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Best Places to Stay in Iceland for every budget

Best Places to Stay in Iceland for every budget

Thinking about heading to Iceland? Worried about what are the best places to stay in Iceland? Well in this round up guide we tell you the best places to stay in Reykjavik, on the Golden Circle and beyond for every type of budget! So whether you are looking for budget, mid-range or luxury we have you covered with the places to stay in Iceland! 

Best places to stay in Reykjavik

Best Mid Range Accommodation in Reykjavik

Important Note: This post may contain affiliate links which means if you click through and make a purchase I will make a small commission at no extra cost to you!

Hotel Fron by The Adventures of Panda Bear

The newly updated Hotel Fron offers Scandinavian-style comfort in the middle of downtown Reykjavik, Iceland. The hotel is located right along the main street of Laugavegur so you can check in and then get right to exploring the city!

Their rooms are fairly spacious for European standards and clean. We stayed in a Double Room and it was definitely enough room for the two of us. Each room also has wireless internet, satellite TV, a minibar, a safe for your valuables, and your own bathroom with a hair dryer. Pricing is reasonable, Northern Europe tends to be more expensive so I would consider it budget to mid-range lodging option.

The rooms also include free breakfast. While it’s not the best breakfast in the world, it is decent and will get your day off to a great start! They offer fruit juices, coffee, toast, cured meats, and granola. If you’re staying in Reykjavik for longer, want to keep within budget, or just have a larger group (family), they also have studios and apartments available that include a small kitchenette.

The employees at the front desk were also super nice and willing to help with anything and everything they could. We would definitely stay at Hotel Fron again!

To Check Prices and Book Online Click Here! 

Best Budget Accommodation in Reykjavik for the Budget Iceland traveller

Student Hostel in Reykjavik by Elisa from World in Paris

Student Hostel is a very cool hostel in Iceland, especially for those looking for budget accommodation. Located in a central position in Reykjavik just in front of the National Museum and at only a few meters from Lake Törjnin, Student is also convenient for exploring Reykjavik on foot.

During the year Student Hostel is a residence for students, that’s why you will only find it available for tourists during the school holidays. All the rooms have twin beds, a cupboard, some shelves and a small toilet corner with a sink. The rooms are clean, bright, with a quite new furniture and cozy beds and duvets. Bathrooms and showers are shared, at the end of the corridor of each floor. Other interesting common facilities in this hostel are a well-equipped kitchen and a living room on each floor. The latest is big and beautifully decorated, with lots of light and different spaces which help to socialize. If you are visiting Reykjavik during the summer or winter holidays, Student Hostel is the place to stay for budget travelers.

You can check prices, availability and book online here! 

Loft Hostel, Carol Guttery from Wayfaring Views

Loft Hostel is conveniently located right on the main drag of Laugavegur street in Reykjavik. It’s within walking distance of most of the major things to do in downtown Reykjavik. Loft is a budget luxury hostel, which sounds like a non-sequitur but they manage to make it work. The lobby and rooms are clean and modern with updated furnishings. Room rates start at $36USD for a dorm room and go up to $166 for a private room (which is a pretty good deal considering how expensive things are in Iceland).

Loft is a good fit for a variety of travelers, not just 20-somethings on the backpacker circuit. They have a great lobby bar but they aren’t a party hostel. If fact, their lobby is the best part of Loft. They have a full library lounge, cool outdoor deck and the best happy hour prices in town. Even the locals go there.

If you usually stay in hostels, you will find Loft a cut above. Even if you don’t normally stay in hostels, Loft’s private rooms are an excellent option for a lower cost hotel stay.

You can book online and check availability here! 

Best places to stay On the Golden Circle

Luxury Accommodation on the Golden Circle

Buubble Hotel Iceland by Once in a LifeTime Journey 

In a secret location about 1h from Reykjavik is the Buubble Hotel! . They keep the location secret so that nobody else goes other than guests since you are effectively sleeping in the wild without any protection and in transparent bubbles. The bubbles are spread in a forested area with tall trees that do not block the view of the sky by protect you from the other bubbles so nobody sees anyone. Best suited for couples as the bubbles are small have double beds only and shared bathroom facilities. They are very romantic so best enjoyed with a loved one.

