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Where to Stay in Reykjavik, Iceland – Hotel Guide From Budget to Luxury

Where to Stay in Reykjavik, Iceland – Hotel Guide From Budget to Luxury

A comprehensive guide breaking down where to stay in Reykjavik for frequent travelers and first-time visitors to the capital city of Iceland.

The first port of call for any traveler in Iceland is often its capital, Reykjavik, accessible via a short 45-minute drive from the country’s main international airport: Keflavík International Airport.

So, it’s safe to say that most adventures to the land of fire and ice will start here. But, if you’re like most first-time visitors, you’re likely wondering where to stay in Reykjavik.

In this guide, I’ll leave you with a good understanding of the best places to stay in the capital city of Iceland. I’ll reveal the best areas and give a broad range of accommodation options for each budget, from luxury hotels to cheap backpacker hostels.

Northern lights outside the city of reykjavik
Olly gaspar

By Olly Gaspar, traveler, travel blogger & photographer for 5+ years with 600+ published travel guides. I visit every place I write about & share real tips from what I learn.

The Quick Answer for Where to Stay in Reykjavik

When it comes to accommodation in Reykjavik, choosing where to stay isn't as important as choosing when to book! This city has become extremely popular and tourism infrastructure is struggling to keep up with demand.

However, if you plan in advance (I recommend at least a couple of months), you'll have some great options to choose from. The best area is generally the city center, a neighborhood called Miðborg (Midborg), also known as the 101 for its postcode.

Miðborg is close to most of the attractions and serves as a great base to explore the city and surrounding higlights. Below are my top 3 Reykjavik accommodation picks for various budgets.

  • The Reykjavik Edition - This is a spectacular hotel that offers its guests ultimate relaxation and luxury. From its beautiful interior design to its incredible onsite restaurant, it ticks all of the boxes.
  • Kex Hostel - One of the best hostels to stay in Reykjavik known for its calm atmosphere for meeting new people and its prime location within the city.
  • Apótek Hotel - A true historic experience can be had at this 1917-built hotel. It offers its guests comfortable beds and great views over the surrounding city.

Reykjavik Accommodation Map

Below is a useful interactive map to help you find the best places to stay in Reykjavik at the latest prices across booking platforms. It includes some of the important places of interest, as well as all of the hotels recommended here, labeled in orange.

Where is the Best Place to Stay in Reykjavik?

The best place to stay in Reykjavik is the city center called Miðborg. With everything you need within walking distance such as bars, and restaurants, and is the main meeting for bus tours around Iceland. The city's main attractions are also here, including:

  1. Harpa concert hall
  2. Sun Voyager sculpture
  3. Hallgrimskirkja– the famous modern church
  4. Nautholsvik Geothermal beach

The beautiful historical buildings in this area also make it the most scenic neighborhood of Reykjavik. However, the only downside is that vehicle parking is limited in the center.

Below I'll offer you the best accommodation options in the city, including luxury hotels, backpacker hostels, boutique hotels, and some unique places to stay to see the northern lights!

Infographic where to stay in reykjavik, iceland

Best Luxury Hotels in Reykjavik With Hot Tubs

What could be better than coming into your hotel room after a cold day exploring Reykjavik and soaking in a warm hot tub? Below you will find the best luxury hotels in Reykjavik with hot tubs.

The reykjavik edition bedroom view with sea viewsThe Reykjavik Edition$$$$
Hotel borg bedroom suite, icelandHotel Borg$$$
Midgardur bedroom with window over cityMidgardur$$$

1. The Reykjavik Edition

Located in the heart of Reykjavik, Iceland's capital city, is where you'll find The Reykjavik Edition hotel.

Overlooking the harbor, this 5-star hotel is one of the best places to stay in Reykjavik because of its location, its design, and the facilities that are available.

This stunning accommodation features a spa and wellness center, a fitness center, a sauna, hot tubs, and a terrace. There is also a restaurant and bar on-site for you to enjoy after a day of exploring.

All of the guest rooms come with free wifi, a seating area, a flat-screen TV, and a private bathroom. Certain rooms also have a city view, perfect for watching the sunset.

Best of all every morning, guests can start their day by fueling up with a delicious à la carte breakfast.

Popular attractions near the property include Hallgrímskirkja Church, Harpa Concert Hall & Conference Centre, and Reykjavik Old Harbor.

2. Hotel Borg

If you like luxury and historic buildings, then Hotel Borg is the hotel for you.

Enjoying a great location in the heart of the city, this art deco-style hotel overlooks the beautiful Asuturvollur Square and boasts brightly decorated rooms.

All of the private rooms at the accommodation feature free wifi, flat-screen, and smart TVs. The rooms also have wooden floors, stylish furniture, and quality beds.

