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ION Adventure Hotel
Photograph: Courtesy Booking.comION Adventure Hotel

The best hotels in Iceland

Here's your guide to very best hotels in Iceland, including those with views of the Northern Lights

Written by
Ruth Jarvis
Camila Karalyte

Grazing the Arctic Circle and straddling two tectonic plates, Iceland offers a visual feast of volcanic landscapes, spurting geysers and Northern Lights that have not gone unnoticed by Instagrammers or Game of Thrones location scouts.

With the increasing interest in outdoor activities and exploration of the island's remote, ethereally beautiful regions, hotels are popping up far and wide, instead of once being concentrated in the capital Reykjavik. There are many unique airbnbs available, allowing guests to feel at home like the locals, but if luxury is more your style, there are many hotels now that offer different styles of accommodation, depending on your needs. So, if you're heading to the island and are stuck choosing where to stay, we've got the list of the best hotels in Iceland. You're welcome. 

RECOMMENDED: The best Airbnbs in Iceland

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Best hotels in Iceland

Retreat at the Blue Lagoon
Photograph: Courtesy

1. Retreat at the Blue Lagoon

The famous Blue Lagoon, a steam-shrouded, mineral-rich, lake-sized natural hot pool, features on every Iceland itinerary and can consequently feel a bit overcrowded and institutional. The new and stunning Retreat nearby offers the select few who can afford it an alternative: a private bathing lagoon of their own, along with a spa complete with lava-heated steam room. The design is soberly stylish, the atmosphere serene (no TVs!) and the ethos eco-friendly, and all the supersleek rooms offer dramatic views through picture windows.

Hotel Aldan
Photograph: Courtesy

2. Hotel Aldan

The tiny port town of Seyðisfjörður, gateway to eastern Iceland, is small but perfectly formed –mainly of buildings whose history speaks of changing ways of life. The Aldan comprises three separate hotels, the Old Bank, the Old School (now apartments) and Snæfell, a former post office, scenically set at the river mouth. All share charming vintage-chic decor, a sushi bar and a restaurant set – you guessed it – in an old shop where there is no such thing as yesterday’s fish.


3. ODDSSON Hotel

The three-star ODDSSON hotel is located in the capital, Reykjavík, less than a mile away from the Laugardalur Family Park. The ODDSSON aims to offer affordable accommodations for guests, in the perfect location and at an excellent standard. The hotel is self-check-in only with no front desk or concierge presence on site, and guests have access to virtual reception 24/7. There are 77 rooms on offer, all modern and comfortable and ranging in size depending on needs, from solo rooms to large groups with bunk beds. There's an on-site restaurant and bar for breakfast and dinner, and free Wi-Fi is offered throughout the hotel. Simple but comfortable. 

Deplar Farm
Photograph: Courtesy Deplar Farm

4. Deplar Farm

This converted sheep farm, with its stone-coloured cladding and living roof, might look unassuming, but this reflects the discretion of its wealthy clientele rather than the simple life. Quite the contrary: the gorgeous 13-room lodge offers every designer luxury you can imagine, from flotation tanks to two helipads – though, to be fair, the road journey is a bit of a schlepp. Of necessity: Deplar is in the back-country of the mountainous Tröllaskagi peninsula, a prime summer location for salmon-fishing, hiking and sea-kayaking. In winter, you can snowshoe, heli-ski or try your legs at snowcycling… or just float in the geothermal pool and watch for the Northern Lights.

ION Adventure Hotel
Photograph: Courtesy

5. ION Adventure Hotel

ION offers an accessible – geographically, if not financially – wilderness experience just 40 minutes away from Reykjavik. A stunning glass-and-grey box projecting from the hillside over lava fields, it’s a design retreat of the highest order, and sustainably built, to boot. A variety of adventure, sightseeing and wildlife tours can be done from the door; on your return you could relax with an Icelandic-herb massage or enjoy Nordic cuisine in the distinctly non-rustic restaurant/bar.

Hotel Borg
Photograph: Courtesy

6. Hotel Borg

Reykjavik’s first luxury hotel, which opened in the 1930s, still trails the rest in its elegant Art Deco wake. The grand white building houses a spa, gym, plenty of period detail and a ‘Jamie’s Italian’ restaurant. Rooms are silvery taupe in tone, Deco in style and equipped with the usual high-end comforts. Great central location and good views, particularly from the suites (Northern Lights watchers please note).

Akureyri Backpackers
Photograph: Courtesy

7. Akureyri Backpackers

One of Iceland’s nicest hostels (with private rooms, too) is in its second city, Akureyri, the capital of Northern Iceland province. It’s pretty and pristine, and well located among the cafes and restaurants of the main street next to the port, where you might spot a visiting whale. A good base for trips to Lake Mývatn and into the northern wilderness, along with whalewatching and Northern Lights tours.

8. Kex Hostel

Even if you’re normally a hotel habitué, given Iceland’s volcanic accommodation prices it can make good financial sense to bed down in a hostel. Especially one as good as this Reykjavik staple (and note that it offers private rooms). Kex is a former biscuit factory, welcoming, atmospheric and eclectically furnished in a louchely hip style. At its heart is a gastropub; there’s also a gym, communal kitchen, tour desk and even a vintage-style tiled barbershop.

UMI Hotel
Photograph: Courtesy

9. UMI Hotel

As grey, stark and geometric as the landscapes it inhabits, the low and long UMI is about inhospitality outdoors and hospitality within. It’s located along a dramatic stretch of black-sand beaches, surrounded by windswept heath and backed by granite crags. Inside, the public areas are clean and elegant, with huge windows bringing the outside in; imaginative cocktails and toddies from the bar will warm you up if the bleakness gets too much. Rooms are simple, but they have all you’ll need, and prices are keen. There’s a good on-site restaurant and staff are notably friendly.

105 – A Townhouse Hotel
Photograph: Courtesy

10. 105 – A Townhouse Hotel

Forego some full-service hotel perks and stay at this apartment/hotel hybrid to get a stylish room with good facilities for a really reasonable price. Reception closes in the afternoon, but there’s an easy key-pickup system, and the location, a 15-minute walk away from the centre, brings with it free parking. The kitchenettes are clever, cute and fully specced and in the attic studios the comfy beds nestle in a romantic nook. Ask nicely for a view over the harbour.

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