The bubbles are the most unique accommodation I have ever slept in and spending a night there was a bucket list item that I very much enjoyed. I did it in the winter and we were so lucky that the Aurora Borealis, the main reason why you would brave temperatures of -20 and a plastic bubble in the middle of nowhere, showed up around 9pm making the spectacle above our heads absolutely breathtaking and incomparable to anything else I have ever seen

Cost: Luxury, the bubbles can only be booked in conjunction with a 24h Circle Road tour that costs around USD1,500 per person sharing

 Hotel Ranga by We 3 Travel

There are not many luxury hotels in Iceland, but Hotel Ranga is one of the best located options. Its lodge-like feel gets you ready to explore the nearby South Coast. From Hotel Ranga you can explore waterfalls and black sand beaches, take super jeep tours into Thor’s Valley, and engage in adventures such as ATV rides, snowmobiling, glacier hikes, and helicopter rides. Back at the hotel, guests can enjoy the outdoor hot tubs, pool table and game room, and outdoor observatory. If you are visiting in the winter, the hotel staff will even give you a wake up call if the Northern Lights make an appearance. The rooms are cozy, with large geo-thermally heated bathrooms, and the hotel also has a number of uniquely-furnished suites. Hotel Ranga is great for couples but families are also welcome. Book early because Hotel Ranga sells out quickly. Even if you can’t book a room, be sure to stop by for a meal if you enjoy fine dining as the chef is a genius at highlighting local ingredients in a creative and delicious way.

To check prices and book for this hotel click here! 

Mid range Accommodation on the Golden Circle

Hotel Stracta by Wandermust family

We opted to stay in Hotel Stracta on our trip to Iceland for a couple of reasons. Firstly it was one of the best value accommodations in the mid range budget that also had a great location. We loved that you had easy access to the Golden Circle and some of the most beautiful waterfalls in Iceland and also could get out East to places like Vik for the Black Sand Beaches. The hotel also offers some self catering apartments, which although small had everything we required as a family and was a great budget saver! For evenings that you might want to splash out there is a nice restaurant and bar on site!

But perhaps for us the main reason for staying at Hotel Stratca was because it was a hotel with an aurora alarm! As we were traveling with a toddler we knew we wouldn’t be able to stand outside in a field awaiting the aurora’s arrival. By staying at Hotel Stratca we all could stayed tucked up in our beds until the show!

To Check prices and book online for this hotel CLICK HERE 

The Litli Geysir by Nomad by Trade

The Litli Geysir Hotel was my favorite spot that we stayed at in Iceland. Its location makes it ideal for travelers visiting the Golden Circle, and it’s a perfect place to stop. The affordably priced, midrange hotel is located right across the street from the Geysir area – we could see the Strokkur geyser erupting from our room’s window during our stay. You can’t get any better than that. It’s a small, unassuming hotel that doesn’t look particularly impressive from the outside, but the lobby has a beautiful, modern rustic feel and the hotel had nice rooms that could accommodate three adults with comfortable beds. Our stay also included an incredible hot breakfast with a variety of eggs, bacon, pancakes, and more to choose from, in addition to free hot tea all day long. The cozy lobby area would make it a perfect spot for couples, though families would feel right at home too.

To Check Prices for this hotel and book online CLICK HERE

The Golden Circle Apartments by Munching Traveller 

The Golden Circle Apartments is a lovely apartment located on the popular Golden Circle route, close to Laugarvatn Lake. Living in an apartment in Iceland is a great way to explore the country while keeping costs low. The apartment has an option of a two-bedroom, three-bedroom, or even a family apartment that would definitely suit families of all sizes. Everywhere is clean and you can get the keys when you’ve arrived at the keybox located outside the apartment. If you really need help, there was staff members located in the development. A kitchen is provided, alongside your necessary pots, pans, and cooking utensils. You can get your groceries and daily necessities at Samkaup strax supermarket, located just 5 minutes away by foot. For those driving, you may just want to drop by a Bonus Supermarket before heading to the accommodation. Just a short walk away, you’ll also find Laugarvatn Fontana, a geothermal pool with spa facilities where you can unwind. All in all, the apartment is a great accommodation for families as you’ll have the privacy of a bedroom while everyone still living in close proximity.

