Scroll Top

The best places to stay in Reykjavik: Accommodation guide

If you’re looking for the best places to stay in Reykjavik for an action packed holiday exploring Iceland, you’ve came to the right place! Reykjavik is the base for most travellers visiting Iceland as it’s close to the airport, there’s plenty to do on an evening and the accommodation options are plentiful and available for all budgets. Follow our accommodation guide below to find out exactly where to stay in Reykjavik for your budget and the top rated hotels, apartments, guesthouses and hostels.

Location is important

One of our top tips for visiting any city is to stay central. It’ll save you money on transport and will give you more time to explore. The good news about Reykjavik is that almost everything in the centre is within walking distance, including bars, restaurants and most of the main attractions. Outside of rush hour, traffic is minimal so you won’t have any trouble driving around or catching a taxi or bus. Regardless of its small size, the best places to stay in Reykjavik are still in the city centre.


Hostels are an affordable accommodation option and some of the best best places to stay in Reykjavik for young people, solo travellers or those looking to meet others. There are a number of top-rated hostels within the city centre and on the outskirts of Reykjavik. Shared dorm rooms are available from around £30 per night and you’ll pay roughly double that for a private room. Hostels are modern in design, clean and friendly, as with most of the places in Iceland.

The best reason to visit a hostel is to meet other travellers for sightseeing, socialising and nightlife, particularly on a weekend. Most hostels also have a number of tours you can sign up to, where you’ll get picked up and dropped off right outside. Hostel tours are catered towards those on a budget so expect to pay a bit less but travel in large groups.

Cost: we’ve given all accommodation options a guideline price rating, between one and five £’s. 1 x £ represents an average cost of £30 per night whilst 5 x £ hotels are upwards of £200 per night.

Recommended hostels:

Galaxy Pod Hostel

Cost: £

  • Located a 10 minute walk from the central attractions
  • A cool ‘space themed’ hostel with a selection of large 20 bed dorms, smaller 6-8-person rooms and unique space capsule beds. There’s also a bar, kitchen and chill-out area.
  • Ideal for young people looking to meet other people and a nice budget accommodation.
Galaxy Pod Hostel

Loft HI Hostel

Cost: £

  • One of the best located hostels in Reykjavik, within a 5-minute walk of many bars, restaurants and attractions.
  • Bright and spacious with 6-8 bed mixed and female only dorms. There’s a balcony area to enjoy breakfast and or drink and a well-furnished living and kitchen area.
  • The friendly and accommodatable staff are a definite highlight.

Reykjavik Downtown HI Hostel

Cost: £

  • Located right next to Reykjavik’s harbour and a short walk from the city centre main sites.
  • Private twin double/twin room and cheap dorm options (4 bed or 10 bed).
  • A minimalistic and modern design with a hang-out area, kitchen and downstairs café where you can relax, socialise or work.
Reykjavik Downtown Hostel


The most popular accommodation option for Iceland is a guesthouse. They’re very much like a bed and breakfast in the UK and usually come with a shared bathroom, but they always have a private room, unlike in a hostel. Guesthouses are a basic but comfortable and a cost-effective means to seeing the city and are the go-to choice for many visitors. They can actually be cheaper than a private room in a hostel if you’re sharing with a friend or significant other.

Guesthouses vary in facilities, prices and rating but there are plenty to choose from both in and outside of Reykjavik. Make sure you take advantage of the free breakfast to fill up before a busy day of sightseeing. They’re the best places to stay in Reykjavik for those on a budget but still want their own room and don’t fancy staying in a hostel dorm.

Recommended guesthouses:

Guesthouse Sunna

Cost: ££

  • A cheap but lovely guesthouse with a free breakfast and quiet but welcoming vibe
  • Excellent location right next to the famous Hallgrimmskirja church
  • Rooms are basic but well maintained and good value for money. Bathrooms are shared with other rooms but you do have a private sink and communal kitchen area.
Guesthouse Sunna

Eric the Red Guesthouse

Cost: ££

  • A pleasant guesthouse right next to the striking Halgrimmskirja Church and within a 5-minute walk of the main shopping street.
  • Cosy and nicely decorated guest rooms with shared kitchen and living areas. A free breakfast is also included.
  • The hosts are very friendly and accommodating to guests. They’ll help you plan your sightseeing and tours with excellent local knowledge.

