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Reykjavik has a fantastic firework display on New Years Eve.

Top 12 Hotels in Iceland

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Reykjavík city is full of great hotels

What are the best hotels in Iceland? Where are the best hotels in Reykjavík? Where to book accommodation in Iceland? What is accommodation in Iceland like? Read about best-value hotels and luxury hotels in Iceland here.

Have you booked your flight to Iceland but are now wondering where to stay? Iceland offers a variety of accommodation, including camping, private cottages, hostels, bed and breakfast, farm stays, Airbnb as well as a variety of hotels, both good value hotels and luxury hotels. There is, naturally, far greater choice in Reykjavik; however, there is a wide array of options on this list for accommodation across the country.

There are a few hotel chains in Iceland. Foss hotels have 12 hotels around the country. The newest one, Fosshotel Glacier Lagoon, is a 4-star hotel that opened in 2016 in a gorgeous location close to Jökulsárlón glacier lagoon. Another one of our favourites is Fosshotel Vatnajökull, that has a great view of the stunning Vatnajökull glacier. 

Another chain is Icelandair hotels, with a total of 9 hotels dotted around the country. Our favourite is the Icelandair hotel in Vík, a new and stylish hotel in a beautiful setting. Note that breakfast is not included in the prices at Icelandair hotels but can be purchased when you book.

KEA hotels have a total of 8 hotels around the country, thereof 5 in Reykjavík, 2 in Akureyri and one by Lake Mývatn. The KEA hotel in Akureyri has the most perfect central location, right next to the iconic church and the ever so popular Akureyri swimming pool. However, our favourite has to be the newly opened Apótek hotel in the centre of Reykjavík, in one of Reykjavík's landmark buildings. If you want to treat yourself to a great meal in Iceland, check out Apótek restaurant as well, no matter if you're staying at the hotel or not.

Reykjavik has hotels throughout its many corners.

Center hotels have 6 different hotels, all in Reykjavík. For a stay in Reykjavík, any of the Center hotels are a good option as they are all centrally located, stylish but still good value for money. Check out the Ský Lounge Bar at Center Hotel Arnarhvoll for the best view of the Northern Lights from Reykjavík city, as it is situated high up above the streetlights.

Edda hotels  is Iceland's oldest summer hotel chain, now with 11 hotels around Iceland. The hotels are only open during summertime and most of them close mid-August.

The chain hotels are mostly good value no matter which hotel you pick. The newer hotels are more stylish, are more likely to be 4-star hotels and may have more amenities, such as spas or gyms. The older hotels are cheaper and have a certain quirky charm about them. We at Guide to Iceland have made a list of our top 12 hotels in Iceland, which is not only based on luxury, comfort and style but also value for money.

Luxury Hotels in Iceland

This is NOT a typical luxury hotel in Iceland! ;)

First up, let us tell you a little bit of what to expect when you book a luxury hotel in Iceland. When it comes to luxury in Icelandic hotels, you should not expect the same level of luxury as you'll find in the top hotels around the world! There are no 5-star hotels in Iceland - but quite a few 4-star hotels.

Iceland's first 5-star hotel, a Marriott Edition hotel, is set to open in downtown Reykjavík, next to Harpa Concert Hall in 2020. It will have conference and meeting rooms, several restaurants and spa facilities and be in an unbeatable central location.

The general emphasis of hotels in Iceland is on the surrounding nature. Even the most luxurious hotels in Iceland won’t offer much more than friendly service, only one good restaurant and bar, comfortable and clean rooms that are en-suite, continental or buffet breakfast and possibly a pool, spa and/or a sauna. Perhaps even a tiny gym.

So if you’re used to a 5-star hotel luxury, take note that your Icelandic luxury will be a bit more rustic, wild and intimate. There won’t be multiple pools or restaurants anywhere or champagne breakfasts. Some hotels may not have the possibility to get breakfast in bed. Some may not even have room service. Others may only have shared bathrooms. They’re pretty much self-service. And you can forget about a pillow or a duvet menu!

It's not all doom and gloom though!

The Blue Lagoon has an attached hotel.

On the other hand, many hotels are family run and they strive to provide you with good and friendly service. Many new restaurants are popping up that use Icelandic fresh and local ingredients and most hotels in the countryside are ideally situated, surrounded by stunning nature. 

Iceland is rich in minerals and hot springs and if the hotel doesn’t boast its own spa, it may be situated very near one. Whereas most hotels don’t have a gym, they may have a nearby mountain to climb or various hiking trails. Or horses on-site to go horseback riding. And Reykjavík’s hotels compete with each other in good design, good restaurants and cocktail bars.

