

Top 10 Cheap Places to Stay In Iceland

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Staying in Reykjavik can be expensive.Iceland is undoubtedly a fantastic travel destination, but it may seem expensive. However, there's a way to travel to Iceland on a limited budget, as there are many options available for cheap places to stay in Iceland if you know where to look.

Traveling to Iceland can be a dream come true for many. Whether witnessing the icebergs of Jokulsarlon Glacier Lagoon under the midnight sun or bathing in a hot spring beneath northern lights, Iceland has no shortage of unforgettable experiences. However, one common hurdle for many travelers is the high cost of visiting this captivating island.

Don't worry - we're here to help! There are plenty of ways to experience all that Iceland has to offer without breaking the bank. The key is to plan smartly, especially when it comes to accommodations, which often take up a significant portion of the travel budget. You might be surprised to discover many charming but budget-friendly options, ranging from hostels and guesthouses to cheap hotels in Iceland.

You might want to book a hotel room in Reykjavik and make the city your base of operations as you go on tours in Iceland. Maybe you'd prefer to rent a car and explore the country by tackling the Ring Road. No matter your plans, there are ways of cutting costs when it comes to finding a place to stay.

In this article, we will guide you through the best accommodations available at lower prices and look at some tips and strategies to help make your Icelandic dream a reality. Now let's look at the top 10 cheap places to stay while visiting Iceland.

Top 10 Cheap Places to Stay in Iceland

1. Kex Hostel (Reykjavik)

Kex Hostel is housed in an old biscuit factory.Housed in an old biscuit factory in the heart of Reykjavik, Kex Hostel is one of the best choices for budget-conscious travelers visiting Iceland. This hostel boasts an industrial yet cozy vibe with a lively atmosphere, making it popular with visitors and locals.

Kex is located by the Reykjavik seafront, close to some of the city's biggest attractions, such as Hallgrimskirkja Church and Harpa Concert Hall. The city's main shopping street Laugavegur is just around the corner with all its stores, bars, and restaurants.

The hostel is large and has different rooms to accommodate guests of all budgets. Most are dorms in which you can rent a bed, but there are options for private rooms as well. Beyond being just a place to sleep, Kex Hostel is a thriving social hub with frequent concerts, events, and some of the most affordable beer in the city. Amenities include a communal kitchen, laundry facilities, a gym, and a library.

For those seeking a budget-friendly stay without compromising on atmosphere, fun, and convenience, Kex Hostel is a solid choice.

2. Hotel Cabin (Reykjavik)

Hotel Cabin is located close to a recreational area.

Photo from Hotel Cabin.

Another great and affordable choice for accommodation is Hotel Cabin which offers a comfortable and affordable choice for travelers looking for cheap hotels in Reykjavik. Known for its simple, clean rooms and friendly service, Hotel Cabin is located a short distance from the downtown area.

Hotel Cabin has a range of rooms to suit guests of different budgets. All rooms have flat-screen TVs and private bathrooms, with the pricier rooms having additional amenities.

The hotel is located near the district of Laugardalur, which is Reykjavik's primary area for recreational activities. There you will find attractions such as Reykjavik Family Park & Zoo, the largest geothermal swimming pool in the city, Iceland's national football stadium, and the Reykjavik Botanical Garden.

Hotel Cabin is a strong option for travelers seeking an affordable, pleasant, and conveniently located base to explore Reykjavik and beyond.

3. The Barn (South Iceland)

The Barn is rustic, yet modern.

The Barn is a charming and budget-friendly accommodation located on the South Coast of Iceland, close to the village of Vik. This rustic but modern hostel offers family rooms with bunk beds that can accommodate larger groups and double rooms for those seeking more privacy.

One of the best things about the Barn is its location within a short driving distance of some of the most beautiful attractions in all of Iceland. The black sand beach of Reynisfjara is within a five-minute driving distance, and the waterfalls of Skogafoss and Seljalandsfoss are also nearby.

The welcoming atmosphere, modern amenities, and excellent location make the Barn a fantastic choice for visitors seeking an affordable stay on Iceland's south coast.

4. Grai Hundurinn Guesthouse (East Iceland)

Grai Hundurinn Guesthouse is a great accommodation in Egilsstadir.

The Grai Hundurinn Guesthouse (The Grey Dog Guesthouse), nestled in East Iceland's charming town of Egilsstadir, is a cozy, affordable option for travelers seeking comfort and tranquility. This family-run guesthouse offers a homey atmosphere with clean, comfortable rooms.

Travelers can choose a room or a private cottage in a perfect location to explore the East Fjords' breathtaking landscapes, trekking paths, and wildlife. The town of Egilsstadir has amenities like restaurants and shops, while attractions like Iceland's largest forest of Hallormsstadaskogur and the mythical lake of Lagarfljot are located nearby.