Captain Reykjavik Guesthouse

Cost: ££

  • A small and traditional B&B setup with multiple rooms and shared bathrooms and living areas.
  • Located right next to Reykjavik harbour, within 5 minutes’ walk of the city centre main attractions.
  • Rooms are bright, clean and excellent value for being so close to the centre of the city. There are two room options to choose from.
Captain Reykjavik Guesthouse

Rented apartments

Cost: ££ – £££££

Another very popular accommodation choice in Reykjavik is renting a private apartment in the city centre. They’re one of the best places to stay in Reykjavik for larger groups of people or those that want to save money on the high expense of eating out by cooking themselves. Apartments are available in all areas of the city and the best places to book them are:

As you’re renting privately from a person, make sure you check the reviews and pay attention to information such as deposits, rules, check-in times and cancellation policies. Generally, we found private apartments to be a little more expensive than guesthouses, but you get lots of space and a place to call home during your stay in the city.

Reykjavik Apartments

The best Reykjavik hotels

Unusually, hotels are in the minority in Iceland, in favour traditional guesthouse options. Although you won’t find many chain hotels that you’d expect to find elsewhere in Europe, there are lots of quirky and modern hotels to choose from in the city centre and they’re often in the best locations. Hotels are an excellent choice for travellers that appreciate a great place to stay whilst on holiday and enjoy winding down in a relaxing hotel environment. Reykjavik hotels are extremely modern, quirky and stylish, taking inspiration from the country’s heritage, mixed with contemporary Nordic design.

Hotels are typically more expensive and of the luxurious variety compared to the accommodation options we’ve already mentioned, but if you like travelling in style, Reykjavik has some snazzy hotel options that are sure to excite you. Here are some of our favourites:

Skuggu Hotel by Keahotels

Cost: £££

  • A stylish 3-star hotel with black and white furnishing throughout. Rooms are well equipped and modern, giving you a classy place to rest your head after a long day of sightseeing.
  • Located a 10 minute walk from Reykjavik central attractions and the popular Sea Voyager sculpture. A supermarket is also nearby.
  • Breakfast is included as standard, the staff are welcoming and the reviews are excellent – it’s rated #7 best hotel in the city.
Skuggi Hotel

Reykjavik Residence Hotel

Cost: £££££

  • One of the best hotels that Reykjavik has to offer and currently rated #2 on Tripadvisor.
  • Rooms are very large and modern in design. They have living areas and a fully stocked kitchen (much like an apartment) so you can cook your own dinner or pack lunch for the road.
  • A more expensive but exquisite boutique hotel with one of the best locations in town, you’re literally in the middle of the main shopping street.

Centrehotel Midgardur

Cost: ££££

  • A spacious and well equipped hotel on the edge of the city’s main street. Facilities include a spa, gym, free breakfast and bar/lounge area.
  • It’s located a 12 minute walk from the central attractions and in a quieter area of town away from the bustling bars and restaurants.
  • It’s currently rated as #10 best hotel in the city on Tripadvisor, with many visitors pointing out the fantastic customer service and value for money.
Centrehotel Midgardur

Hilton Reykjavik Nordica

Cost: ££££

  • A large 4-star hotel that wears the Hilton brand name proudly and displays all of the facilities and large room size that’s expected in a Hilton Hotel.
  • It’s located slightly out of the action on the outskirts of the city centre, meaning easier access to the countryside and less traffic entering and leaving Reykjavik. It’ll take you 30 minutes to walk into town or 10 minutes on the bus
  • Unlike the many boutique hotels of the city centre, the rooms of the Nordica are large and have nice views of the city. Breakfast is also top notch, although a little pricey.