On top of that, many hotels have their own cute and quirky charm that you can see in small details.

Iceland’s tourism industry is young and the service is constantly improving. That’s something to consider when you look through menus or websites that may contain a spelling mistake or two.

For a romantic getaway break then you might also want to look into booking your own personal countryside cabin. Icelandic summer cabins, or cottages, can be found all over the country, varying in amenities and luxury. The majority of them have a hot tub though and are situated in amongst the spectacular nature, tranquil and secluded. There's no better way to enjoy the Northern Lights than from your own hot tub, far away from any light pollution - it really is the best seat for the show!

To find a suitable cabin, you can browse through a variety of them in different regions of Iceland on the Bungalo website.

But if your heart is set on a hotel, then the following list is a mix of luxurious hotels, apartment hotels, small boutique hotels as well as more basic hotels that are good value. We want to be able to cater to all tastes.

12. Hotel Katla

This traditional 3-star country hotel is great value for money and in a fantastic location. It's also recently been renovated, offering a number of new and stylish accommodation mixed in with rooms in an older style.

Situated near the village Vík you have easy access to some of the country's most breathtaking locations, such as Dyrhólaey cliffs, Seljalandsfoss waterfall and Skógafoss waterfall. A tour of the South Coast will allow you to discover all that this area has to offer.

Hotel Katla is near the South Coast sites, like Seljalandsfoss.

Many people that are driving the south coast of Iceland from Reykjavík towards Jökulsárlón glacier lagoon choose to spend the night at Vík and then Hótel Katla is a great and affordable option. There are plenty of attractions by the ring road in Iceland and so taking your time to enjoy this route is advisable.

All guests have access to their outdoor hot tubs and the restaurant serves a buffet breakfast and a delicious and extremely varied dinner buffet with local specialities. There is also a cosy bar where you can have a drink before or after dinner.

Jokulsarlon is within reach of Hotel Katla.

Rooms: Standard and superior single, double and triple rooms. 

The breakfast buffet is included in all prices.

Discover more about Hotel Katla.

11. Hotel Flatey

Hotel Flatey is a really cute small hotel in a restored building that offers 11 rooms with space for 27 people.

This is the only hotel in the sparsely populated Flatey island, that's truly one of Iceland's hidden gems. Flatey is the largest island on Breiðafjörður fjord but it only has a population of about 100 people during summer and about 5 during winter.

You'll find a lot of puffins in Flatey island during summer

The island's appeal lies in its tranquillity and remoteness. Most of the colourful houses have been restored in their original style, from the time of the island's prosperity. Besides birdwatching and strolling around the island (it takes about 30 minutes) there's not much else to do but let go of your worries and let your imagination take hold of you. The perfect place to be inspired. 

The rooms in Flatey Hotel are small and simple, but with stylish Nordic decoration, freshly picked flowers, cosy and charming. Their restaurant, Samkomuhúsið, serves delicious food, mostly freshly caught seafood. There are no en-suite rooms, all of the rooms have shared facilities. The hotel is only open in the summertime, between the 1st of June and the 24th of August.

The puffins of Flatey are not hard to find in summer.

Rooms: Single, double, suite (2 people) and triple rooms.

Breakfast is included in all prices.

Discover more about Hotel Flatey

10. Room With a View Apartments

Room With a View is a luxury apartment hotel in the centre of Reykjavík. The apartments come in different shapes and sizes but are all situated right in the centre of Reykjavík, literally on the main shopping street, Laugavegur.

All of the apartments have a fully furnished kitchen and a private bathroom, although their best value apartments have a private bathroom that's across a corridor. Bright colours mixed with white, black and grey dominate the decorations but each apartment is unique.

All of the apartments have access to a shared sun-roof with a jacuzzi, a lounge with tables and chairs and a great view over the city.

Reykjavik is a bustling city.

The hotel is a part of IGLTA, the International Gay and Lesbian Travel Association and doesn't discriminate against guests of any sexuality. The LGBT community in Iceland is vibrant and locals advocate for sexual freedom and personal liberty, so this hotel is a nice reflection of the country’s values.

This is a great option for people that want to be at the heart of the city, on a romantic getaway, a weekend party vacation or on a business trip. All the bars, restaurants and shops are a stone throw away and you will be spoilt for choice of things to do in Reykjavik.

Rooms: Studio apartments, larger apartments, group apartments, penthouse apartments.

Breakfast is not included.

Discover more about Room With a View Apartments

9. Frost and Fire Hotel

Frost and Fire (Frost og Funi in Icelandic) is a lovely hotel situated in Hveragerði, a mere 45-minute drive from Reykjavík.

