Iceland, with its dramatic landscapes of volcanoes, geysers, hot springs, and lava fields, has become one of the world's most sought-after travel destinations. Finding the perfect place to stay is crucial to experiencing this Nordic island nation to its fullest. This comprehensive guide will help you navigate Iceland's diverse accommodation options across its most captivating regions.
Understanding Iceland's Regions
Iceland's relatively small size—about the size of Kentucky—doesn't diminish its geographical diversity. Each region offers unique attractions and accommodation styles.
Reykjavik and the Capital Region
As Iceland's cultural heart, Reykjavik provides the widest range of accommodation options from luxury hotels to budget hostels.
Luxury Options
- Hotel Borg - Art Deco elegance in the city center
- The Reykjavik EDITION - Waterfront luxury with spa facilities
- Canopy by Hilton - Stylish, centrally located with neighborhood character
Mid-Range Accommodations
- Center Hotels - Several properties throughout downtown
- Fosshotel Reykjavik - Modern high-rise with excellent views
- Storm Hotel - Scandinavian design with comfortable amenities
Budget-Friendly Choices
- KEX Hostel - Trendy social hostel with private and dorm options
- Bus Hostel - Affordable with free parking
- Galaxy Pod Hostel - Futuristic sleeping pods for privacy on a budget
South Coast
Iceland's South Coast offers some of the country's most iconic natural wonders, including waterfalls, black sand beaches, and glacier lagoons.
Popular Areas
- Vik - Famous for Reynisfjara black sand beach
- Selfoss - Gateway to the Golden Circle
- Höfn - Near the breathtaking Jökulsárlón glacier lagoon
Accommodation Highlights
- Hotel Ranga - Luxury lodge famous for Northern Lights viewing
- UMI Hotel - Minimalist design with mountain views
- Fosshotel Glacier Lagoon - Contemporary design near Jökulsárlón
- Black Beach Suites - Modern apartments near Reynisfjara
The Golden Circle
This popular tourist route features Þingvellir National Park, the Geysir Geothermal Area, and Gullfoss waterfall.
Where to Base Yourself
- Selfoss - Largest town in the region
- Flúðir - Home to the Secret Lagoon hot spring
- Laugarvatn - Lakeside location between attractions
For travelers seeking an off-the-beaten-path experience, gmru offers excellent resources for finding hidden accommodation gems throughout Iceland's diverse regions.
Notable Accommodations
- ION Adventure Hotel - Award-winning design hotel
- Heradsskolinn Hostel - Historic schoolhouse conversion
- Farmhotel Efstidalur - Working dairy farm with guesthouse
- Hotel Grimsborgir - Luxury cottages with private hot tubs
North Iceland
Home to Iceland's second-largest city, Akureyri, the North offers whale watching, the Arctic Coast Way, and Lake Mývatn.
Key Locations
- Akureyri - Urban amenities with small-town charm
- Húsavík - Whale watching capital
- Mývatn - Otherworldly volcanic landscapes
Where to Stay in North Iceland
- Hotel Kea - Classic hotel in downtown Akureyri
- Fosshotel Mývatn - Contemporary style overlooking the lake
- Kaldbaks-kot Cottages - Self-catering with mountain views
- Husavik Cape Hotel - Charming hotel near the harbor
The Westfjords
Iceland's most remote region offers dramatic fjords, towering cliffs, and authentic village life.
Recommended Bases
- Ísafjörður - Main town and commercial center
- Patreksfjörður - Near the famous Látrabjarg bird cliffs
- Hólmavík - Gateway to the region
Accommodation Options
- Hotel Ísafjörður - Central location with harbor views
- Fosshotel Westfjords - Modern hotel with restaurant
- Heydalur Country Hotel - Converted farm with hot springs
- West Fjords Cottages - Self-catering with spectacular views
East Iceland
Known for its fishing villages, forests, and fjords, the East provides a less-traveled alternative.
Key Areas
- Egilsstaðir - Main inland town
- Seyðisfjörður - Picturesque fjord town with colorful houses
- Djúpivogur - Quiet fishing village with artistic flair
Where to Stay in East Iceland
- Hotel Hallormsstaður - Woodland setting near Iceland's largest forest
- Hótel Aldan - Historic buildings in Seyðisfjörður
- Berunes HI Hostel - Budget-friendly farm accommodation
- Wilderness Center - Unique historical experience in remote settings
The Highlands
Accessible only in summer, Iceland's interior highlands offer truly off-grid experiences.
Access Points
- Landmannalaugar - Colorful rhyolite mountains
- Þórsmörk - Valley nestled between three glaciers
- Kerlingarfjöll - Geothermal mountain range
Limited Accommodation Options
- Highland Centers - Basic mountain huts with shared facilities
- Kerlingarfjöll Mountain Resort - One of few developed accommodation options
- Volcano Huts - Simple cabins and camping in Þórsmörk
Types of Accommodation in Iceland
Hotels and Guesthouses
Iceland's hotel scene has expanded significantly, ranging from international chains to boutique properties.
Hotel Chains in Iceland
- Fosshotel - Iceland's largest hotel chain with properties throughout the country
- Icelandair Hotels - Quality accommodations often in prime locations
- Kea Hotels - Northern Iceland's primary hotel group
Boutique Options
- Sandhotel - Stylish hotel on Reykjavik's shopping street
- Tower Suites - Luxury apartments with panoramic views
- Deplar Farm - Ultra-luxury converted sheep farm in the North
Farm Stays
Farm stays offer authentic Icelandic hospitality and often feature home-cooked meals with local ingredients.
