You’ve probably already explored Iceland’s main regions and attractions and are wondering where to stay, depending on where you want to go. The largest number of tourists in Iceland visit the southwest region, where Reykjavik is located, where two-thirds of the country’s population lives. And you can stay in Reykjavik for at least a short time after arrival or on the last night before departure.
Many travelers prefer to explore the island independently, spending no more than one night, a maximum of two in one hotel, moving from one region to another, and returning to Reykjavik before leaving. It is better to book hotels outside the city in advance, especially in summer; otherwise, it will be difficult to find well-located hotels at an affordable price.
Reykjavik is the best place to stay when visiting Iceland
Reykjavik is a convenient place to stay as it is the capital; it is a lovely and welcoming city. Many local operators offer day trips or activities starting and ending in Reykjavik. If you don’t want to drive and prefer guided day tours, this is your best option.
If you plan to rent a car, we recommend staying 1-2 nights in Reykjavik as it is one of the best vacation spots in Iceland to enjoy Icelandic cuisine and immerse yourself in the cultural museums. When choosing a hotel, the location downtown will be a good choice, where you find many small hotels, restaurants and meet many other tourists walking down Laugavegur street in the evening.
Keflavik, hotels near the Blue Lagoon and International Airport
Keflavik is located on the Reykjanes Peninsula, 50 km from Reykjavik. This area is ideal if you are looking for accommodation close to the airport because you need to catch your plane early or land very late. The Blue Lagoon, a must-see destination in Iceland, is also located close (20 km / 12 miles) to Keflavik.
Accommodation at the Golden Circle route
The Golden Circle is one of the most popular routes in Iceland, starting and ending in Reykjavik. Likely, you will want to take this route in begin of your trip program. And if the next day you plan to go towards the South Coast, then the optimal logistics would be to stay overnight in the Selfoss, Hella, or the area of the Golden Circle route. Thus you will reduce the time driving to Reykjavik and from there the next day.
Selfoss is a town at the excellent place on the Ring Road, approx. 50 km / 32 miles from Reykjavik. Apart from all this, Selfoss has a large selection of accommodations. A good choice for an overnight stay after a trip along the Golden Circle route would be the Grimsborgir Luxury Hotel.
Hella is a village 90 km / 55 miles east of Reykjavik on the Ring Road, where no large towns and fewer hotels are available to stay. If you decide to choose a hotel in Hella, you will also be nearby the most popular highland area of Landmannalaugar and a half-hour drive to the South Coast.
Where to stay on the South Coast of Iceland
The small town of Vik on the Ring Road at the most southern part of Iceland with a magnificent natural landscape. It is a convenient place for an overnight stay when you’ve already toured the South Coast and don’t plan to return to Reykjavik on the same day. An overnight stay in Vik will fit those traveling further east and intend to visit the glacial lagoon Jokullsarlon or explore the southeastern region. Vik is undoubtedly an essential stop on the Ring Road, making it one of the most popular places in Iceland.
Kirkjubaejarklaustur village is almost one hour drive east of Vik along the Ring Road and a good location for an overnight stay during a 2 or 3 days trip from Reykjavik to South Iceland up to the Glacier Lagoon.
Hofn is a beautiful and quiet town in southeastern Iceland. The area is visited by travelers going around Iceland or by photographers heading to the nearby Stokksnes Cape, known for its black dunes and the imposing Vestrahorn mountain.
Egilsstadir, where to stay in East Iceland
Egilsstadir, the largest town in the eastern part of Iceland, is located on the Ring Road and can also be reached by plane from Reykjavik. From Egilsstadir, there are three main fjords within easy reach: Vopnafjordur, Reydarfjordur, and Seydisfjordur. Also, due to its location, this city surrounded by wildlife is excellent for trekking and hiking. This town is often chosen by travelers who have discovered East Fjords along the Ring Road and continue their trip to Myvatn lake or Akureyri town in North Iceland on the next day.
Where to stay in North Iceland
Whether you are touring around Iceland or heading north from Reykjavik by car or plane, one day might be not enough to explore all sights of the Diamond Circle, Lake Myvatn and experience a whale watching tour. Depending on your interests, there are three popular places to consider: Akureyri, Lake Myvatn, or Husavik village.
Akureyri is the most important city in the north of Iceland and is often called the “northern capital.” It is a home for the main fishing port, and you will find a variety of accommodations and restaurants, tours, and activities. If you are looking for an excellent place to stay in the northern part of Iceland, then Akureyri is the best one.
Myvatn is the volcanic lake about one hour east of Akureyri and is surrounded by amazing landscapes and hiking trails. Myvatn is an excellent place to relax, as there are several attractive thermal baths.
Husavik is a beautiful town located one hour northeast of Akureyri. It is known as the “whale capital” and has scenic views and remoteness. The best whale-watching tours in Iceland take place here. Whale excursions start early in the morning, so if you want to book one of them, Husavik is an excellent place to stop.
Where to stay in West Iceland
The Snaefellsnes Peninsula, a favorite destination for photographers and nature lovers, is located a couple of hours’ drive north of Reykjavik. Snaefellsnes is one of the most impressive regions to stay in for a couple of days. If you decide to take a trip to the west of Iceland, stopping at Stykkisholmur or Grundafjordur towns is a great choice. One of the unique places to stay on the peninsula is Budir hotel, next to the old black church.
The Westfjords are the quietest area in Iceland and also the wildest and least populated. If you decide to visit this part of Iceland, see some of its most popular sites, such as the Dyndjandi Falls, Latrabjard Rocks, and Hornstrandir Nature Reserve. The best places to stay in this area are Isafjordur, Holmavik, and Patreksfjordur.
Top luxury hotels in Iceland
If you don’t care where to stay in Iceland but want to stay in one of the best hotels in Iceland, here is a list of the best luxury hotels in the country:
Retreat Hotel – Blue Lagoon, a luxury hotel next to the Blue Lagoon
Black Pearl – Finest Apartment Hotel in Reykjavik
Grimsborgir – Retreat Hotel, a hotel in Iceland’s Golden Circle
Tower Suites Reykjavík, the hotel with the best panoramic views
Ranga Hotel, a luxury hotel near Hella, where you can see the northern lights
Where to stay to see the Northern Lights
Iceland is one of the best places to see the Northern Lights if you travel from October to the end of March. If your trip involves seeing the Northern Lights, we recommend visiting one of the best hotels to see the Northern Lights in Iceland.
- Ranga Hotel: the best hotel to see the Northern Lights. There is an observatory on the roof.
- Husafell Hotel: the hotel in West Iceland. Ideal for observing the Northern Lights.
- Laxness Hotel: The country hotel in Mosfellsbaer (a suburb of Reykjavik) to see the Northern Lights
- Reykjavik Domes: The original igloo hotel in Grafarvogur/Reykjavik to see the Northern Lights
- Grand Hotel Reykjavík: the best option if you want to see the Northern Lights in Reykjavik
- Aurora Cabins Hofn: The best hotel for viewing the Northern Lights in eastern Iceland
- Hotel Kjarnalundur in Akureyri, admire the northern lights from the jacuzzi.
- Villa Lola is the best hotel near Akureyri for Northern Lights viewing.