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Where to Stay in Reykjavik: Best Areas & Hotels

Where to Stay in Reykjavik: Best Areas & Hotels

Olly Gaspar

By Olly Gaspar, full-time traveler for 6 years. I visit every place I write about & share real tips, photos, & advice from my trips.

Plan exactly where to stay in Reykjavik, from historic boutique hotels in the city center to luxury hotels with city views & hot tubs.

It’s safe to say that most adventures to the land of fire and ice will start in Reykjavik, accessible via a short 45-minute drive from the country’s main Keflavík International Airport.

But, if you’re like me on my first visit, you’re likely wondering where to stay in Reykjavik?

There are four main neighborhoods in Reykjavik which include Midborg (city centre), Hlidar, Laugardalur, Vesturbær which have a range of luxury hotels, mid-range stays, and hostel picks that ill break down below.

A personal favorite of mine is the Kex Hostel which is the best hostel to stay in Reykjavik for meeting people.

Map showing the different areas to stay in reykjavik, iceland
Map showing the best areas to stay in Reykjavik

4 Best Areas & Neighborhoods to Stay in Reykjavik

In my opinion, if it's your first time, I recommend picking a hotel in Reykjavik's city center (Miðborg). However, note that these hotels are usually more pricey. Below I'll break down all the areas to stay in Reykjavik to suit a range of travel styles and budgets.

  • Miðborg (Reykjavik City Center): Has everything you need within walking distance such as bars, and restaurants, and it's the main meeting point for bus tours around Iceland.
  • Hlidar: A great area for budget travelers seeking a central location with easy access to public transport and local attractions like Reykjavik Art Museum.
  • Laugardalur: A popular option for families and outdoor enthusiasts, offering many parks, a zoo, and the city's largest geothermal pool - Laugardalslaug.
  • Vesturbær: Ideal for a quieter stay, close to the city center with a charming residential vibe with a coastal walkway.

My Quicklist: Best Hotels & Unique Stays

Whether you're just starting off your Iceland journey, you're returning to Reykjavik before flying out, or perhaps you're just here on a quick business trip, you can't go wrong with my top picks below.

Luxury Hotels in Reykjavik

Is there anything better than coming back to your hotel room after a long 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

  • Area: City Center (Miðborg)
  • Best for: Couples looking for luxury with breathtaking views

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.

The Reykjavik Edition 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 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, and Reykjavik Old Harbor.

2. Hotel Borg

  • Area: City Center (Miðborg)
  • Best for: Couples and small groups exploring the city

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 and smart TVs. The rooms also have wooden floors, stylish furniture, and comfortable 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

  • Area: Hlidar
  • Best for: Solo travelers looking to be close to the shopping malls

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

It features an on-site bar and restaurant where you can enjoy a meal and drink after a full day of exploring. 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!

Prices in Reykjavik are significantly high since Iceland is one of the world's most expensive countries to visit/travel. Book ahead to avoid costly hotel rates especially if you're on a budget.

Mid-Range & Boutique Hotels in Reykjavik

If you love staying at boutique hotels, you can have peace of mind knowing there are many to choose from in Reykjavik and they don't all break the bank. 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$$

4. Sand Hotel

  • Area: City Center (Miðborg)
  • Best for: Couples looking for a boutique hotel

Located in one of the best areas Miðborg, 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.

A popular attraction near this boutique hotel is the Hallgrímskirkja Church and if you're looking for an interesting experience be sure to check out the Icelandic Phallological Museum.

5. Apótek Hotel

  • Area: City Center (Miðborg)
  • Best for: Couples looking to sleep in a historic building

Set in a beautiful historic building dating back to 1917, this boutique hotel is one of the best places to stay in Reykjavik. Apótek Hotel offers brightly decorated, modern, and sleek rooms feature free wifi, a flat-screen TV, 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 if you feel like exploring the nearby area.

Reykjavik Harbor is also only a short walk from the property.

Did you know? Reykjavik experiences nearly 24 hours of daylight during summer and very little daylight in winter, due to its location.

6. Thingholt

  • Area: City Center (Miðborg)
  • Best for: Solo travelers or couples looking for a relaxing yet central hotel

Finally, this stylish and original boutique hotel Thingholt 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!

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.

Did you know? A cool thing about Reykjavik is that it has geothermal water running under the main shopping streets to keep them from getting icy and slippery in the snow.

Budget Hotels & Hostels

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

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

7. Exeter Hotel

  • Area: City Center (Miðborg)
  • Best for: Large rooms with work spaces near the harbor

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

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 and National Gallery of Iceland. Or, if you prefer to shop up a storm, the Laugavegur shopping street is a short walk from the property.

8. Grandi

  • Area: Vesturbær
  • Best for: Solo or travelers on a lower budget

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.

9. Kex Hostel

  • Area: Laugardalur
  • Best for: Budget travelers looking for a comfortable dorm

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 m 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. 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.

Northern lights outside the city of reykjavik

Best Places to Stay 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 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

1. 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 with the northern lights

2. Lighthouse-Inn

Another great place situated 50 minutes from Reykjavik city with spectacular sightings of the Northern Lights.

Northern lights near reykjavik, iceland
Northern lights on a clear night in iceland

Pick a Hotel With Free Parking and Easy Access

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.

Bedroom suite at the eyja guldsmeden hotel iceland

1. 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, iceland

2. 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.

Dorm room at baron's hostel

3. 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

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 'its landscapes'. This 62-suite luxury hotel is surrounded by the stunning Blue Lagoon.

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.

My Hotel Selection Process

  • Accommodation Criteria: When selecting the best accommodation options in Reykjavik, I prioritized reviews, location, and value for money. Each listed accommodation meets this criteria, guaranteeing an unforgettable stay.
  • My Experience: I only choose hotels that offer the best for your money. I have not stayed in all of the selected accommodations above however, I have read through hundreds of reviews, comments, and resources to help with my selection process.
  • Top Reviews: All hotels on this list have earned a high customer rating across booking sites such as,, and I consistently check my options and update them accordingly.
  • Local Insights: I gathered reviews from other travelers who recommend hotels based on location and nearby activities whilst I was on tours and traveling around Iceland.

Read more about how I review & select hotels & accommodations.

Years Traveling
Hotels Stayed
Olly gaspar

I'm Olly, a full-time traveler since 2018. Each accommodation option in this guide is handpicked by me. Read my travel review ethics statement.

FAQ 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 2-3 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.

I hope that you've enjoyed this guide to where to stay in Reykjavik, Iceland.

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 traveler from Australia. I’ve spent the last six years traveling the world full-time, sharing my first-hand experiences & photography in over 700 travel guides on We Seek Travel. I visit every destination I write about to bring you unique travel itineraries, epic hiking routes, fun tour ideas, travel & photography gear ideas, & interesting places to stay.

I only make genuine, worthwhile recommendations based on my experience, expertise, & research. If you buy through my links, I may get a commission, supporting this website at no extra cost to you. Read my Publishing Ethics Statement.