Where to stay in Iceland for every budget

During our week touring Iceland we tested 5 different types of acommodation: a luxury hotel, a cottage in an organic farm, a hostel, a cozy Airbnb house and a colorful guesthouse.

Keep reading to know what to expect and decide later!

Where to stay in Iceland for every budget

Tips when booking your stay in Iceland

  • If you’re visiting Iceland in winter, I highly recommend you to stay indoors – you won’t regret it.
  • Book your stay well in advanced, as options can be very limited.
  • If you’re planning to do a road trip, check distances on google maps in advanced to help you decide where to stay.
  • Make sure to double-check locations before booking. For example, there are 2 places named Reykholt located in different areas of the country (one it’s right in the Golden Circle/South Iceland and the other one is in West Iceland).
  • You can also stay in Reykjavik as your base and join day tours from there.
  • And if you visit Iceland in summer, you can opt for renting a camper van or go camping (and even clamping!).

Luxury: Hotel Húsafell

If you’re looking to stay in a design hotel with all the amenities, you’ll love hotel Húsafell. The best asset about this hotel – apart from the design – is its location, surrounded by waterfalls, geothermal activity and blessed by northern lights and thermal pools.

I wish I stayed longer! Hotel Husafell was our home for our first night in Iceland and it was the nicest welcome of the trip.

Best things about Hotel Husafell:

  • Its design and location are outstanding.
  • It’s really close to Hraunfossar and Barnafoss waterfall and Deildartunguhver spring.
  • It’s also close to Into the Glacier, an experience where you can get inside Langjökull, the second largest glacier in Iceland.
  • It has thermal pools that are perfect to end the day, enjoying Icelandic nature.
  • During winter, you can spot northern lights an average of 3 times per week – which is a lot!

There are a few incredible 4 and 5* hotels in Iceland always in the most incredible locations.

If you want to splurge in an unforgettable stay, we recommend these luxury hotels in Iceland:

  • The Retreat at Blue Lagoon: the most expensive hotel in Iceland, where you step out from your room directly into Blue Lagoon!
  • Hotel Husafell (Reykholt – West Iceland): we loved everything about our stay!
  • Tower Suites (Reykjavik): located at the highest viewpoint in Reykjavik – the views are just epic from the 20th floor of this contemporary glass tower.
  • Hotel Rangá (Hella): expect an idyllic location and impressive views.
  • Torfhús Retreat (Selfoss): here, traditional Viking culture meets luxury – such a unique place to stay at!

Organic Farm: Smáratún

For those looking to feel truly connected to nature, this is the place.

Although it was still pretty to stay there while it was covered by snow, I’m sure it gets even better in summer, with horses outdoors and a gorgeous view.

Smáratún is a family farm of 300 hectares just a few minutes drive from Hvolsvollur. The main attraction are their beautiful horses. Smáratún also has an ecological crop and all its products are ecologically sustainable: here it’s where I had the best skyr of the whole trip!

In the same location there is a hotel and a guesthouse, but we stayed in the cabin that you see in the picture and we prepared our dinner in the shared kitchen.

Farm stays are usually more affordable than other options! It’s one of our top picks in Iceland as you get a total connection with nature and an organic breakfast.

These are our recommended farm stays in Iceland:

  • Esjan (Kjalarnes): not far from Reykjavik, with epic mountain and sea views, Esjan is perfect for those looking for horse riding and hiking.
  • Smaratun (Hvolsvollur): we loved out stay and 100% would stay here again!
  • Árbakki Farmhouse Lodge (Reykholt – Golden Circle): a quiet and peaceful stay with a river view.
  • Stóra-Ásgeirsá (Vidigerdi): located in North Iceland, you can have a hot bath tub with a view to the waterfalls.

Hostel: Puffin Vík Hostel

Vík í Myrdal is one of the most beautiful villages in the world, and I am not exaggerating. It’s so photogenic it looks unreal. Puffin Vík Hostel is a very good choice if you are looking for a budget place where to stay but don’t expect too much from it. The rooms are basic and the bathrooms and the kitchen are shared, but after all, this is the best way to meet new people while we travel.