The hotel’s focus is on the hot springs in the area and they offer a 12-metre long pool, a hot tub and an indoor spa with hot and cold Kneipp footbaths and newly opened mud baths.

Additionally, you can always go for a soak in the nearby naturally warm river. In the summertime, the river’s temperature next to the hotel can reach up to 18°C. Each guest is provided with a bathrobe and slippers during their stay.

The hot spring valley of Reykjadalur is near the Frost and Fire Hotel.Photo from Hot Spring Hike of Reykjadalur Valley

The hotel also boasts the restaurant Varmá, that serves delicacies such as wild game goose, ptarmigan and reindeer as well as traditional lamb and seafood.

From Hveragerði you can hike up to the warm river in Reykjadalur where you can bathe, or go on a horseback riding tour to Reykjadalur hot springs. Further up in Reykjadalur valley you’ll reach the warmest part of the river, where it’s as warm as a hot tub.

Hveragerði itself is famous for its greenhouses and all the nearby hot springs. Indeed, this hot spring tops our list of the best natural hot springs in Iceland. From the hotel, you’ll see steam rising all around you and the crackling of the nearby hot springs can help you fall asleep at night.

Our local Regína went to stay here and you can read more about her stay in her blog post about Frost and Fire Hotel.

A path leads to the Reykjadalur hot spring valley.Photo from Hot Spring Hike of Reykjadalur Valley

Rooms: Single, double and family rooms.

Breakfast is included in all prices.

Discover more about Frost and Fire Hotel

8. Hotel Rangá

Hótel Rangá is situated in the south of Iceland, near the small town of Hella. This is a luxury hotel that feels somewhat like a wild wooden ranch in the middle of nowhere. It is, by many, considered to be an adventure hotel.

The hotel prides itself on being one of the best locations to see the Northern Lights as it is far away from any other light sources. They even offer a service where they can wake you up if the lights appear while you are asleep.

The hotel is famed for having delicious food at their restaurant, although it may come with a hefty price tag.

They are also famous for the themed decoration of their junior and master suites, as they are somewhat outrageously themed after the world's continents. Their Antarctica suite is for example decorated with (fake) penguins, the African suite has a fair share of wooden giraffes and animal prints and their North American suite is full of stuffed animals and bearskins.

They also offer standard and deluxe rooms and the Royal Suite, which are not themed after a continent.

Hotel Ranga is a great place to see the Northern Lights.

There are quite a few extras available at this hotel, you can order a massage and a number of items can be delivered to your room, such as cheese platters, bouquets of flowers, chocolate covered fruits, champagne bottles etc. Jacuzzis are also available to relax in outside the hotel, from where you can admire the Northern Lights on a clear night.

The view from the hotel is towards the volcano Hekla or to the nearby salmon river that the hotel is named after, Eystri Rangá.

It's an hour's drive from Reykjavík to Hotel Rangá and it's a great location to go and explore the south coast of Iceland from. Perfect location if you want to go salmon fishing or horseback riding.

Rooms: Standard single and double, Deluxe single and double, themed Junior Suites and Master Suites.

Breakfast buffet is included in all prices.

Discover more about Hotel Rangá.

7. Hotel Egilsen

Hótel Egilsen is a small and intimate 10 bedroom boutique hotel situated in Stykkishólmur on Snæfellsnes peninsula.

This homely and cute hotel is run by the story lover Gréta. Every morning she cooks healthy homemade breakfast with local fresh organic eggs. For lunch, she serves freshly made soup with herbs from her own garden, along with homemade bread and mozzarella. Around 3 o’clock she’s serving homemade waffles or blueberry pies with ice-cream from a local farm. And besides making food, she listens to and tells stories.

Kirkjufell can be found near Hotel Egilsen.

The hotel centres around stories in all shapes and sizes. Locals regularly come to the guest lounge to tell stories. Guests that tell Gréta a story, poem or send her pictures or draw a picture for her, get a special treat. (Maybe even a discount off their stay!)

The 10 rooms are small but bright, with attention to detail. All rooms are en-suite. In every room is a Coco-Mat bed that's made from natural materials from renewable sources, specially selected to give the guests a good night's sleep.

The Snaefellsnes Peninsula has many great features.

Stykkishólmur featured prominently in the movie The Secret Life of Walter Mitty, as it was used to portray a town in Greenland. It is one of Iceland’s prettiest towns, situated on the northern side of Snæfellsnes peninsula with a view over the Breiðafjörður fjord. Breiðafjörður is full of small islands of every shape and size, the largest one being Flatey island.

