Planning an Iceland trip can be overwhelming, especially when trying to figure out where to base yourself. The truth is, there is no single "best" place to stay; it depends entirely on whether you are doing day trips from a single base, driving the Ring Road, or hunting the Northern Lights.
Iceland offers a wide range of accommodation options. Stay in hotels in Iceland, cozy cottages, apartments, guesthouses, or even budget-friendly hostels. No matter your travel style, you’ll find the perfect place to serve as a base for your adventures.
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Key Takeaways
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The " Reykjavik Basecamp" vs. "Road Trip" strategy: If you have 5 days or less, base yourself in Reykjavik and take guided day tours to avoid packing up daily. For trips of 7+ days, plan a "road trip" approach, moving accommodations every 1–2 nights to conquer the South Coast or Ring Road.
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Match your region to your itinerary: Reykjavik is perfect for short trips and culture, but if you're prioritizing nature, head out. Towns along the South Coast (like Vik) are incredibly popular for glacier and waterfall access, meaning lodgings here often sell out 6 to 9 months in advance.
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The sweet spot in Reykjavik: Downtown Reykjavik (Miðborg) is the ultimate area for walkability, dining, and easy tour pick-ups. However, if you are renting a car, consider staying just outside the immediate downtown area, like Laugardalur, to avoid expensive city parking.
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Save money with the right accommodation type: Traditional 5-star luxury hotels are rare in Iceland. Instead, Icelandic luxury is experiential, think cozy boutique guesthouses or rural cabins with private geothermal hot tubs. For the best value, rent a cottage or apartment with a kitchen; cooking your own meals is the number one way to combat Iceland’s notoriously high food costs.
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Seasonal booking logistics: Summer visitors can confidently book remote stays to enjoy the Midnight Sun in complete isolation. However, winter travelers should strictly book accommodations located on or immediately adjacent to well-plowed main roads (like Route 1) to avoid getting snowed in on impassable rural tracks.
- See also: How Many Days To Spend in Iceland
How To Choose Where To Stay in Iceland
Deciding where to stay in Iceland may also depend on transportation means and how much time you have. Before you start looking at specific towns, decide on your travel strategy.
a) The "Basecamp" Approach
Best for 3–5 day trips, first-timers, or non-drivers. Stay in Reykjavik or the Golden Circle and take guided day tours. This eliminates the need to pack up every day and keeps you close to the highest concentration of dining and culture.
b) The "Road Trip" Approach
Best for 7+ days. Moving accommodations every 1–2 nights allows you to conquer the South Coast or the full Ring Road. Many travelers choose car rentals or enjoy self-drive tours in Iceland, allowing flexibility in where they stay and explore.
Best Regions to Stay in Iceland
Discover the perfect home base for your Icelandic adventure by exploring the unique highlights, top towns, and accommodation options that each distinct region has to offer.
Staying in Reykjavik (Best for Short Trips)
Iceland's capital city of Reykjavik has some of the best hotels in the country, whether you're traveling on a shoestring budget or looking for a comfortable getaway.
Unquestionably, the best place to stay in Reykjavik is downtown, near the Laugavegur Shopping Street. There, you'll find most of the best attractions, restaurants, and souvenir shops in Reykjavik. This area has the postcode Reykjavik 101.
Those with a larger budget can choose between an array of Reykjavik hotel options. Hotel Borg, for example, is a beautiful building located right in the downtown area, with 99 Art Deco-style rooms. Meanwhile, the Berjaya Reykjavik Marina Hotel overlooks the Reykjavik harbor and is perfect for those with a refined taste.
- Find out: Best Hotels in Downtown Reykjavik
- Discover: Best Restaurants in Reykjavik
Those traveling with expenses in mind still have many great options. There are hostels and budget guesthouses throughout the city. For example, KEX Hostel is within a five-minute walk of Laugavegur Main Street. HI Loft Hostel is located on the main street itself. Hostels slightly away from the center like Bus Hostel Reykjavik are better suited to those on an even tighter budget.
Those who wish to avoid the bustle of the capital can also opt to stay in one of the quieter surrounding towns. You can book accommodations in Kopavogur or rent a room in Hafnarfjordur hotels, such as the Hotel Vellir or the Viking Hotel, which is a unique and popular option.