Stay at Grai Hundurinn Guesthouse if you're seeking a friendly, budget-friendly base from which to explore the captivating beauty of East Iceland.

5. Langavatn Guesthouse (North Iceland)

Langavatn Guesthouse gives a taste of Icelandic country life.

Langavatn Guesthouse is a delightful accommodation located in the North of Iceland. This tranquil retreat offers a mix of four bedrooms with a shared bathroom as well as small cabins with a private bathroom.

Apart from the warm and hospitable atmosphere at Langavatn Guesthouse, the location is fantastic. The guesthouse is an excellent base for exploring the area, located between the charming town of Husavik and the beautiful Lake Myvatn. Don't miss out on the Myvatn Nature Baths if you decide to stay here.

For those seeking an affordable stay in a serene location with a touch of traditional Icelandic hospitality, Langavatn Guesthouse is an ideal choice.

6. Dalahyttur Lodges (West Iceland)

Dalahyttur Lodges is suitable for visitors who want to explore West Iceland.

Dalahyttur Lodges is a hidden gem amidst the spectacular natural beauty of West Iceland. Offering budget-friendly private cabins and rooms, Dalahyttur Lodges provide an ideal blend of rustic charm and comfort.

Located close to the Snaefellsnes Peninsula, you will have no lack of wonderful attractions to explore when staying at Dalayttur Lodges. For example, you could explore the crater of Eldborg or spot seals on the beach of Ytri-Tunga.

Dalahyttur Lodges is a great and affordable choice if you're seeking solitude, breathtaking scenery, and a genuine connection with nature.

7. Hafnarstræti Hostel (Akureyri)

The capsules in Hafnarstraeti Hostel are comfortable and private.

Hafnarstraeti Hostel is located in the northern town of Akureyri and offers an ideal blend of comfort, affordability, and a vibrant social environment. This modern hostel provides a Japanese-style accommodation option with minimalist sleeping capsules for travelers on a budget.

The pods in Hafnarstraeti Hostel are two sizes, accommodating one or two persons, lined up in a few separate hallways to create privacy. Outside the pods is a communal area with a kitchen, multiple bathrooms with showers, and a relaxing lounge.

Akureyri is a beautiful town with no shortage of charming attractions within walking distance from the hostel, such as Akureyrarkirkja church and the world's northernmost botanical gardens. If you're looking for an economical stay in the heart of Akureyri, Hafnarstraeti Hostel is a fantastic choice.

8. Apotek Guesthouse (Akureyri)

Apotek Guesthouse is housed in an old apothecary.

If the Japanese-style capsules are not your thing, another great option for an affordable stay in Akureyri is at Apotek Guesthouse. Housed in (and drawing its name from) a building that was once a pharmacy, it offers clean, cozy rooms with shared bathrooms and kitchen facilities.

Staying in Akureyri is a great way to set up a base of operations to explore the north of Iceland. One of the more popular things to do is to explore the Diamond Circle. This sightseeing trail includes the stunning Dettifoss Waterfall, the gorgeous Lake Myvatn, the horseshoe-shaped canyon of Asbyrgi, and the quaint town of Husavik.

Overall, Apotek Guesthouse is another great option for an affordable stay for travelers wishing to get acquainted with Akureyri and the north of Iceland as a whole.

9. Nordurey Guesthouse and Nordurey Hotel City Garden (Reykjavik)

Nordurey Hotel City Garden is located in a quiet neighborhood in Reykjavik.

Nordurey Guesthouse and Nordurey Hotel City Garden are two charming and affordable accommodations in Reykjavik.

Nordurey Guesthouse is located just a short walk from Reykjavik's bustling city center. This budget-friendly guesthouse offers clean, comfortable rooms with shared bathrooms and a communal kitchen. Iconic attractions such as Hallgrimskirkja Church are located just around the corner, making this a good option for visitors who wish to explore the downtown area. 

Nordurey Hotel City Garden, on the other hand, is a mid-range hotel situated in a quiet, residential neighborhood located in the Laugardalur area. This hotel offers comfortable and modern private rooms and is situated in a great area to go on walks and explore Icelandic parks and residential areas. The hotel also has a quiet garden which is a great place to relax after a busy day.

Whether you prefer the homey atmosphere of a guesthouse or the added comforts of a hotel, both options are a great way to stay in Reykjavik for an affordable price.

10. Galaxy Pod Hostel (Reykjavik)

The capsules at Galaxy Pod Hostel are equipped with comfortable amenities.