You can compare prices for this hotel HERE

Cottage at Reynisfjara/beach, Reynisfjara Black Sand Beach by We Go with Kids 

Ragnar’s Cottage at Reynisfjara / beach is exactly what it says it is – a small, efficient cottage located literally as close to the famous Black Sand Beach as you can get. We began looking for accommodations near Vik about six months prior to our trip and knowing that we would be traveling in late May at the beginning of the heavy tourist season, I quickly snapped up one of Ragnar’s three cottages when I noted availability on Airbnb. I was pleasantly surprised when I arrived at the beach and discovered that the accommodations were literally the closest accommodations to the beach that are available and we could even hear the sound of the waves lapping at night. The small kitchen was efficient (we even cooked dinner there one night!), and the full size bed was just the right size for our party of two. Best of all, however, were the pastoral views from the windows of grazing sheep, picturesque green rolling hills, and the sound of the waves in distance. Ragnar was a gracious host, he gave us a quick tour of the place and showed us how to use things, but all in all, I was thrilled to have found this gem with availability during our trip. The cottage is best suited to couples or families with very small children (one full size bed and one possible couch sleeping spot)

Some great activities that can be done from Vik include Quad Biking on Black Sand Beaches,  and glacier tours!

Budget Accommodation on the Golden Circle

Nice Hostel, Seljalandsfoss, South Iceland by Globetrotting GP

Staying in hostels in Iceland is a great way to save money and there are some really lovely ones such as The Nice Hostel which totally lives up to its name! In fact, its one of the nicest hostels I’ve ever stayed at.

The dorms were comfy and spacious. The bathrooms were clean and private – they even had a beauty area with mirrors and powerful hair dryers to use! The whole hostel had a more ‘mature’ feeling than a regular hostel – there was even background piano jazz music playing in the communal area! How civilised?! But the best bit was the included breakfast – so delicious!

The location of the Nice hostel was brilliant – just a 2-minute drive from Seljalandsfoss – one of my favourite waterfalls in Iceland. Staying so close to it meant it was super easy to visit for sunset or sunrise. But you don’t have to go far to see waterfalls here – there’s a huge one backing directly onto the hostel!

You can compare prices here! 

Beyond the golden circle

Luxury Accommodation Beyond the Golden Circle

Ion Adventure Hotel by Travel by a Sherrie Affair

The Ion Adventure hotel is located close to the Golden Circle of Iceland, but far enough off you feel pretty much isolated.  Except for the Geo Thermal plant next door but this did not take away from the landscape views.  The fun thing about the Ion Adventure hotel is architecture.  It pretty much looks like something out of a Star Wars movie.  Inside though is a cozy and modern décor.  The staff is very efficient and look after all your needs and inquires.

The restaurant Silfra has won many awards and deserves each one, delicious food while being very creative.  The main attraction is the Northern Lights Bar which is glass windows from floor to ceiling to view the Northern Lights of course! There is also a spa to enjoy while you relax after a day outdoors in Iceland.

One of my favorite things were the rooms, again fantastic window views, but also a great view of an Icelandic horse on your wall!

You can Compare Prices HERE

Mid Range Accommodation Beyond the Golden Circle

The Garage, Varmahlíð South Coast, 861 Varmahlíð, Iceland

If you plan on spending a night or more on the south coast of Iceland, The Garage studio apartments are a great place to stay. Owners Anna and Siggi have renovated a number of outbuildings on their farm and turned them into modern, self-catering studios and apartments. The Garage is located on Highway 1 (the Ring Road) about 140 kilometres south east of Reykjavik and 50 kilometres from Vik.  It is also conveniently situated half way between Seljalandsfoss and Skogafoss waterfalls. We used our studio, named ‘Axel’s Studio’, as a base for exploring the south coast and Jokulsarlon Glacier and it was a cosy little home for my husband and I for three nights. Anna greeted us on arrival and showed us to our studio and then left us to settle in with a couple of slices of her delicious home made cake. Our studio featured a small kitchen area with cooktop, microwave, fridge, toaster and tea and coffee supplies and plenty of cooking utensils and crockery for two people.  The open plan room also had a comfortable double bed, TV and free Wi-Fi and was furnished in a modern but rustic style. In the separate bathroom there was a walk-in shower, washbasin and toilet. Larger apartments are available for families and The Garage would be an ideal place to stay if you are traveling with children. Unfortunately the weather wasn’t great during our stay so we couldn’t really appreciate the beautiful surrounds.  The Garage is built at the foot of a small mountain with its very own waterfall, and there’s a small lagoon nearby where you can fish for trout. I would definitely recommend The Garage for anyone looking for a mid-range self-catering option on Iceland’s south coast.