Staying in the Reykjanes Peninsula
About 40 minutes from Reykjavík is the Reykjanes Peninsula, where Keflavík International Airport is located. Staying in hotels in Keflavik will make it relatively easy to access the Blue Lagoon.
The Diamond Suites is a great example of luxury accommodation in Reykjanesbær. The Konvin Hotel is more tailored to travelers looking for something affordable. Check out the wide selection of hotels near the Blue Lagoon, and make sure to book your admission to the Blue Lagoon ahead of time.
If you have an early departure, staying near Keflavik International Airport is ideal. Options include the Courtyard by Marriott or the simpler Raven's Bed and Breakfast. For more choices, see accommodations near Keflavik Airport or our list of the Best Hotels Near Keflavik Airport.
Staying in the Golden Circle (Best for Convenience & Cabin Stays)
The Golden Circle is an essential excursion containing Thingvellir National Park, the Geysir Geothermal Area, and Gullfoss Waterfall.
Many visitors use the Golden Circle as a springboard from which to leave the west of Iceland without needing to return to Reykjavik for the night. Check out the range of accommodations in the Golden Circle. At the Geysir Hot Spring, you can stay nearby at Hotel Geysir or Litli Geysir Hotel.
Quaint towns like Selfoss and Hveragerdi offer plenty of places to stay after visiting the Golden Circle. Plan to stop at one of these Selfoss hotels and accommodations, like the four-star Hotel Selfoss. Selfoss recently transformed its downtown area by building a charming new center composed entirely of reconstructed historic Icelandic buildings.
Hveragerdi accommodations offer options near Iceland’s geothermal areas, like the Reykjadalur Valley. The GreenHouse Hotel is a top pick, including the excellent Greenhouse food hall. In Fludir, home of the Secret Lagoon, you can find The Hill hotel.
Staying in the South Coast (Best for Waterfalls and Glaciers)
Traveling east along the South Coast is essential for 5–7 day itineraries. There are many great hotels in South Iceland near Skogafoss and Seljalandsfoss, waterfalls, the Solheimajokull Glacier, and Reynisfjara Black Sand Beach. Consider Hotel Skogafoss and Hotel Skoga for great-value hotels.
Many choose Vik accommodations, which is the southernmost village on the mainland of Iceland. The town of Vik is highly recommended, but book early as demand is often more than supply! Hotel Katla offers a comfortable stay, while the Volcano Hotel and Solheimahjaleiga Guesthouse are great budget or intimate options.
Further east is the small town of Kirkjubaejarklaustur. Check out Klaustur accommodations like Hotel Klaustur or Dalshofdi Guesthouse.
A true paradise for hikers, the Skaftafell Nature Reserve is home to incredible trails and the striking, basalt-framed Svartifoss Waterfall. For unparalleled access to these landscapes, Hotel Skaftafell is a fantastic choice; while its amenities are simple, its breathtaking location at the foot of the glacier makes it a highly sought-after basecamp.
Near Jokulsarlon Glacier Lagoon, you'll find accommodations at Jokulsarlon like the newly built Hotel Jokulsarlon, Hali Country Hotel, Seljavellir Guesthouse, and the luxurious Fosshotel Glacier Lagoon. Budget travelers can book HI Vagnsstadir Hostel.
For those taking the Ring Road further, the town of Hofn offers many accommodations in Hofn. The Hofn Guesthouse is simple, while Hotel Hofn offers more luxury.
Staying in East Iceland (Best for Picturesque Villages and Fjords)
The Eastfjords are remote and beautiful. Check out the hotels in East Iceland. Egilsstadir is the largest settlement, nestled by Hallormsstadaskogur forrest and Lagarfljot Lake. Book accommodations in Egilsstadir like Gistihusid Lake Hotel, or stay near Faskrudsfjordur Fjord at Fosshotel Eastfjords. Hostels like Berunes HI Hostel (near Djupivogur) and Husey HI Hostel are also great.
