Best Hotels in Reykjavik: Every Budget Covered

Iceland's capital offers accommodation to match every traveller's needs and budget, from heritage hotels in converted historical buildings to modern design properties and welcoming guesthouses. After years of rapid tourism growth, Reykjavik's hotel scene has matured into one of Europe's most diverse, though prices remain notably higher than most European capitals. Here's your complete guide to finding the perfect base for exploring Iceland.

Luxury Hotels: When Budget Isn't a Concern

Hotel Borg

Standing prominently on Austurstræti since 1930, Hotel Borg remains Reykjavik's most distinguished address. This art deco landmark charges 65,000-85,000 ISK per night (€450-590) for its redesigned rooms, each featuring handcrafted Icelandic furnishings and marble bathrooms. The hotel's restaurant serves modern Nordic cuisine, whilst its location places you steps from Austurvöllur Square and the Parliament House.

ION City Hotel

This boutique property on Lækjargata transforms a 1960s building into a contemporary design statement. Rooms start at 55,000 ISK (€380) nightly and feature floor-to-ceiling windows, locally sourced materials, and minimalist Scandinavian aesthetics. The rooftop bar offers panoramic views across Reykjavik's colourful rooftops to Mount Esja, 915 metres across Faxaflói Bay.

Canopy by Hilton Reykjavik City Centre

Opened in 2019 on Smáralind, this modern hotel brings international standards with Icelandic character. Rooms from 48,000 ISK (€330) feature Nordic design elements, whilst the ground-floor restaurant specialises in New Icelandic cuisine. The property sits 650 metres from Laugavegur shopping street and 1.2 kilometres from Harpa Concert Hall.

Mid-Range Comfort: Quality Without the Premium

Hotel Reykjavik Centrum

Occupying three interconnected buildings dating from the 18th to 20th centuries, this hotel on Aðalstræti offers genuine historical character. Rooms range from 28,000-42,000 ISK (€190-290) nightly, with some featuring exposed stone walls and timber beams. The hotel incorporates ruins from a 10th-century Viking longhouse, visible through glass panels in the lobby.

Fosshotel Reykjavik

This reliable Icelandic chain property on Barónsstígur provides consistent quality 800 metres from the city centre. Standard rooms cost 25,000-35,000 ISK (€170-240) and include modern amenities, comfortable beds, and functional bathrooms. The hotel's restaurant serves traditional Icelandic dishes, whilst the bar stocks an impressive selection of local beers and spirits.

Alda Hotel Reykjavik

Located on Laugavegur in a renovated 1930s building, Alda Hotel combines boutique design with reasonable pricing. Rooms from 30,000 ISK (€205) feature contemporary Icelandic art, natural materials, and excellent soundproofing despite the central location. The ground-floor café serves specialty coffee and light meals throughout the day.

Budget-Friendly Options: Comfort Without Compromise

Kex Hostel

Housed in a former biscuit factory on Skúlagata, Kex has redefined hostel accommodation in Reykjavik. Dorm beds start at 8,500 ISK (€58), whilst private rooms cost 18,000-25,000 ISK (€125-170). The industrial-chic common areas include a acclaimed restaurant, vinyl record collection, and regular live music events. Location is 1.1 kilometres from downtown.

Galaxy Pod Hostel

This innovative property on Laugavegur offers Japanese-inspired sleeping pods alongside traditional dorm rooms. Pods cost 12,000 ISK (€82) nightly and provide privacy within shared spaces, each featuring individual lighting, power outlets, and personal storage. Traditional dorm beds start at 7,200 ISK (€49).

Bus Hostel Reykjavik

Converted from a former bus station on Vatnsstígur, this hostel maintains transport connections whilst offering budget accommodation. Dorm beds from 6,800 ISK (€47) include breakfast, whilst private rooms cost 16,000-22,000 ISK (€110-150). The hostel operates shuttle services to Keflavik Airport, 48 kilometres away, for 2,990 ISK (€20).

Guesthouses and Apartments: Local Flavour

Three Sisters Guesthouse

This family-run property on Þórsgata occupies three adjacent buildings dating from the early 1900s. Rooms from 15,000 ISK (€105) retain period features whilst providing modern comforts. The generous breakfast features homemade bread, Icelandic dairy products, and locally smoked fish. Location is 600 metres from Reykjavik Cathedral.

Apartment Hotels

For longer stays or family groups, serviced apartments offer excellent value. Properties like Reykjavik4You and Storm Hotel provide fully equipped kitchens, separate living areas, and weekly housekeeping from 20,000 ISK (€140) nightly. These prove particularly economical given restaurant meal costs of 4,000-8,000 ISK (€28-55) per person.

Practical Considerations

Booking Strategy

Reserve accommodation well in advance, particularly for summer visits (June-August) when demand peaks and prices rise 30-50%. Winter months (November-March) offer the best rates, though availability remains limited due to Northern Lights tourism.

Location Priorities

Central Reykjavik properties within the 101 postcode provide walking access to restaurants, museums, and nightlife. Properties beyond this area often require taxi journeys costing 2,000-3,500 ISK (€14-24) each way.

Additional Costs

Factor in Reykjavik's 14.4% tourist tax, typically added to published rates. Parking costs 200-400 ISK hourly in central areas, though many hotels provide guest parking for 2,000-3,000 ISK daily.

Whether seeking luxury heritage accommodation or budget-conscious dorm beds, Reykjavik's diverse hotel scene ensures every traveller finds suitable lodging. Book early, budget appropriately for Iceland's premium pricing, and choose locations matching your itinerary priorities for the best experience in this remarkable Nordic capital.

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