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If you want to know the best areas to stay in Iceland to enjoy its Northern Lights, its impressive waterfalls, and some of its glaciers, in this article you will find the keys to staying in some of the best hotels in Iceland.
We are in love with the landscapes of this country. That is why, every year, we run photo tours in Iceland, where we help other photographers to discover this incredible island that looks like it came straight out of a fairy tale.
This has allowed us to drive the whole Ring Road around Iceland several times and visit the Highlands, the different Icelandic peninsulas and fjords, its cities and towns, etc. So I am sure I can help you find the accommodation in Iceland that best suits your travel goals.
My first advice is not to spend more than one night, two at most, in the same hotel. Although you can take tours from Reykjavik, the capital of Iceland, to almost anywhere on the island, it’s best to drive in Iceland to explore the island on your own. That way, you can see all its wonders at your own pace on the Ring Road, the 800-mile road that encircles the island. This is the best way to do most of the things to do in Iceland.
To help you book the best hotels in Iceland for you, in our guide on accommodation in Iceland, you can find:
- Best areas to stay in Iceland
- Best hotels along the Ring Road by location
- Best luxury hotels in Iceland
- Where to stay in Iceland for Northern Lights
- Cheap hotels in Iceland
- Campsites in Iceland, the best places to camp in Iceland
- Map of the best places to stay in Iceland
Best areas to stay in Iceland
Next, I am going to tell you the best towns and cities to stay in Iceland. In addition, I will briefly explain what each area is like, what places of interest there are, what type of accommodation you can find there, etc.
For our photo tours, we usually book hotels in Iceland 6 months in advance because if we don’t, it’s almost impossible to find well-located hotels at an affordable price. However, we book for 8-12 people. In your case, if you are between 2 and 4 travelers, you will have no problem finding well-located, cheap accommodation in Iceland if you book 2 months in advance. In cities, you can always find a room available. But bear in mind that, in other areas such as Southern Iceland, hotels are very scarce and expensive, so I recommend not booking at the last minute.
Reykjavík, the best place to stay in Iceland
Reykjavik is a good place to sleep in Iceland, since it’s the capital city. Unlike other European capitals, Reykjavik has small, colorful houses. It’s a very lively and welcoming city.
If you decide to stay in this city, I recommend visiting the Hallgrímskirkja Church, the Sun Voyager sculpture, and the Perlan rotating glass restaurant, which are some of the top-rated tourist attractions in Reykjavik.
Many travelers decide to find their accommodation in Iceland here and visit the rest of the country through tours and day trips from Reykjavik. If you don’t want to drive, it’s your best option (check our recommended tours to see the Northern Lights from Reykjavik).
But, even if you plan to rent a car in Iceland, I recommend spending 1 or 2 days in Reykjavik, since it’s one of the best places to stay in Iceland if you want to enjoy Icelandic food and soak up the culture in interesting museums.
These are the hotels in the capital of Iceland that I recommend:
- Premium option: Reykjavik Residence Apartment Hotel
- Standard option: Midgardur by Center Hotels
- Low-cost option: Brim Hotel
Golden Circle, accommodation in the most popular area in Iceland
The Golden Circle is one of the most popular areas in Iceland. However, it is more than an area; it’s a 200-mile route that begins and ends in Reykjavik.
This route passes through some of the most important tourist attractions in the country, which makes the Golden Circle one of the best places to stay in Iceland.
Although I recommend you do the route at your own pace and visit all the places that capture your attention, the places that you cannot miss are Thingvellir, Gullfoss, and the Haukadalur Valley, which is where the geysers of Iceland are. I also recommend stopping at the Kerid volcanic crater, the Hveragerdi greenhouse village, Skálholt church, and the Nesjavellir geothermal power plant. You can check here the best Iceland Golden Circle stops.
These are the hotels in the Golden Circle that I recommend if you’re looking for the perfect place to stay in Iceland:
- Premium option: Grimsborgir – Your Golden Circle Retreat Hotel
- Standard option: Litli Geysir Hotel (we stayed here when we took this photo at sunrise)
- Low-cost option: Gullfoss Hotel
Selfoss, the best place to find cheap accommodation in Iceland
Selfoss is also a good place to look for hotels in Iceland, as it is on the Ring Road, the road that circles the island, and equidistant among Reykjavik, the main attractions of the Golden Circle, and the first few waterfalls in southern Iceland.
In addition to all this, in Selfoss, there is a wide variety of accommodation. If you have left your hotel reservation for the last minute, you’ll still be able to find one here. This is, without a doubt, one of the best places you can choose to stay in Iceland.
If you decide to stay here, you will be very close to the Kerid crater and the Reykjadalur thermal river. Also, it is one of the best places to find cheap accommodation in Iceland.