There are also accommodations in Seydisfjordur, which is one of the coziest towns in the Eastfjords, including HI Hafaldan Hostel and the 19th-century Hotel Aldan.
- See also: Best Restaurants in East Iceland
Where to Stay in North Iceland (Best for Wildlife and Fewer Crowds)
When exploring North Iceland, your natural basecamp is Akureyri, affectionately known as the 'Capital of the North.' You can choose from a range of Akureyri accommodations when visiting the must-see places in North Iceland.
Stay at the Hotel Kea for the best location, or the cozy Acco Ice Apartments, and Hotel Natur. Affordable options include Akureyri Backpackers and the Hafnarstraeti Hostel.
- Learn more: Best Restaurants in Akureyri
- See also: 13 Best Things To Do in Akureyri (and Nearby)
There are also great accommodations near Lake Myvatn, surrounded by the Namafjall Geothermal Area and Dimmuborgir Lava Formations. Fosshotel Myvatn and Hotel Laxa are great, as is the Loulundur Cabin or the simple Hlid Hostel.
You can also stay in the whale-watching capital of the world at one of the accommodations in Husavik, like the Husavik Green Hostel or Fosshotel Husavik. Made internationally famous by the Will Ferrell movie Eurovision Song Contest, the cozy town of Húsavík is the perfect place to base yourself while exploring North Iceland.
In Siglufjordur, known for the Herring Era Museum, explore accommodations in Siglufjordur like the luxurious Siglo Hotel, which many consider the best hotel in North Iceland.
- Check out: Interview With Iceland’s Famous Lost Tourist
- See also: 11 Must-See Destinations in North Iceland
You can also consider Dalvik accommodations or hotels in Blonduos, which brings you closer to the Westfjords and Snaefellsnes Peninsula.
Staying in West Iceland, The Snæfellsnes Peninsula & Westfjords
If you want to experience everything from volcanic peaks to deep, plunging fjords without fighting the Ring Road crowds, point your steering wheel west. Staying in West Iceland and its dramatic peninsulas offers a front-row ticket to some of the country's most awe-inspiring and untouched landscapes.
The Snaefellsnes Peninsula is called Iceland in miniature due to its diverse, dramatic scenery. Check out accommodations on the Snaefellsnes Peninsula.
The best options include HI Hostel Grundarfjordur and the Freezer Hostel in the Rif Settlement. Hotels like Fosshotel Hellnar or the elegant, romantic Hotel Budir near the Snaefellsjokull National Park and Budakirkja Church are perfect for unwinding. In Stykkisholmur, browse Stykkisholmur accommodations like Hotel Egilsen.
If your itinerary allows you to explore the untouched beauty of the Westfjords of Iceland, you are in for a treat. Navigating its winding, often unpaved mountain passes is a true adventure, which is why renting 4x4 vehicles is highly recommended to traverse this region safely and comfortably.
Because this area is wonderfully remote, accommodations in the Westfjords are sparse, making early booking essential. The best strategy is to base yourself in one of the main coastal hubs.
In the northern part of the peninsula, the "Capital of the Westfjords," Isafjordur, is a fantastic choice. You'll find a great selection of hotels in Isafjordur, including the comfortable and centrally located Isafjordur Torg Hotel.
Alternatively, if you are focusing your exploration on the southern half of the region, the charming fishing village of Patreksfjordur makes an ideal basecamp. Here, you can relax after a long day of driving at reliable spots like the Fosshotel Westfjords.
Budget stays include HI Korpudalur Hostel. Keep in mind that most accommodations in this region are only open during the summer. Remember to check the Icelandic Road Administration website for conditions, especially if you are visiting the Westfjords in winter.
- Discover: Top 16 Things To Do on the Snaefellsnes Peninsula
- Learn more: Iceland in Winter - The Ultimate Travel Guide
Where to Stay in the Highlands
If you are looking to truly escape civilization, venturing into the uninhabited interior of the Highlands offers a once-in-a-lifetime experience. Keep in mind that this rugged, otherworldly region is generally only accessible during the summer months via unpaved F-roads, which strictly require a 4x4 vehicle.
