Best Hotels in Reykjavik: All Budgets

Budget hostels to luxury boutique hotels. The best places to stay in Iceland's capital.

Iceland rewards thorough preparation. This comprehensive guide covers everything you need to know before your visit, including practical tips, best times, logistics, and insider advice from people who have visited dozens of times.

Essential Information

Iceland is a country of extremes — extreme beauty, extreme weather and extreme experiences. Understanding what you are visiting before you arrive makes the difference between a good trip and an extraordinary one.

Planning Your Visit

For a personalised itinerary that incorporates this destination along with your other interests and travel dates, use Atlas Iceland's AI Itinerary Builder.

Mid-Range Hotels

The mid-range hotel market in Reykjavik has strengthened considerably in recent years. Canopy by Hilton Reykjavik City Centre (Smiðjustígur 4) occupies a converted 19th-century building with original exposed brick and timber, providing a boutique feel with international chain reliability. Room sizes are generous by Reykjavik standards. Breakfast included. Hotel Borg (Pósthússtræti 11), dating from 1930, is Iceland's original grand hotel — the Art Deco interiors have been maintained through multiple renovations, and the location opposite Austurvöllur square is the most central of any Reykjavik hotel.

Budget and Hostel Options

Reykjavik has a well-developed hostel scene concentrated in the old city. KEX Hostel (Skúlagata 28, old harbour area) is Iceland's most celebrated hostel — a converted biscuit factory (KEX = Kex, Icelandic for biscuit) with large common areas, a good bar and kitchen, and a social atmosphere that makes it the best choice for solo travellers. Dorm beds from approximately GBP 35 per night. Hlemmur Square (Laugavegur 105) is a hostel-hotel hybrid — private rooms and dorm beds in a renovated bus station, with a well-regarded restaurant on the ground floor.

Guesthouses

Reykjavik's guesthouses provide the most authentic accommodation experience — typically family-run properties in residential buildings near the old city, offering private rooms with shared bathrooms at prices between hostel and hotel. Many include a basic self-catering kitchen. Guesthouse Butterfly (Ránargata 8a), Guesthouse Pávi (Þórsgata 1), and Loft HI Hostel (Bankastræti 7) are consistently well-reviewed options in the budget-to-mid range.

Booking Tips

Reykjavik hotel prices increase significantly from June through August — booking 3 to 4 months ahead for peak summer dates is recommended for mid-range and above. Shoulder season (September to May) offers the same quality hotels at 20 to 40% lower prices. The 101 Reykjavik postcode commands a premium over equivalent quality in outlying areas — the walkability justifies the premium for most visitors. Always check whether breakfast is included before comparing prices — Icelandic hotel breakfasts (skyr, smoked lamb, herring, freshly baked bread) are substantial and worth GBP 15 to GBP 20 per person if valued in the comparison.

For the most luxurious Reykjavik experience, the Retreat Hotel at the Blue Lagoon (20 minutes from the city, GBP 500 to GBP 1,200 per night) provides private lagoon access and the closest thing to resort-style Iceland accommodation. For those who prefer city-centre luxury, the 1919 Hotel (Pósthússtræti 2) and the ION City Hotel (Laugavegur 28) both provide design-led rooms in the heart of the old city.

Browse and book tours and activities on GetYourGuide — glacier hikes, whale watching, northern lights tours, Golden Circle day trips and hundreds more. Instant confirmation, free cancellation on most bookings.

Getting around Iceland is easiest by car. Compare rental options and find the best deals on Discover Cars — free cancellation available.