Below are the Iceland hotels, specifically in Selfoss, which I recommend:
- Premium option: South Coast Hotel (we stayed here on our first trip to Iceland)
- Standard option: Selfoss & Spa Hotel
- Low-cost option: Selfoss Hostel
Hella, a village where you can find the best hotels in Iceland
Hella is the last town you will go through before reaching the southern part of Iceland, where it’s more difficult to find large towns and, therefore, fewer affordable hotels to stay in Iceland.
This town is on the banks of the Ytri-Rangá River, very close to the first two waterfalls in southern Iceland, Seljalandsfoss and Skógafoss. If you decide to search for your hotel in Iceland here, you will also be close to the most visited and popular place in the Highlands, Landmannalaugar, and you can hike part of the Fimmvörðuháls trail, which goes from Skógar to Thórmsmörk. If you want to hike the entire trail, you will need a couple of days, but doing the first section is definitely worth it.
Here are our favorite hotels in Hella:
- Premium option: Stracta Hotel Hella
- Standard option: Hella Hotel
- Low-cost option: Kanslarinn Hotel (we’ve stayed here several times)
Vík í Mýrdal, the best place to stay in Iceland South coast
The small town of Vík í Mýrdal is at the southern tip of Iceland, in a gorgeous natural landscape where you can see, during the summer, one of the most important puffin colonies in the country.
If you decide to stay a night in Vík í Mýrdal when looking for hotels in Iceland, you will be very close to the black sand beach, Reynisfjara. I also recommend you visit its church, which is easily recognizable for its red roof; you’ll also get fabulous views from there. Vik is undoubtedly an essential stop on the Ring Road, making it one of the most popular towns to stay in Iceland.
These are the hotels in Vík í Mýrdal that I recommend:
- Premium option: Kría Hotel (we stayed here with the group and the breakfast is amazing)
- Standard option: Carina Guesthouse
- Low-cost option: Puffin Hotel Vík
Höfn, a beautiful and quiet place to sleep in Iceland
Höfn is the last town in the south of Iceland, very close to Stokksnes beach, which stands out for its black dunes and the imposing Vestrahorn Mountain in the background. The place is idyllic, but it is also quite a popular area to sleep in Iceland, so if you decide to stay here, you should book your accommodation well in advance.
If you pass through Hofn, I recommend you go to my favorite restaurant, Hafnarbuðin, to try their lobster baguette. Without fail, every time we go to Iceland, we stop there.
Although it’s not that close, Höfn is the largest town near such impressive places as the Jökulsárlón glacial lagoon or the Svartifoss waterfall, in Skaftafell, within the Vatnajökull National Park. So if you decide to look for hotels in Iceland in the Höfn area, you can visit these incredible places.
These are the best accommodations in Iceland that I recommend in this area:
- Premium option: Höfn Hotel
- Standard option: Apotek Guesthouse
- Low-cost option: Höfn Guesthouse
Snæfellsnes, one of the most beautiful places to stay in Iceland
Snæfellsnes is a peninsula that is a couple of hours from Reykjavik, and I consider it one of the most beautiful areas in the country. Also, it’s one of the best places to see the northern lights in Iceland.
On this peninsula, you can see the impressive Kirkjufell hat-shaped mountain, lava fields with caves, black sand beaches full of seals, glaciers, and cliffs.
It definitely concentrates the entire essence of Iceland into a small peninsula. That is why I consider it to be one of the most spectacular places to stay in Iceland for a couple of days. Often, many travelers, who opt for the southern area or the Ring Road, overlook this part of the island. However, I recommend you take a few days to make a small detour. It is well worth it.
Below, you can find the hotels that I recommend in Snæfellsnes:
- Premium option: Arnarstapi Hotel
- Standard option: Kirkjufell Guesthouse and Apartments (our usual hotel)
- Low-cost option: Við Hafið Guesthouse
Akureyri, best hotels in north Iceland
Akureyri is considered the most important city in northern Iceland, which is why it’s often called “the northern capital.” In addition, this is where the main fishing port is located, so in this town, you can find a wide range of accommodation in Iceland, as well as restaurants, leisure, and tours.
In this area, I recommend you visit the Goðafoss waterfall and the Aldeyjarfoss waterfall (one of the best waterfalls in Iceland).
If you are looking for a good place to stay in Iceland in the northern area, I recommend the following accommodations in Akureyri:
- Premium option: Kjarnalundur Hotel
- Standard option: Kea by Keahotels Hotel
- Low-cost option: Hafnarstræti Hostel
Mývatn, staying near this volcanic lake in Iceland
Very close to Akureyri is the volcanic Mývatn Lake, surrounded by some amazing hiking trails and landscapes.
Mývatn is a good place to stay in Iceland, as there are some interesting thermal baths there whose waters are rich in minerals and are said to have beneficial health properties. After long days of hiking and sightseeing, relaxing in these baths can be a great idea.