Benefits of Farm Stays
- Cultural immersion with local families
- Often less expensive than hotels
- Usually include breakfast with farm-fresh ingredients
- Potential to see farm animals and operations
Notable Farm Accommodation
- Vogafjós Farm Resort - Working dairy farm with restaurant
- Hestheimar - Horse farm with riding tours
- Sólheimahjáleiga Guesthouse - Organic farm near Eyjafjallajökull
Hostels and Budget Options
Iceland can be expensive, but budget accommodations do exist.
Hostel Networks
- Hostelling International Iceland - Quality-controlled network
- Reykjavik Hostel Village - Several options in the capital
Money-Saving Strategies
- Camping - Legal with proper equipment (summer only)
- Guesthouses with shared bathrooms
- Self-catering cottages for longer stays
Vacation Rentals
Apartments and cottages provide independence and potential cost savings for groups.
Popular Rental Types
- Downtown Reykjavik apartments
- Coastal cottages with hot pots (hot tubs)
- Remote wilderness cabins
Considerations When Booking
- Many require minimum stays (especially in high season)
- Self-catering options save on restaurant costs
- Rural properties may have limited Wi-Fi
Seasonal Considerations for Where to Stay in Iceland
Summer (June-August)
High season brings midnight sun and accessible highlands but requires advance booking.
Summer Accommodation Tips
- Book at least 6-9 months in advance for popular areas
- Prices peak in July and August
- Consider highland huts for unique experiences
- Camping becomes viable (with proper equipment)
Shoulder Seasons (May, September)
Offering good balance between accessibility and crowds with more availability.
Advantages of Shoulder Season Stays
- More last-minute options available
- Lower rates than summer
- Still enough daylight for activities
- Northern Lights possible in September
Winter (October-April)
Northern Lights season brings unique accommodation opportunities.
Winter Stay Considerations
- Many rural guesthouses close for winter
- Focus on staying near towns with winter road maintenance
- Consider hotels with Northern Lights wake-up services
- Look for accommodations with hot tubs for winter soaking
Planning Your Iceland Accommodation Strategy
Itinerary Styles
Ring Road Circuit
Most travelers follow Route 1 (Ring Road) around the island. Consider:
- 7-10 day minimum recommended
- 2-night stays in strategic bases to reduce packing/unpacking
- Strategic bases: Reykjavik, Vik, Höfn, Egilsstaðir, Lake Mývatn, Akureyri, Snæfellsnes
Hub and Spoke
Base yourself in 2-3 locations and take day trips.
- Reykjavik for Golden Circle and South Coast day trips
- Akureyri for exploring North Iceland
- Egilsstaðir for East Iceland exploration
Focusing on One Region
For shorter trips or deeper exploration:
- South Coast and Golden Circle (5-7 days)
- Snæfellsnes Peninsula (3-5 days)
- Westfjords exploration (5-7 days)
Booking Considerations
When to Book
- Summer (June-August): 6-9 months advance booking
- Winter northern lights season (Sept-March): 3-6 months advance
- Off-season: 1-3 months advance generally sufficient
Cancellation Policies
- Many rural properties have strict cancellation terms
- Consider travel insurance for Iceland's unpredictable weather
- Look for free cancellation options when available
Special Accommodation Experiences in Iceland
Unique Stays
Iceland offers distinctive accommodation concepts you won't find elsewhere.
Glass Cabins and Bubble Hotels
- The 5 Million Star Hotel - Sleep in a transparent bubble
- Panorama Glass Lodge - Glass-walled cabins with privacy
- Aurora Cabins - Specifically designed for Northern Lights viewing
Historic and Unusual Properties
- Hotel Búðir - Historic church-adjacent hotel on Snæfellsnes
- The Retreat at Blue Lagoon - Luxury rooms with lagoon access
- Lighthouse Inn - Converted lighthouse on dramatic coastline
Eco-Friendly Accommodations
Iceland's environmental awareness extends to its hospitality industry.
Sustainable Properties
- Hótel Húsafell - Carbon-neutral operation with geothermal energy
- Friðheimar Guesthouse - Greenhouse tomato farm with accommodations
- Hellishólar - Eco-cabins powered by sustainable energy
Practical Tips for Booking Where to Stay in Iceland
Understanding Icelandic Accommodation Standards
Room Types
- Standard rooms are often smaller than North American equivalents
- Double rooms frequently feature two twin beds pushed together
- Triple/quad rooms rare outside of larger hotels
Common Amenities
- Hot tubs (hot pots) common even in budget properties
- Breakfast typically included in non-apartment stays
- Wi-Fi generally available but may be limited in remote areas
Cost-Saving Strategies
Iceland's reputation for high prices is deserved, but savvy travelers can manage costs.
Money-Saving Approaches
- Book accommodations with kitchenettes to save on food costs
- Consider guesthouses with shared bathrooms with bathroom mirror cabinet for lower rates
- Look for properties including breakfast to start the day economically
- Travel during shoulder seasons for better rates
- Join loyalty programs for Icelandic hotel chains
Conclusion: Finding Your Ideal Place to Stay in Iceland
Where to stay in Iceland ultimately depends on your travel style, budget, and the experiences you prioritize. From luxury hotels overlooking dramatic landscapes to cozy guesthouses in fishing villages, the perfect accommodation enhances your connection to Iceland's extraordinary natural beauty.
Remember that location often matters more than luxury in Iceland—a modest guesthouse with stunning views might create more memorable experiences than an upscale hotel in a less remarkable setting.
By considering the regions that most interest you, the type of accommodation that suits your travel style, and planning according to Iceland's distinct seasons, you'll find the perfect base for exploring this magnificent island nation.