22 Best places to stay in Iceland

This hostel is located in a refurbished biscuit factory by the sea in central Reykjavik (kex is Icelandic for biscuit).

The chic vintage design moves it a cut above the classic hostel; it’s also got its own library, gym and pizza restaurant, as well as a hair salon in the basement. You can also arrange tours here and hire bikes for exploring the city.

There are four-, six-, ten- and 16-bed dorm rooms available – with shared bathrooms – plus private family rooms and even two hotel-quality, en-suite rooms.

As hostels go, it’s top quality, and great value in an otherwise expensive city.

This fjordside guesthouse has a fascinating history: it was once a lodging house for women who worked at the local herring factory, but since 1985 it’s been repurposed as a rustic, traditional hotel filled with memorabilia of the town’s maritime history.

There are eight rooms, all on the first floor, simply decorated with Icelandic textiles, wooden furniture and fun decorative details (like shelves made from old herring crates). There are also a couple of smaller cottages to rent. Breakfast and dinner is served communally in the little dining room.

Guided tours of the ruined herring factory and the nearby craft museum can be arranged. It also makes a convenient gateway for onward explorations of the remote Westfjords.

Iceland is nothing if not eccentric, and this 17-room guesthouse is no exception.

As the name hints, it was once a dairy processing plant, but it’s been renovated into a modern guesthouse. Rooms are very simply furnished – some might say stark – but all are ensuite and offer views over Vantnajokull and the surrounding mountains.

The hotel is situated on the road leading to the southeast harbour town of Hofn, about 2km from the quayside and its excellent seafood restaurants – the best places to taste the town’s legendary langoustines.

This ranch-style hotel is perfectly located, and your best option, for exploring southwest Iceland.

There are seven bizarre but dazzling suites, taking the world’s continents as their themes and containing items from them all – apart from the Antarctica Suite, which is black and white like a penguin. Weird but wonderful.

There’s also an excellent restaurant in-house, serving locally-sourced food inspired by Nordic cuisine. The menu features plenty of Icelandic specialities, including smoked puffin (which tastes a bit like duck), Icelandic lamb, langoustines and skyr (a type of natural yoghurt) cheesecake. The salmon river provides wonderful fish too.

Located miles from anywhere, it’s a great spot for stargazing. The hotel has set up a special ‘observatory’ with a couple of high powered telescopes, and from September to April, on clear nights, a local astronomer visits to give talks about the stars, explaining the various constellations.

With Iceland being in the Aurora Belt, it’s also one of the best places in the world to see the Northern Lights in all their glory (when they decide to appear – most often between September and April). Stay for at least four nights to give yourself the best chance of seeing them.­ NB The hot tubs are perfectly placed for midnight dips and views of the Northern Lights.

If a dip in the fabled Blue Lagoon isn’t enough of a spoil, then for the ultimate indulgence, book a night at this swanky spa hotel, located just a few steps from the lagoon’s western edge. Rooms are beautifully decorated, with expansive glass windows offering views over the Reykjanes lava fields of the lagoon.

There are three upscale restaurants to choose from – the Michelin-rated Moss, Lava or the Spa Restaurant.

Everything here is designed to indulge your every whim, from morning yoga sessions to spa treatments and massages. A section of the lagoon is reserved solely for guests’ use.

This practical city hotel offers a decent base for exploring Reykjavik.

It’s a little way east of downtown, just off the main thoroughfare of Laugavegur, and while the building isn’t much to look at – a boxy, concrete block that’s typical of so much of Reykjavik – inside you’ll find plenty of designer style, including in the chic open-plan bar and attached restaurant.

Rooms are surprisingly cosy, with timber furniture, frilly fabrics and sheepskins giving them the feel of a rustic B&B out in the country. There are some handy amenities here, too, including free parking and on-site bike hire.

Hotel Husafell sits in its own remote valley on the edge of the mighty Langjokull glacier, and numerous outdoor adventures are on offer here, from ice caving to glacier hiking.

The hotel itself is a smart, inviting space: a cluster of single-storey buildings clad in timber and glass, with luxuries including underfloor heating, slate bathrooms and artworks by Icelandic artist Pall Gudmundsson.

The hotel’s Icelandic restaurant is open for dinner and offers views of the highlands through floor-to-ceiling glass windows.

Now here’s something different – a glass-walled, bubble-shaped sleeping pod, giving you a truly 360˚ view of Iceland’s incredible landscapes – and, fingers crossed, the chance to see the Northern Lights while you’re tucked up in bed.