After a day of exploring the city, you can enjoy a relaxing massage at the in-house spa or soak in the steam room.

3. Midgardur

Located on one of Reykjavik's main shopping streets, Midgardur by Center Hotels is one of the best places to stay if you love being close to everything.

Midgardur is one of the best hotels in Reykjavik and features an on-site bar and restaurant where you can enjoy a meal and drink after a full day of exploring. All of the spacious rooms come equipped with free wifi, a minibar, and a private bathroom. Depending on the type of views you enjoy, you can choose a room with views of the city, mountains, or sea.

Being in such a great location, cafes, restaurants, and shops are within easy walking distance of the hotel, so you don't have to venture too far!

The nearest airport is Reykjavik Domestic Airport, which is 2.8 km from the hotel.

Top Budget Guest Rooms & Hotels in the City Center

If you're a conscious traveler and love spending your money on experiences rather than accommodation, here are the best budget hotels for you to stay in Reykjavik!

Exeter hotel bedroom suite in reykjavík, icelandExeter Hotel$$$
Grandi suite with viewsGrandi$$
Kex hostel dorm room with bedsKex Hostel$$

4. Exeter Hotel

Set in the convenient location of Reykjavik's Old Harbor area, Exeter Hotel boasts industrial decor, modern furnishings, and wooden floors.

While staying at this hotel, you can dine at the in-house restaurant or indulge in a delicious pastry from the bakery. Then, after a day of exploring, why not treat yourself to some relaxation in the sauna?

Each of the carefully designed and comfortable rooms features a smart TV, a Nespresso coffee machine, and a private bathroom. You can also choose between a room with a sea or city view.

If you love sightseeing, some of the popular attractions near the hotel include Solfar Sun Voyager, the National Gallery of Iceland, and Hallgrímskirkja Church. Or, if you prefer to shop up a storm, the Laugavegur shopping street is a short walk from the property.

5. Grandi

If you're looking for one of the best places to stay in Reykjavik on a budget, Grandi is a must.

This 4-star hotel features a range of amenities for all types of guests to enjoy. From a restaurant and bar to room service, a concierge service, and a 24-hour front desk, you have everything you need for a comfortable stay.

All of the modern rooms at the hotel feature free wifi, a flat-screen TV, and private bathrooms. Certain rooms also have a balcony for you to enjoy.

Additionally each morning, you can indulge in a buffet breakfast before going off to explore the sights near the hotel, including Reykjavik Old Harbor and Hallgrímskirkja Church.

6. Kex Hostel

Looking for a budget, yet comfortable place to stay in the city center? Kex Hostel is one of the best budget accommodations for you!

Conveniently located only 250 meters from Laugavegur Street, this hostel is perfect for solo travelers and couples on a budget offering guest and dormitory rooms.

Additionally, seating areas and wardrobe features can be found in all rooms at the hostel. Specific rooms also have private bathrooms. There is also a communal kitchen on-site.

Each morning, guests can enjoy a buffet breakfast before heading off to explore the city. There is also an in-house restaurant and bar where you can meet and mingle with other guests. Musical events happen every Thursday to Saturday at Drinx Bar.

Top Mid-Range & Boutique Hotels in Reykjavik

If you love staying at boutique hotels, you can have peace of mind knowing there are plenty to choose from in Reykjavik. Below you will find the best mid-range and boutique hotels in the city.

Bedroom at the sand hotel, reykjavíkSand Hotel$$$
Apótek hotel large bedroom with lounge and tableApótek Hotel$$
Thingholt large room with lounge and table and windowThingholt$$

7. Sand Hotel

Located in one of the best areas in Reykjavik, Sand Hotel is a chic, modern, and beautifully designed hotel worth staying at.

Boasting a terrace and rooms with views overlooking the city, there is so much to love about this hotel. You can enjoy free wifi throughout the property as well as a 24-hour front desk with staff that will answer any questions you have.

All of the deluxe rooms come equipped with a flat-screen TV and private bathroom. Certain rooms also have a seating area where you can relax after a long day.

Some popular attractions near this boutique hotel include Hallgrímskirkja Church and Harpa Concert Hall, and if you're looking for an interesting experience be sure to check out the Icelandic Phallological Museum.

8. Apótek Hotel

Set in a beautiful historic building, this boutique hotel is one of the best places to stay in Reykjavik. The brightly decorated, modern, and sleek rooms feature free wifi, a flat-screen TV, a seating area, a minibar, and a private bathroom.

Not only are the rooms fabulous at this hotel, but there is also an amazing restaurant and bar. You can spend your evenings dining and drinking at the hotel, the perfect place to end your day.

Because of its central location, there are also many other bars and restaurants found near the hotel.

Hallgrímskirkja Church and Reykjavik Harbor are also only a short walk from the property.