From this area, in addition to the thermal baths, I recommend visiting Dimmuborgir, some amazing lava fields; and Hverir, a solfatara with boiling mud pits and fumaroles next to the Námafjall mountain.
Depending on your Iceland itinerary, Mývatn is a good place to stay in Iceland to visit other places like Dettifoss and Selfoss. These are the best hotels in Iceland located in this area:
- Premium option: Fosshótel Mývatn
- Standard option: Laxá Hotel
- Low-cost option: Skútustadir Guesthouse
Húsavik, the best place to stay in Iceland for a whale watching tour
Húsavik is a beautiful town due to its picturesque appearance and its remote location, in the north of Iceland. If I recommend you stay here, it is because it’s the place to catch the best whale watching tours in Iceland. Furthermore, it’s a beautiful and charming village.
With a little luck, you will see the humpback whales that come to the bay to feed during the summer and even puffins that form large colonies on one of the islands in the bay. The tours start very early in the morning, so if you want to book one of them, I recommend spending the night here, as we did the year we saw whales in Iceland.
The hotels in Iceland that I recommend in this area are:
- Premium option: Húsavík Cape Hotel
- Standard option: Post-Plaza Guesthouse
- Low-cost option: Fosshotel Husavik
Egilsstaðir, where to stay in the east of Iceland
Egilsstaðir is the largest city in the eastern part of Iceland and is located by the Lagarfljót river. If you’re looking for a hostel in Iceland here, you will be very close to the amazing Hengifoss waterfall, which is one of my favorite ones. You can also visit the Stuðlagil canyon and the Gufufoss and Klifbrekkufoss waterfalls.
Egilsstaðir is considered the door to the fjords of the east, since from it, you can see the three main fjords: Vopnafjörður, Reyðarfjörður, and Seyðisfjörður. Also, due to its location, it is a city surrounded by wild nature, which is great for trekking and hiking.
These are the best places to stay in Iceland in Egilsstaðir:
- Premium option: Valaskjálf Hotel
- Standard option: Gistihúsið – Lake Hotel Egilsstadir
- Low-cost option: Icelandair Hotel Herad
Keflavík, hotels near the Blue Lagoon and the airport in Iceland
Keflavík is located on the Reykjanes peninsula, just 25 miles from Reykjavik. This area is perfect if you are looking for accommodation in Iceland near the airport, either because you have to catch a plane very early or you land very late.
I also recommend you stay here to visit the Reykjanes peninsula, which has some spectacular natural landscapes, such as the Krisuvik/Seltún geothermal area and the Valahnúkamöl cliffs. You will also be very close to the Blue Lagoon, a must-visit in Iceland, although later I will specify which Iceland hotel to book near the Blue Lagoon.
Here are the best hotels you can find in Keflavík:
- Premium option: Berg by Keflavik Airport Hotel
- Standard option: BB Hótel by Keflavik Airport
- Low-cost option: Nupan Deluxe
Westfjords, the quietest place to stay in west Iceland
Westfjords is a quiet area to stay in Iceland, and it’s also the wildest and least populated area in the country. If you decide to visit this part of Iceland, I advise you to visit some of its most popular places, such as the Dynjandi waterfall, the Latrabjard cliffs, and the Hornstrandir nature reserve.
The best towns to stay in this area of Iceland are Ísafjörður, Holmavik, and Patreksfjörður. These are my favorite hotels:
- Premium option: Finna Hótel Guesthouse
- Standard option: Harbor Inn – Guesthouse
- Low-cost option: Mánagisting Guesthouse
Best hotels along the Ring Road by location
Most of Iceland’s main tourist attractions are surrounded by nature and far from any major populated areas. Therefore, if you want to stay in the best places in Iceland, below you will find a selection of the best hotels that are near the places you cannot miss.
These are the best-located Iceland hotels:
- The Retreat at Blue Lagoon Iceland, the best hotel in Iceland near the Blue Lagoon
- Héradsskólinn Historic Guesthouse, a good place to stay near Thingvellir
- Litli Geysir Hotel, the best place to stay in Iceland near Geysir
- Gullfoss Hotel, a good place to stay in Iceland near the Gullfoss waterfall
- Brú Guesthouse, good accommodation near the Seljalandsfoss waterfall
- Skogar Hotel, the best hotel near Skogafoss waterfall, Iceland
- Black Beach Suites, good accommodation on Reynisfjara beach, Iceland
- Skaftafell Hotel, a place to stay in Iceland near Skaftafell (Svartifoss waterfall)
- Fosshotel Glacier Lagoon, staying near Jokulsarlon and Diamond Beach, Iceland
- Vikingcafe, a hotel in Iceland near Stokksnes
- Fosshótel Mývatn, the best hotel near Lake Myvatn, Iceland
It goes without saying that these hotels sell out quickly, so, if you want to stay in any of them, you must book quite a few months in advance. It’s undoubtedly worth it to stay in one of the best hotels in Iceland and see some of the wonders of this country practically from the window of your room.