On the eastern edge of the Highlands, The Wilderness Center is an incredible option for history buffs and nature lovers alike. It offers a deeply authentic Icelandic experience, blending an interactive museum with beautifully restored historic lodgings that range from shared dormitories to private rooms.
If you prefer the lush, glacial valleys of the south, the Volcano Huts in Thorsmork are a hiker's absolute dream. Nestled in a nature reserve surrounded by three towering glaciers, this site offers everything from cozy private cottages to trendy glamping tents. Because the drive involves serious river crossings, many visitors choose to take a specialized mountain bus to get there, making the stay feel like a true, off-the-grid retreat.
Where To Stay by Traveler Type & Itinerary
Your ideal accommodation depends as much on your travel style as it does on the region. Here is a quick breakdown of the best places to base yourself based on your specific itinerary length and priorities.
Where To Stay to See the Northern Lights (Sept–April)
For the best chances of seeing the aurora, stay in remote rural areas with minimal light pollution, such as the South Coast, West Iceland, or North Iceland.
Many countryside hotels and cabins offer northern lights wake-up calls. You can book northern lights tours or stay in northern lights hotels. The best time to see the northern lights is late September to early April.
Where To Stay For Families
In Reykjavik, CenterHotels is a fantastic chain for families. CenterHotel Laugavegur is highly central. Slightly outside the city center are plush family-friendly options like the Hilton Reykjavik Nordica or the Exeter Hotel. Akureyri also makes a fantastic, walkable family base.
Understanding Iceland’s Accommodation Types
Iceland's lodging landscape is unique. Setting expectations here adds immense value to your trip planning.
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Hotels & Lodges: Clean, minimalist, and often geothermally heated.
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Guesthouses & Farm Stays: Highly popular, family-run, and often feature shared bathrooms, offering an authentic look at Icelandic life.
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Cabins & Cottages: Perfect for self-catering. Icelanders often own "summer cabins" available year-round for rent. Some feature outdoor hot tubs for a relaxing view of the northern lights.
Booking vacation packages in Iceland ensures accommodation and ease of travel. Camping in Iceland is a great summer option. You can rent camping equipment or take a self-drive camping tour of the Ring Road by renting campervans or motorhomes. Reykjavik hosts a large campsite in Laugardalur Valley.
- See more: Top 5 Places To Visit in the Highlands of Iceland
- See also: The Perfect Camping Tour Around Iceland
Practical Tips for Booking Your Stay in Iceland
Here are a few essential things you should know about planning your stay.
Book Early, Especially in Peak Season
Hotels and lodgings fill up quickly during the summer and the Christmas season. Booking several months in advance is highly recommended, especially outside the Reykjavik Capital Region and Akureyri, where accommodations are limited. Without proper planning, you may drive long distances only to discover there are no vacancies.
Winter Travel & Kitchen Advantages
In the winter, avoid booking remote cabins unless they are situated on main, well-plowed roads (like Route 1). Also, booking places with kitchens (cabins or apartments) is the number one way to save money on Iceland's notoriously high food costs.
- Join: Guide to Iceland VIP Club to enjoy savings at restaurants, bars, and stores
Route Suggestions by Trip Length
- 3 Days: Base in Reykjavik 101. Take Golden Circle and South Coast day tours.
- 5–7 Days: Split between Reykjavik and the South Coast (e.g., Vik or Jokulsarlon).
- 10+ Days: Drive the full Ring Road (Reykjavik → Vik → Hofn → Myvatn → Akureyri → Borgarnes).
FAQs About Where to Stay in Iceland
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Book Smart, Stay Comfortable: Iceland Awaits
With demand for accommodations in Iceland growing every year, securing the perfect basecamp is the key to a great trip. Let us do the heavy lifting for you—start exploring our Iceland vacation packages and self-drive tours to get a perfectly planned itinerary right out of the box.
Whether you want a fully guided experience or just need to book all the best hotels and accommodations in Iceland for your own road trip, Guide to Iceland, the country's largest travel marketplace, has everything you need.
Book well in advance and plan your trip around your lodgings, and you will surely have a fantastic time in Iceland. Will you stay in any of these locations? Have you visited Iceland before? Share your thoughts and experience in the comment section below!