9. Thingholt

Finally, this stylish and original boutique hotel is a fantastic place to stay in Reykjavik's downtown area.

The one thing that makes this hotel so unique is that each room is individually designed, meaning no two rooms are the same! Each room features a minibar, free wifi, a coffee maker, and modern bathroom facilities.

After a day of exploring the city or parts of the ring road, treat yourself to a delicious Icelandic or international dish at the hotel's restaurant Ísafold. Or, if you prefer to indulge in a cocktail, the on-site bar provides some of the best in the city.

In addition, if you're interested in day trips to the Blue Lagoon, snowmobile safaris, whale-watching trips, or any other activity, the staff can help arrange it for you.

Best Places to Stay in Reykjavik to See the Northern Lights

Many people flock to Reykjavik thinking that they can witness the Northern lights from their hotels or from within the city. However, the chances of seeing the Northern lights from the city center are very low due to the city light pollution.

Don't let this deter you from visiting or staying in Reykjavik city as there are many places that you can reach by foot or car to see the Northern Lights in Iceland.

Another option is to book a Northern Lights Bus Tour, which allows you to stay in the city center and reach the Northern Lights without any worries.

Alternatively, you can see the Northern Lights from the Golden Circle Tour or book accommodation near the Golden Circle to maximize your chances of seeing the Northern Lights. Below are two great options.

  • ION Adventure Hotel - Situated on Mount Hengill this hotel offers its guests the best opportunity to witness the Northern Lights from their bedroom suites
  • Lighthouse-Inn - Another great place situated 50 minutes from Reykjavik city with spectacular sightings of the Northern Lights.
Northern lights near reykjavik, iceland

Pick a Hotel With Free Parking and Easy Access Instead

Here is a quick list of hotels that offer free parking to make driving to see the Northern Lights as easy and stress-free as possible.

  • Eyja Guldsmeden Hotel - Located on the main shopping street in Reykjavik this hotel boasts elegantly designed rooms and free parking out the front of the hotel.
  • Hilton Reykjavik Nordica - Boasting free private parking and located in the Reykjavik business district the Hilton offers its guests a 5-star on-site restaurant with immaculate views.
  • Baron's Hostel - With private parking located on-site this hostel is a great place to stay if you're wanting to drive to find the Northern Lights.
Car parking in reykjavik
Finding parking in reykjavik can be challenging
Rental car in iceland

Car Rentals in Iceland

With amazing self-drive itineraries like the Golden Circle Route & the famous Ring Road, Iceland is one of the world's most epic road trip destinations.

But make sure to book your car in advance as cars often sell out in peak season.

Bonus: Stay Outside of Reykjavik At the Famous Blue Lagoon

If you're traveling to Iceland with the main goal of seeing the Blue Lagoon and the Northern Lights, then you must stay at The Retreat at Blue Lagoon.

This 5-star hotel is a great place to stay to experience the best of what Iceland is known for. This 62-suite luxury hotel is encircled by the stunning Blue Lagoon.

All of the private rooms at this accommodation include free wifi, 24-hour room service, a minibar, and a private bathroom.

By staying at this retreat, you can experience world-class service and amenities, such as unlimited access to the Retreat Spa, the Retreat Lagoon, the Blue Lagoon, and Blue Lagoon Ritual.

You can start each day by indulging in a delicious à la carte breakfast before going off to soak in the Blue Lagoon or explore the surrounding area. The accommodation also offers daily yoga sessions and group hikes.

The nearest airport, Keflavík Airport, is just 23 km from the accommodation.

Frequently Asked Questions About Accommodation in Reykjavik

Where is the best area to stay in Reykjavik?

The best area to stay in Reykjavik is Downtown as it's home to most tourist sites, restaurants, cafes, bars, and shops.

How many days should you stay in Reykjavik?

If you're planning to explore the whole of Iceland, spending a couple of days in Reykjavik to begin with is ideal to explore some of the tourist sites like the famous Hallgrímskirkja Church or taking a day trip to the Golden Circle. After, you could book accommodation in Vik, a great coastal town in the south.

When is the best month to visit Iceland to see the Northern Lights?

The best time to visit Iceland to get a chance to see the Northern Lights is during winter, from September to April.

More Iceland Travel & Accommodation Guides

I hope that you've enjoyed this comprehensive guide to where to stay in Reykjavik, Iceland. If you found this post useful, check out some of my other guides below for more travel inspiration based on my personal experiences in this amazing country.

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Thanks for Reading

I'm Olly Gaspar, adventure travel blogger & photographer. Traveling non-stop since 2018, I've published over 600 travel guides on We Seek Travel. These draw on my personal experience to share unique itineraries, accommodation tips, & fun adventure guides covering hikes, viewpoints, beaches, waterfalls, & tours. Read my Publishing Ethics Statement.

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