Many boat tours operate from Stykkishólmur, both the ferry Baldur that goes via Flatey island over to the Westfjords as well as various day tours, including this Viking Sushi Adventure tour.

Bike rentals are available from the hotel and Snæfellsjökull glacier is just about an hour’s drive away. Rent a car or take a tour of Snæfellsnes peninsula to discover all that this area has to offer.

The Snaefellsjokull glacier towers on the tip of Snaefellsnes Peninsula.

Rooms: Standard single, standard double, superior double.

Breakfast is not included and costs an additional 2500 ISK per person.

Discover more about Hotel Egilsen.

6. Hotel Laxá

Hótel Laxá is a 3-star hotel by Lake Mývatn. It opened in 2014, quickly received a certificate of excellence from Tripadvisor and aims to be green and eco-friendly.

The hotel’s fun and funky décor is also stylish and the hotel boasts a lounge, bar and a restaurant that has an emphasis on local ingredients.

Myvatn is a breathtaking lake area in Iceland's north.

Lake Mývatn is one of Iceland’s gems. It’s famous for its spectacular nature, full of pseudo-craters, interesting flora and fauna, peculiar rock formations and hot springs. 

Nearby you’ll find Dimmuborgir (Dark Cities), a great area to explore on foot with its hauntingly beautiful lava landscape. You can also head to Mývatn Nature Baths and soak in hot natural water. Or go fishing in Laxá river.

Tours of Myvatn include natural attractions such as Námaskard pass and Dimmuborgir lava fortress.

The Namaskard Pass is right by the Myvatn area.

Rooms: Single, Single with lake view, Double, Double with lake view. All rooms are ensuite.

Breakfast is included in all prices.

Discover more about Hotel Laxá.

5. Hotel Búðir

Búðir is an upscale but cosy country hotel on the Snæfellsnes peninsula, not too far from Arnarstapi. The location of the hotel is exceptionally idyllic and romantic, nearby one of Iceland’s three national parks.

You have a view of the looming Snæfellsjökull glacial volcano, by the coast, you can admire the crashing waves of the Atlantic Ocean on a white beach and on a clear day you have a view across the bay to Reykjavík! There are many hiking routes in the area, an otherworldly lava field covered with squishy moss, rich birdlife and an abundance of caves to explore.

Budir is home to just a church and a hotel.

This location is exceptionally popular for weddings and marriage proposals, as the ceremony can be held in the nearby picturesque black wooden church, on the white beach or in the midst of a lava field!

Snæfellsjökull glacier is the entryway to the centre of the Earth in Jules Verne’s novel Journey to the Centre of the Earth. Many people feel the natural power of this glacial volcano when they are near it. The summit can be reached after a few hours hike and you can also choose to go snowmobiling on it.


Rooms: The Loft, Standard, Deluxe, The Suite.

Breakfast is included in all prices.

Discover more about Hotel Búðir.

4. Hotel Sigló

This brand new hotel in picturesque Siglufjörður in north Iceland is the only hotel in Iceland with a dock entrance! So if you arrive on a boat, you’ll have a private harbour.

Hotel Sigló is stylish but with a definite small fishing town charm, more due to its location than its decoration. It's actually extremely modern with a very spacious lobby, big rooms and a stylish outdoor hot tub right next to the marina. All rooms have ocean and mountain views and all guests have access to their hot tubs and sauna.

The Trollskagi Peninsula has more Icelandic horses than any other part of the country.


You don’t need a boat to reach the gorgeous town of Siglufjörður. It is one of Iceland’s hidden gems, slightly off the beaten track but easily reachable by car. It is situated on Tröllaskagi (Troll Peninsula) in the north of Iceland, not far off from Akureyri, the capital of the north.

The hotel is situated within the Marina Village, along with the neighbouring restaurant Hannes Boy and the café Rauðka. The hotel itself also boasts a lobby bar and café and a delicious restaurant called Sunna. You might even catch a glimpse of the chef picking out the freshest fish when the fishing trawlers sail in.

Siglufjörður used to be quite isolated as the mountain pass to reach it wasn’t opened until 1967. Before then, people had to sail in and out of the town. Take advantage of this mountain pass and go explore this beautiful town, its nearby hiking trails, planted forest or its great skiing area.

Rooms: Classic, Deluxe, Junior Suite and Suite.

Breakfast is included in all prices.

Discover more about Sigló Hotel

3. Icelandair Hotel Reykjavík Marina

Another top hotel is located by the old harbour in the centre of Reykjavík – and a part of the Icelandair hotel chain. We think this is a fun and modern hotel, and the best value hotel you can get in the capital. It’s in an exciting location, right between the town's centre and the trendy and arty sector of town in the Grandi area.