It’s essentially off-grid glamping – the bubble pods include a comfy bed and, well, not a great deal else. Bathroom facilities and showers are provided in a nearby service house. Thankfully, they are fully heated in winter.

Surrounded by nature, they’re designed as a place for you to unplug and unwind.

There’s one compelling reason to stay at this manor house on the south coast – it’s one of the top places to experience Icelandic horse riding.

Located on a working farm, the triple-gabled timber building offers elegant, traditionally furnished rooms, some tucked in under the eaves, others with spoils like clawfoot bath tubs or Nespresso machines.

The views over the surrounding countryside are superb, and there’s a refined restaurant and spa, too.

Various horseback trips are on offer, from 1-hour introductory rides, to half-day trips to Irarfoss, Eyjafjalla and local beaches, and multi-day rides deep into the Icelandic wilds. You can also snowmobile to the famous Eyjafjallajokull volcano (2-3 hours, ideal for beginners), and hike on the Solheimajokull glacier.

Iceland’s first design hotel is a hip place to stay in the centre of Reykjavik, just steps from Laugavegur.

Inside it’s all monochrome minimalist chic, accessorised with talking point works from leading Icelandic artists.

The 38 luxurious rooms are spacious and look out over the city or the old harbour; all have underfloor heating and large walk-in showers.

There’s a great bar, modern European restaurant and basement spa.

The ‘Turf House’ Retreat offers guests the chance to sleep inside a modern version of the grass-roofed houses that were once common across much of Iceland (the turf acted as a form of natural insulation).

Cleverly built from reclaimed timber, volcanic stone and natural materials, the cabins offer understated luxury but also nod to the Icelandic past – you’ll spot old tools, animal skins, vintage sleds, carts and even a sofa made from an old boat as you wander round.

The hotel’s renowned restaurant, in the central ‘meeting house’, serves classy, Neo-Nordic cuisine. There’s also a ‘basalt stone’ hot pool where you can take a soothing dip.

It’s the ultimate luxury cabin experience, and it sits smack bang in the centre of the celebrated ‘Golden Circle’: Geysir is 13km north, Gullfoss 15km northeast, and Thingvellir National Park is 60km west.

This striking hotel sums up so much about Iceland: it’s architecturally bold, effortlessly stylish and situated only a stone’s throw from a geothermal power station.

Perched on stilts, with a projecting, glass-fronted wing that looks out over the landscapes of Thingvellir National Park, it’s the epitome of Icelandic industrial chic. It’s luxury with an edge of austerity, and feels a little bit like staying inside a lunar space station.

Everything here is designed to make the most of the hotel’s setting – through every window there are views of barren lava fields, tufty hills and the nearby Nesjavellir Power Plant.

The hotel’s Silfra restaurant specialises in Icelandic ‘slow food’, with many of the ingredients (including Arctic char) sourced within the local area.

Good hotels are much harder to come by in East Iceland, so this attractive, family-owned hotel is a good find. It’s located near the large glacial Lake Lagarfljot, and makes a convenient base from which to explore the eastern fjords such as Seydisfjordur and Reydarfjordur.

The design is functional: a trio of single-storey boxes containing four rooms each, all attractively decorated with wooden floors, glass doors and little pebbly patio areas where you can sit out and admire the scenery.

There is a decent restaurant and, rather oddly, a cognac lounge. Owners Astvaldur and Kristin are very friendly and full of information on the surrounding area.

This city-centre hotel isn’t much to look at – it’s set in a former school – but given the limited options in the ‘capital of northern Iceland’, it’s the best place to stay. The 100 modern Scandinavian rooms are smartly furnished and comfortable..

It’s a ten-minute walk to the centre of Akureyri – not great in the snow – but otherwise it’s ideally positioned for visiting the country’s northern attractions, including Lake Myvatn, Dimmuborgir, Dettifoss and the ski area at Mt Hlidarfjall. The town’s thermal pools are just across the road.

Echoing the traditional ‘turf houses’ that were once widely used across Iceland, this modern cottage complex makes a great overnight stop-off as you drive along the south coast.

There are 25 rooms, furnished in a simple Icelandic style with modern touches. Most also offer a lake view, and glass doors that slide open onto your own timber patio.

The design is modern, but it feels homely too – the grass-roofed cottages look rather like hobbit houses crossed with seaside bathing huts.

The in-house restaurant, Bistro 1783, offers superb views of the mighty ice sheet of Vatnajokull.

This wonderful hotel in the countryside, two hours’ drive from Reykjavik, is the best place to stay for a true Icelandic wilderness experience.