Compare Prices for this hotel here! 

Lambhus huts By Kids and Compass

Lambhus huts are an ideal place to stay along the ring road between Jokulsarlon glacier lagoon and Hofn.  They’re suitable for couples and families, and the cost is very reasonable; at 20,000 to 24,000 ISK they’re budget to mid-range. The huts are super cute; clustered together, their red timbered exteriors are a cheerful welcome.

Inside they’ve got a cosy, real Scandinavian feel to them with warm wood panels on the walls. The huts are small but well appointed with a large bunk bed that can sleep two adults and two children easily (some huts can sleep 5 people).  The kitchens have all the equipment you need, but the nearest shops are in Hofn so bring your own food.

The setting is the best thing about the huts.  They’re at the foot of a huge glacier, and three tongues of ice creep down the mountainside in full view of the huts.  It is a great place to stay in Iceland with kids, a favourite was spending a great morning playing in front of the glacier in the small playground.

You can easily get to Jokulsarlon and Hofn, or in the immediate area you can go glacier hiking.  Lambhus huts are only open in the summer months, and booking in advance is essential.

Lighthouse Stay in Iceland by Outside Suburbia

Can you imagine playing lighthouse keeper for a night or two in Iceland with amazing views of the Dyrhólaey.  That is what we did after a fun day of hiking on glaciers and a zipping through the a glacier lagoon in Iceland. The lighthouse located in the Vik area of Iceland has been transformed into a boutique hotel perfect for a family stay, it can accommodate up to 5 people. You are only 15 minutes from the town of Vik but feels like you are in a world of your own.

Dyrhólaey is a 120m high promontory and its name means “the door hole island”. The promontory got its name from the massive stone arch that the sea has eroded from the headland. While in the past farmers often went fishing around Dyrhólaey, today they have developed a nesting site for eider ducks for the gathering of down. But also loads of other birds find a home here. Therefore all the cliffs, rocks, etc. are protected area and Dyrhólaey has been a natural reserve since 1978. From on top of the hill you get the best view of the massive stone arch.

The Dyrhólaey lighthouse is not currently available to book but contact Icelandair Hotels to book this as part of a tour.

Budget Accommodation Beyond the Golden Circle

Mjoeyri Guesthouse by Travels with Carole 

Situated way up in the northeast of Iceland, and way out there on the shore of a fjord in Strandgotu, the Mjoeyri Guesthouse consists of a line of red cabins.  The price is budget, and the facilities are modest but comfortable.  It’s perfect for anyone who enjoys end-of-the-road quiet and semi-privacy.  A boat-shaped hot tub known as the “hot pot” and a sauna provide included relaxation.  At check-out we were instructed to leave the key in the lock, alerting us to the comforting safety of this seclusion.  A small kitchen permits making some meals, but for dinner one night we took a stroll over to Randulff’s sea-house for some of the country’s infamous fermented shark and a pleasant dinner of local specialties that included Icelandic shrimp, reindeer meatballs, and brown bread.  We also visited the informal museum upstairs where rooms appear as the seamen left them in 1890.

You can compare prices here

Have you been to Iceland? Where did you stay? Which of these places in Iceland would you most like to stay in?

Looking for more Iceland Inspiration? Then Check out our other posts:

Iceland with a baby or toddler

Best Things to Do in Iceland with kids 

Iceland in March

How to Save Money in Iceland 

Best Northern Lights Hotel 

Best Places to Stay in Iceland for Every Budget

Best Waterfalls in Iceland

Best Black Sand Beaches 

Best places to stay in Iceland for every budget, budget places to stay in Iceland, luxury hotels to stay in Iceland, where to stay in Iceland

Best places to stay in Iceland for every budget, budget places to stay in Iceland, luxury hotels to stay in Iceland, where to stay in Iceland

Best places to stay in Iceland for every budget, budget places to stay in Iceland, luxury hotels to stay in Iceland, where to stay in Iceland


Saturday 1st of December 2018

I am currently in Australia where it is 40+ degrees so I am CRAVING the cold! Get me too Iceland ASAP - those bubbles look insane to sleep in!