Galaxy Pod Hostel is a capsule-style accommodation located in Reykjavik within walking distance of some of the city's most popular attractions, nightlife, and shopping. The pods are private and include a personal ventilation system, mirror, power outlet, lockable storage box, and a TV.

The communal area of Galaxy Pod Hostel is welcoming and includes a well-equipped kitchen and a lounge area which is a great way to meet fellow travelers. The communal area also includes a virtual reality gaming room which makes for a great way to unwind after tiring days of exploring Iceland.

If a somewhat futuristic yet affordable capsule-style accommodation is something you're looking for, don't miss out on Galaxy Pod Hostel.

Other Ways to Save Money When Visiting Iceland

Beyond going for cheaper accommodation, there are several ways you can save money when visiting Iceland. Here are some tips to mitigate the damage to your wallet while exploring all of the wonders Iceland has to offer. 

Prepare Your Own Meals and Don't Buy Bottled Water

Cooking at your accommodation is a great way of cutting down on costs.Eating out in restaurants in Iceland will quickly start stacking up the bills. If you are staying at a place where preparing your own meals is possible, doing so will save you a lot of money in the long run. Shop at budget supermarkets like Bonus or Kronan for groceries, and avoid convenience stores where prices are higher.

When it comes to drinks, avoid bottled water, as the same water will be running free of charge from your nearest faucet. Iceland is famous for the purity of its tap water, so bring a reusable water bottle for all your hydration needs in Iceland. If you plan on drinking alcohol during your visit, you should visit the duty-free store when arriving at Keflavik Airport and stock up, as the alcohol prices there are the lowest in the country.

If you do want to go out for dinner at a restaurant or drinks at the bar, check out our articles on 12 spots when dining on a budget and the Happy Hour guide to Reykjavik's cheapest bars.

Buy a Reykjavik City Card to Explore the City

Iceland's largest church beneath a rainbow.

If you want to explore everything that Reykjavik has to offer, consider getting a 24-hour Reykjavik city card. The card gives free access to all City Museums and Galleries, including the National Gallery and Museum. If you plan to visit more than two museums, you'll be saving money with the Reykjavik Card.

The card is also valid for the Reykjavik Family Park & Zoo, public transport, and the seven geothermal pools in the capital area as well as offering wallet-friendly discounts to numerous interesting locations and activities throughout the city. You'll also get discounts at various restaurants, shops, and cafes and on a number of tours that operate within the city center.

Book Your Trip in Advance and Travel During Off-Season

Visiting Iceland off-season can be a way of saving money.Planning ahead can pay off big time. Tours, flights, accommodation, and other services are often much cheaper if you book them in advance. This has the added benefit of securing your spot, as many tours and accommodations in Iceland have limited capacity.

Iceland's busiest tourist season is during the summer. If you visit the country during the off-season, you might find that certain prices are much lower than during the summer. This also means that you will have a chance to witness the northern lights, which is impossible during the summertime.

FAQs on Cheap Places to Stay in Iceland

There are many great options when it comes to swimming in Iceland.Here are answers to the most frequently asked questions about cheap places to stay in Iceland.

How Much Does it Cost to Stay in Iceland?

The cost of a night's stay in Iceland can vary greatly depending on the type of accommodation, the location, and the time of year. While there are a lot of variables, you should expect to have to pay 100 to 150 dollars per night at minimum. If you book ahead of time and do some research, you can definitely find cheap accommodation in Iceland.

Is It Cheaper to Stay Outside of the City in Iceland?

Yes, there are places in Iceland that can be less expensive to visit compared to Reykjavik, which as the capital and largest city, can be more costly due to its concentration of tourist attractions, dining, and accommodation options. Towns outside of the capital area, such as Akureyri and Selfoss, will be generally less expensive to stay in.

Are There Any Free Activities in Iceland?

Yes, many of Iceland's natural wonders are free to visit, such as most of its waterfalls, geysers, black sand beaches, and national parks. Strolling around Reykjavik to see its street art, colorful neighborhoods, and the old harbor is also free.

What is the Best Place in Iceland to Stay In?

The best part of Iceland to stay in largely depends on your interests, as each region offers its unique attractions. Reykjavik is the country's cultural hub, with numerous museums, restaurants, and nightclubs. If you're interested in natural wonders like waterfalls, glaciers, and black sand beaches, towns on the South Coast, such as Vik and Selfoss, are great options. If you're a fan of diverse landscapes, you might want to consider staying on the Snaefellsnes Peninsula. 

That concludes our guide to the top 10 cheap places to stay in Iceland. Did we leave any of your questions unanswered? Do you have any stories of staying in budget accommodation during your visits to Iceland? Let us know in the comments below!

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