The hotel itself has a funky design, with bright colours, cosy fireplaces as well as a maritime theme. All the design in the hotel is Icelandic and is also produced in Iceland.

Harpa is right by the centre of Reykjavik.


Slippbarinn restaurant and bar is popular with both locals and travellers, often hosting live popup music events and DJ's playing on weekends. Every day between 15 and 18 there's a happy hour at the bar. There is a café as part of the hotel as well, featuring a nice delicatessen. Additionally, the (not included) breakfast buffet is delicious!

The hotel features a small cinema that can be hired and that screens kid's films during brunch time at weekends. There's also a small gym on-site for guests as well as a couple of meeting rooms.

As the hotel is situated right next to Reykjavík’s old harbour, you’re very close to a number of exciting seafood restaurants. Indeed, you are spoiled by some of the best restaurants in Reykjavik sitting right on your hotel doorstep. 

Reykjavik's hotels are largely within walking distance of Hallgrimskirkja.

Right next door is the popular Bryggjan Brewery and close by are some of Reykjavík's most celebrated art galleries and museums. Any of the main attractions within the city centre, such as Hallgrímskirkja church, Harpa Concert Hall or the city pond are within a 5-15 minute walking distance.

Rooms: Standard, Superior, Studio, Attic Rooms, Deluxe Rooms, Junior Suites and Marina Suite.

Breakfast is included in all prices.

Discover more about Icelandair Reykjavik Marina

2. Hotel Klettur

Hotel Klettur is based in downtown Reykjavik and so is ideally located for those who wish to be right in the heart of the city. With almost every type of room, from Single to Family-sized, this hotel has something for every type of traveller. 

Indeed, the free on-site parking and WiFi make this hotel ideal for visitors who want to be comfortable and well looked after during their stay. Their buffet breakfast is a hit among travellers and private bathrooms come as standard throughout the hotel.

The hotel itself has a sleek and modern design, with TVs in the room and helpful staff on hand. The hotel bar downstairs is great for cosy nights and they are equipped with a tour desk which helps guests to find trips and activities to enhance their experience in Iceland.

Reykjavik has a fantastic firework display on New Years Eve.


Situated just over 100m from Laugavegur, the main shopping street, it is perfectly located for exploring the city on foot. The famous Hallgrimskirkja is just a ten-minute walk away and a visit the iconic Sun Voyager is fifteen minutes. In terms of eateries, you have the choice of the city centre.

Rooms: Single, Standard Double, Superior Double and Family Room.

Breakfast is included in all prices.

Discover more about Hotel Klettur.

1. Alda Hotel

This hotel is ideal for those who want to enjoy all that the city has to offer while relishing the calm sanctuary away from the hustle and bustle of the city noise.

Alda Hotel is another boutique hotel in the heart of Reykjavik. With 88 rooms, this is a medium-sized hotel. The rooms boast a grayscale decor, which gives this hotel a chic but cosy feel. You will notice Icelandic fair in the detail of the decor design.

Located at the top of Laugavegur, the main shopping street, this places you just 15 minutes walking distance from the main attractions. You are, however, ideally located for shops and amenities, and far enough from the nightlife in the city to know you won’t be disturbed by Saturday night partygoers.

From the hotel, you can easily hop aboard a bus to the Blue Lagoon Spa, or relax in the on-site hot tub and sauna at the hotel itself. There is also a fitness centre located on the ground floor of the hotel for those who like to stay active while travelling.

For those who have travelled from outwith the EEA, you will benefit from the use of one of the hotel’s complimentary smartphones. Take this high-tech device out in the city and make the most of the free 4G and local phone calls. This will allow you to comfortably navigate your way around the city and enjoy the use of the Reykjavik-focused apps on the device.

Enjoy your breakfast, lunch and dinner within the restaurant's cosy surroundings. Find yourself in need of a haircut? Alda Hotel has you covered on this, too, with an on-site barber. 

This is why Alda Hotel is number one on our list of top hotels in Iceland. Every convenience you need, Alda has thought of, and more! It is also consistently highly rated by travellers to Reykjavik.

Rooms: Single, Double, Attic, Alda Attic, Deluxe, Family, Queen, Alda Suite and King Suite.

Breakfast costs 2,740 ISK per person, per night.

Discover more about Alda Hotel.

Hotels in Iceland come in all shapes and sizes, with something for every type of traveller. We hope our recommendations help make your trip to Iceland an even more incredible experience. Share this article with your friends and family as you plan your trip.