Quirky accommodation inspiration

If you’re looking for a hotel with a little bit of character and something totally unique, check out these hand-selected quirky hotels, all located in Reykjavik city centre and boasting top reviews. They’re some of the best places to stay in Reykjavik for those that like art, design and cool surroundings for a place to stay.

OK Hotel – A quirky hotel with colourful rooms, unusual furniture and abnormal décor throughout.

OK Hotel

Oddsson Hotel – If you like the colour blue and a great view, the Oddsson Hotel is for you. This brightly decorated hostel/hotel has shared and private room options and a great views of the Reykjavik coastline, a good area to see the Northern Lights.

Oddsson Hotel

CenterHotel Thingholt – A centrally located boutique hotel with unusually decorated lounge and restaurant areas. Rooms are small but stylish.

Centrehotel Thingholt

Icelandair Hotel Reykjavik Marina – This seaside adjacent boutique hotel has a number of themed rooms and fun facilities such as a movie theatre and gym with a climbing wall.

Reykjavik Lights Hotel by Keahotels – Inspired by the famous Northern Lights, this minimalistic hotel has modern rooms inspired by the colour scheme of the Aurelia Borealis phenomenon. They even have their own nightly tour to see the lights.

Reykjavik Lights Hotel

For more edgy hotels, check out Global Grasshopper’s excellent article here.

Staying outside of Reykjavik:

Minna-Mosfell Guesthouse

Minna Mossfell Guesthouse

If you’d prefer to stay just outside the city of Reykjavik away from the hustle and bustle, Minna-Mosfell Guesthouse in the north is only a 30 minute drive from Reykjavik, located on a tranquil mountain side. It’s currently rated the number one guesthouse in the Reykjavik area on Tripadvisor and provides an amazing view of the Northern Lights away from the light pollution of the city.


Iceland camping

Iceland’s stunning countryside is a popular camping haven throughout the year, particularly in the warmer spring and summer seasons. It’s a great adventure and will give you an Icelandic nature experience like no other. You can either drive up to one of the many designated camp sites or simply park up near a hillside and set up your tent.

For a detailed guide to camping in Iceland, visit Guide to Iceland here.

Multi-point road trip

If you plan on visiting the north and eastern sides of Iceland (which can be a long drive), it can be beneficial to book multiple places to stay along your road trip route. Small guesthouses, barns and rented apartments are available in all of Iceland’s towns and villages. There’s something special about staying in a quiet farmhouse beneath the stars and it multi-point accommodation is a great options for extended stays of 5 days or more.

Top tips for booking Reykjavik accommodation

Where to go on holiday for New Year - Reykjavik Iceland
  • As we mentioned above, location is everything. Aim to be within a 10 minute walk of the central Hallgrimmskirja Church.
  • If you’re renting a car, look for hotels with free parking as public parking charges can soon add up. Many hotels and guesthouses offer complimentary parking spots.
  • Iceland has gained a reputation for being expensive for living costs but it has accommodation options to suit all budgets. Book in advance for the best rates and choose an accommodation option to suit your total holiday budget.
  • Choosing a place to stay with a buffet breakfast can save you money on food. Eat lots for breakfast and stock up with sandwiches, pastries and fruit for the road.
  • Use our ‘How to book the cheapest hotel rates’ guide to secure the best possible price and discounts for your chosen accommodation.
  • Reviews are always an important part of the booking process and although Iceland accommodation is well maintained in general, make sure you check Tripadvisor reviews before booking. You can’t go wrong with our recommendations above, which we’ve personally visited or researched.
  • If you want to save money on eating and drinking costs, book an accommodation option with access to a kitchen and make your own meals.
  • Sometimes you can get a cheaper, exclusive rate by contacting the hotel directly rather than booking on a comparison website. It’s well worth a try!

Flying toucan image - World Travel Toucan

Related Posts

Leave a comment