From its rooms, you can look out onto ancient volcanoes, a mystical glacier and a lagoon where seals play; beyond it an empty sandy beach stretches out to the Atlantic, and soft-furred Icelandic horses huddle together in the wind.

The hotel’s country-style decor is idiosyncratic. Parts of the hotel date back to 1948 and the decor is traditional Icelandic. Images of whales, local flora and fauna and ancient legends hang on the walls.

The restaurant is pricey but the locally-inspired cuisine is excellent. There’s also a cosy, characterful bar – perfect for a relaxing drink after a long day of outdoor adventure.

You can’t miss this imposing hotel as you drive along the south coast: clad in black timber and glass, its blocky, architectural profile stands out against the hills like a contemporary sculpture.

It’s part of the Islandshotel group, which is known for its contemporary decor and luxurious, modern style. The Glacier Lagoon is up there with the best of the group: chic rooms, picture windows and an ultra-refined restaurant make this one of the best places to stay on the south coast.

Skaftafell National Park is only 30km northwest, and (despite the name) Jokulsarlon is roughly the same distance to the northeast. These are two of Iceland’s top outdoor nature attractions – making this a great base for wilderness fans.

Steaming fumaroles, hot springs and a rushing thermal river surround you at Frost and Fire, another impressive luxury hotel that makes an ideal stop as you drive eastwards from Reykjavik on the Ring Road.

It’s located near the village of Hveragerdi, on the banks of the Varma River, and combines stylish rooms with grand views of the Icelandic countryside (the best are the riverside suites, which have small balconies where you can sit and admire the scenery).

Geothermally-heated water is supplied to the hot tubs and the outdoor pool, and also feeds the river – where you can have the bizarre experience of a wild swim in bath-warm water.

Meals are served in the attractive conservatory restaurant, and breakfast even ties in with the geothermal theme: you can boil your own eggs in the naturally hot water, or try traditional hverabraud, hot-spring bread.

This 58-room art deco gem is one of Reykjavik’s most sophisticated and glamorous hotels.

Features include parquet floors, twinkling chandeliers and the best mod cons around – Philippe Starck fittings, Bang and Olufsen flatscreen TVs and Hastens beds in large rooms decorated in chocolate and maroon.

The hotel’s restaurant serves up wonderful local produce with a twist, with popping candy and dry ice pepping up exquisite desserts.

It’s elegant and upmarket, and unsurprisingly popular with the older end of the market. Service is perfect and a concierge can book everything you need in advance or during your stay.

It’s also in a great location beside Reykjavik’s key green space.

Once a sheep farm, this lavish getaway is lost in the wilds of the Troll Peninsula. You’re really out in the sticks here: the nearest town is Akureyri, a rugged 45-minute drive that requires a 4×4.

With its sleek surfaces, rustic materials and minimalist design, it’s a model of Scandi chic – but it somehow manages to feel cosy too, with sheepskin rugs, textiles and leather armchairs giving it the feel of a traditional Icelandic lodge (the building has a grass roof, a nod to the tradition of turf houses).

There’s a luxurious spa, a geothermally-heated pool and all meals are included – but it’s the views that really sell this place: a wall of glass offers uninterrupted views over the wild valley.

Even better, many adventures are included in your stay – from trekking to horse riding. There are thirteen rooms, or if you have the cash, the whole place can be booked out as the ultimate Icelandic retreat.

If it’s a slice of Icelandic heritage you’re after, then this delightful harbourside hotel in Stykkisholmur will be right up your street.

The handsome, timber-clad building dates from 1867, and has been renovated with taste and a discerning eye for vintage design. Retro furniture, old maps, Icelandic books and sheepskin blankets adorn the lounge, and the ten rooms mirror the upcycled, mix-and-match style.

Unlike many Icelandic hotels, which are heavy on style but light on cosiness, the emphasis here is on creating a warm, welcoming space – it feels more like staying with Icelandic friends than the impersonality of a chic hotel.

If out-and-out luxury is what you’re after, then The Reykjavik Edition is the only hotel to consider in the capital.

This is an upscale design hotel par excellence: stylish, stripped-back Scandi-styled rooms (many with harbour views), a cool palette of monochrome greys, creams and taupes, a tempting choice of restaurants, and a knockout rooftop bar that offers panoramic views over the city.

It feels like stepping into the pages of a glossy design magazine. It’s in a super position for exploring the city, too, right beside the harbour and the architecturally striking Harpa Concert Hall.