Best Hotels in Iceland – Top Luxury & Budget Stays

Planning a trip to Iceland? Whether you are staying in Reykjavík, venturing out to the volcanic landscapes of the south coast, or chasing the Northern Lights in the highlands, Iceland offers an outstanding range of hotel experiences. Below is a curated guide to some of the most dependable hotels across budgets and styles.

Our Selection Criteria

We selected these hotels based on guest experience, service quality, amenities, location (capital city, coastal areas, countryside), and overall value. Each property listed is among the more highly regarded in its category in Iceland. We focused on strong design, excellent locations (especially near nature or in city centres), and consistently positive reviews.

Best Luxury Stays in Iceland

The Retreat at Blue Lagoon Iceland (Grindavík – Reykjanes Peninsula)

This award-winning luxury resort features a subterranean spa, a private lagoon sourced from the same geothermal waters as the world-famous Blue Lagoon, and suites with high-end modern décor. It is one of Iceland’s flagship ultra-luxury stays.

The Reykjavík EDITION (Reykjavík – City Centre)

Located in downtown Reykjavík, this stylish 5-star hotel brings a design-led luxury experience to the Icelandic capital. With modern interiors, premium service and a central waterfront location, it is ideal for travellers who want the best of city and style.

Hotel Rangá (Hella – South Coast)

Set outside the main city lights in the countryside, Hotel Rangá is highly rated for its premium comfort, scenic setting and Northern Lights viewing opportunities. It combines luxury and adventure in a single stay.

Best Mid-Range / Comfortable Hotels

Stylish Boutique Hotel in Reykjavík (Example)

Reykjavík offers many excellent 4-star boutique hotels with modern rooms, central locations and good amenities — ideal for travellers looking for quality without ultra-premium prices.

Comfortable Nature-Lodge Stay (West Iceland / South Coast Example)

Outside Reykjavík, countryside hotels and lodges provide strong design, beautiful natural surroundings and comfortable amenities — perfect for travellers who want to experience Iceland’s landscapes while still enjoying a good standard of comfort.

Top Value / Budget-Friendly Options

Smaller Boutique / Guest-House Style Hotels (Various Regions)

Across Iceland you will find guest-house style and small boutique hotels offering clean rooms, friendly service and very good value for the price, especially in smaller towns and non-peak travel seasons.

Regional Lodge or Value Stay (Less-touristed Regions)

If your itinerary takes you off the beaten path into smaller towns, lesser-visited coastal areas or remote regions, you can find lodges and hotels that deliver very good comfort and value — particularly if you prioritise setting over ultra-luxury amenities.

Hotel Comparison Table

Tips Before You Book

• City vs nature region: Reykjavík offers the greatest concentration of luxury and comfort hotel options. Nature-focused regions such as the South Coast or West Iceland provide spectacular scenery and more intimate lodges but fewer ultra-luxury international brands.
• Location & access: For nature-based stays, check driving distances, road conditions (especially in winter), and whether a 4×4 is recommended. For city stays, look for a central, walkable location close to key attractions and dining.
• Payments & amenities: Luxury hotels accept international cards and offer full amenities. At smaller or remote lodges, confirm what is included (breakfast, WiFi, heating, transfers) and any limitations due to location.
• Value & timing: Hotel rates in Iceland vary significantly by season and region. Peak summer and Northern Lights seasons are usually more expensive. Booking ahead for top properties is wise, and travelling in shoulder seasons can offer better value.

FAQs

Which region has the best hotel options in Iceland?

Reykjavík has the highest concentration of luxury and quality hotel options. However, regions such as the South Coast, West Iceland and the Reykjanes Peninsula also offer excellent hotels and lodges that cater especially well to nature-focused itineraries.

Are luxury hotels in Iceland good value compared to other destinations?

Many of Iceland’s luxury hotels provide strong service, refined design and exceptional natural settings. When considering the uniqueness of the landscapes and experiences on offer, they can represent good value within the global premium travel market.

Can I find comfortable budget-friendly hotels in Iceland’s scenic regions?

Yes. Guest-houses, small hotels and boutique stays across Iceland offer clean, comfortable rooms for value-conscious travellers, especially in less central locations or outside peak travel periods.

Summary

From standout luxury stays such as The Retreat at Blue Lagoon Iceland, The Reykjavík EDITION and Hotel Rangá, through stylish mid-range boutique and countryside lodges, down to value-friendly guest-houses, Iceland offers a robust and appealing hotel market across budgets and styles. Choose your base according to your plans — city, coast or remote countryside — and you will be well-positioned for a memorable stay in this dramatic and distinctive country.

Continue Your Hotel Search

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