Best luxury hotels in Iceland
If you don’t care much about where to stay in Iceland, but you want to make sure you stay in one of the best hotels of Iceland, here is a selection of the best luxury hotels in the country.
These are the best hotels in Iceland:
- The Retreat at Blue Lagoon Iceland, a luxury hotel in Iceland near the Blue Lagoon
- Grimsborgir – Your Golden Circle Retreat Hotel, hotel in Iceland’s Golden Circle
- Tower Suites Reykjavík, a hotel with the best panoramic views of Iceland
- Rangá Hotel, a luxury hotel in Iceland to see Northern Lights
- 360 Hotel & Thermal Baths, a luxurious place to stay in Iceland
Where to stay in Iceland to see northern lights
Iceland is one of the best destinations to see northern lights because, thanks to its 65º latitude, the chances of seeing them are very high if you travel at the right time. If your trip to the island is because you want to see the Northern Lights, I recommend you check out one of the best hotels to see northern lights in Iceland.
These are the best hotels in Iceland to see the Northern Lights:
- Rangá Hotel: The best hotel to see Northern Lights in Iceland. It has an observatory at the rooftop
- Husafell Hotel: Hotel away from light pollution that is perfect for seeing the Northern Lights
- Laxnes Hotel: The best rustic hotel to see the Northern Lights in Iceland
- Reykjavik Domes: Original igloo hotel in Iceland to see the Northern Lights
- Grand Hotel Reykjavik: The best option if you want to see the Northern Lights in Reykjavik
- Aurora Cabins: Best Hotel to see the Aurora Borealis in east Iceland
- Kjarnalundur Hotel: Enjoy the Northern Lights from a Jacuzzi
- Villa Lola: The best hotel to see Northern Lights in northern Iceland
Cheap hotels in Iceland
If you want to travel Iceland on a budget, don’t worry. It’s possible to stay cheap in Iceland. I have compiled the best cheap accommodation in Iceland. Of course, keep in mind that they are the first to fill up, so you must book in advance.
These are the cheapest hotels in Iceland:
- The Barn, cheap accommodation in Iceland near Vík í Mýrdal
- B59 Hostel, a cheap hostel in Iceland
- Vibrant Iceland Hostel, budget accommodation near Reykjavik, Iceland
- The Freezer Hostel & Culture Center, a good option for cheap accommodation in Iceland
- Selfoss Hostel, a good place to stay in Iceland for cheap
Campsites in Iceland, the best places to camp in Iceland
Camping in Iceland is the best way to travel for cheap. We did it on two of our trips, and besides being one of the best ways to stay in Iceland on a budget, sleeping in the middle of nature is without a doubt something that I recommend.
Until 2015, wild camping was allowed in Iceland without restrictions, but now it’s not legal, especially in inhabited or protected areas. This doesn’t mean that you can no longer go camping in Iceland. It means that your tent has to be away from public roads, that you can only camp in a place where people don’t permanently live, that you can’t camp if there is some type of infrastructure in the place, and that you can’t camp in national parks. I recommend you check our guide on camping in Iceland to find the places where wild camping is allowed in Iceland, so you can save yourself some trouble.
Additionally, there are plenty of official campsites in Iceland where you can pay to set up your tent and enjoy the infrastructure of the campsite in question, which usually includes bathrooms with showers and sometimes kitchen and common areas. Here you can see the full list of campsites in Iceland.
If you travel in summer, from May 15 to September 15, it might be worth buying the CampingCard, which is a card that allows you to camp for free for 28 nights (they don’t need to be consecutive) in 40 of the associated campsites for € 150 per tent or RV.
These are the best campsites in Iceland where we have camped:
- Hellissandur Camping: on the Snaefellsnes Peninsula
- Camping Geysir: in the Golden Circle
- Brennisteinsalda Camping: in Landmannalaugar
- Skógar Campsite: at the Skógafoss waterfall
- Skaftafell Camping: in Skaftafell National Park
- Camping Höfn: in Höfn, near Stokksnes
Map of the best places to stay in Iceland
Now that you know the best areas and hotels to stay in Iceland, you can check the map of Iceland below to find all these accommodations. I hope it helps you find the hotel in Iceland that suits you best.
And if you still don’t know where to stay in Iceland, leave me a comment and I will be happy to help you. Now, enjoy this beautiful country!
Hi There, I’m looking to stay in Iceland in February. I want a nice hotel but not too expensive, somewhere in the middle. I will be by myself. Thoughts?
Hi Laura, expensive is different for everyone. Let me know how much you want to spend per night and I will let you know the best place to stay in Iceland for your budget.