Hostels are perfect for solo travelers, wether you decide to share a dorm or stay in a private room. They usually feature a shared kitchen and lounge, but also bars and great locations. It’s a top pick that will make your trip super easy!

We recommend the following hostels for your trip to Iceland:

  • Loft – HI Hostel (Reykjavik): featuring a rooftop terrace with a lovely city view, this place is perfect for nightlife and getting around Reykjavik
  • Nicehostel (Selfjaland): just 2 minutes away from Seljalandfoss waterfalls!
  • Midgard Base Camp (Hvolsvollur): I’ve visited this place right before it was opened to the public. I totally recommend this company as I’ve visited Thórsmörk with them and they are really amazing.
  • The Barn (near Vik): clean, comfortable and very stylish!
  • Hafnarstraeti (Akureyri): a capsule hotel with sleeping pods – the best price you can get in Akureyri with the best quality!

Airbnb: Fjarkastokkur

If you’d rather stay in a typical Icelandic house or apartment, you’ll find very authentic places on Airbnb.

That was our case in Fjarkastokkur, a beautiful little house in Thykkvibaer, close to Hella.

The biggest advantage of staying here was that we could enjoy the most amazing northern lights of the entire trip just staring from the window, from the coziness and warmth of our home for the night. In summer you can enjoy the hot water pool on the terrace.

Guesthouse: Butterfly Guesthouse, Reykjavik

Our last night in Iceland was spent in Reykjavik, in my favorite guesthouse ever: Butterfly guesthouse.

Advantages of staying at Butterfly Guesthouse:

  • It’s located in the city center, just 2-3 minutes from the port and the Harpa building..
  • Although is centrally located, it’s in a quiet street which is also really colourful.
  • It will take you 2 minutes to get to the most famous hot dogs in Reykjavik: Baejarins Beztu Pylsur.
  • Decor is amazing! You could spend hours looking at every detail.
  • There’s a fully equipped shared kitchen and absolutely everything is at your disposal: pasta, rice, biscuits, cofee and much more – it will save you money!
  • There is a lovely butterfly on the facade.
  • The family running this guesthouse is adorable.
  • Heradsskolin Historic Guesthouse (Laugarvatn – Golden Circle): set in a former school, this superb guesthouse overlooks Lake Laugarvatn, Hekla Volcano and the Eyjafjallajökull Glacier – hard to beat!
  • Guesthouse Fludir – Grund (Fludir – Golden Circle): located really close to Gullfoss, Geysir and the Secret Lagoon, it offers one of the best value for money in Iceland.
  • Blue Grove Guesthouse (Reykholt – Golden Circle): a family run guesthouse located in a log house – the coziest experience.
  • Loa’s Nest (Hella): another great value for money, consider staying at this brand new place when in Hella.
  • Guesthouse Carina (Vik): with an amazing location in Vik, just 500 meters away from the black sand beach. It’s the best option in Vik!

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  1. I love how many different accommodation options there are. We spent a month in a campervan in Iceland… but now I’m thinking we need to go back to try some of these, particularly the farm stays!

  2. I love this post! We’re hoping to visit Iceland for our honeymoon next year so I’m going to keep your post to hand, some of this accommodation looks amazing!

  3. I LOVE that your post shares accomodation options that run the gamut budgetwise! The farm stay looks lovely, and the decor of the guest house!! We did airbnb when I visited two years ago with a group. Great helpful post, I’m definitely saving this one!

    1. We wanted to try different ways to experience Iceland and our airbnb was one of the best watching the northern lights from our window… unforgettable!

  4. Lots of great suggestions for where to stay in Iceland. I love the idea of staying at the organic farm to feel more connected with nature and the Butterfly guesthouse sounds like a convenient and cozy place to stay. We always prefer staying at B&Bs and guesthouses rather than the hotels as that gives us more chance to interact with the owners and locals. Thanks for all the details.

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