Where to stay in Iceland: areas & booking tips

 Staying in Iceland can feel just as varied as the landscape itself. You’ll find everything from simple farm stays with homemade bread in the morning to sleek hotels with floor-to-ceiling windows facing the Northern Lights. Here’s our guide to booking your accommodation in Iceland.

Where to stay in Iceland: from budget to luxury

Iceland has a wide range of accommodation, and prices generally match the location and comfort level. On the lower end, hostels and simple guesthouses are usually the best choice. You’ll usually get a clean room, WiFi, access to a shared kitchen, and maybe a basic breakfast – all of which helps when food prices are high.

At mid-range Iceland accommodation, you’ll find standard hotels and nicer guesthouses with private bathrooms, buffet breakfasts, and sometimes hot tubs fed by geothermal water. Many places also use local ingredients and feature Icelandic design details.

Luxury hotels tend to have big views, New Nordic menus, and extras like private decks for watching the Northern Lights or access to quiet hot pools. Iceland’s hotel rating system is stricter than in many other countries, so a 4-star hotel might feel more upscale than you’d expect.  Where you stay is a big part of planning your Iceland itinerary.
 

Best accommodation types in Iceland

There’s no one right way to stay in Iceland—it really depends on your budget, your route, and how close to nature (or comfort) you want to be. Here’s what you’ll come across most often.

Guesthouses

From 12,000 ISK ($85 USD) per night

Guesthouses, or gistiheimili, are usually small, family-run places that feel more personal than hotels. A lot of them are converted homes with shared spaces, so you might end up chatting with the owners or other travelers over coffee. There are some of the best places to visit in Iceland.

Breakfast is often homemade—skyr, warm bread, and local jam are common. Outside of the cities, some guesthouses also make dinner, usually something simple and traditional. If you're curious about day-to-day life here, this is a low-key way to get a sense of it.

Hotels

From 18,000 ISK ($125 USD) per night

Hotels in Iceland tend to be clean and well-run, often with that classic minimalist design—big windows, natural materials, and fireplaces in the lounge. Rooms are usually heated geothermally, and breakfast often includes local produce.

You’ll find the most options in Reykjavik and the bigger towns, but more boutique hotels are starting to pop up in rural areas too.

Cabins and cottages

From 15,000 ISK ($105 USD) per night

If you’re interested in quiet and wide-open views, renting a cabin can be a great way to go. They range from pretty basic to upscale, but most come with kitchens, heating, and often a hot pot (a small outdoor hot tub). It’s hard to beat soaking outside while watching the sky shift colors. 

Some cabins come stocked with linens and basics, but not all—so check ahead. In winter, be sure the cabin is reachable if snow hits hard. See our guide to how to plan a trip to Iceland for a step-by-step guide to planning your trip.

Camping and campervans

From 2,500 ISK ($18 USD) per night for campsite fees

Camping is one of the most budget-friendly ways to stay in Iceland, but it takes some prep. Campsites vary a lot—some have just a bathroom, while others have kitchens and hot showers.

Fees are usually charged per person, and you’ll pay extra if you need electricity. Wild camping isn’t allowed in most of the country anymore because of environmental concerns.

Campervans are another option and make it easy to explore without sticking to a fixed route. Just keep in mind that even summer nights can get cold, and weather can turn fast.

Glamping

From 20,000 ISK ($140 USD) per night

If you like the idea of being out in nature but still want a proper bed and a warm room, glamping might be the way to go. In Iceland, this usually means heated domes with clear panels for stargazing, canvas tents with bathrooms, or yurts with wood stoves.

They're usually set in quiet, remote areas—ideal if you're hoping to catch the Northern Lights. Some places even have extras like outdoor hot tubs or telescopes. Most glamping setups run from May through September, though a few stay open in winter if they’re well-insulated.

Luxury resorts and spas

From 45,000 ISK ($315 USD) per night

If you're looking for comfort and don't mind the splurge, Iceland has a few high-end resorts that really lean into the landscape. Some are built near Iceland geothermal pools and come with full spa facilities that use local ingredients like volcanic clay or seaweed.

Design tends to be minimal, with huge windows that frame the surroundings. Restaurants usually serve modern Icelandic dishes using ingredients from nearby farms or waters. At the very high end, you can expect things like private guides, helicopter rides, and dinners cooked just for you in remote places.

Farm stays

From 14,000 ISK ($98 USD) per night

Farm stays give you a closer look at rural life in Iceland. These are working farms—usually with sheep, horses, or cows—and you'll stay in a guest room, cabin, or maybe a converted barn.

Some hosts let you help with daily tasks like collecting eggs or feeding animals, and in the fall you might get to watch or even join in the annual sheep round-up. Meals are often made with ingredients from the farm itself, like lamb or homemade dairy.

Highland huts

From 8,000 ISK ($55 USD) per night

If you're hiking in Iceland’s interior, highland huts are one of the few ways to stay out there. These are simple shelters along popular trails—bunk beds, shared spaces, maybe a stove, and not much else.

You’ll need to bring your own sleeping bag, and there usually aren’t showers. Drinking water comes from nearby streams (see our Iceland travel health tips for more on that). It’s very basic, but being able to sleep out in that landscape is the real draw. The huts are only open in summer and tend to book up fast.
 

Igloos and ice hotels

From 35,000 ISK ($245 USD) per night

These aren’t native to Iceland like they are in Finland or Canada, but a few companies have started setting up winter igloos and ice stays around the country.

The clear “bubble” igloos are probably the most well-known—you sleep in a see-through dome so you can watch Iceland's Northern Lights overhead. Some places also build short-term ice structures in the north, mostly for the novelty.

You usually sleep in a super-warm sleeping bag, but in some cases, there’s a heated cabin nearby where you can warm up or even spend the night.

Eco-lodges and sustainable stays

From 20,000 ISK ($140 USD) per night

Eco-lodges in Iceland are built with sustainability in mind, often using local or reclaimed materials and powered by renewable energy like geothermal or hydro. Many try to reduce waste and water use and serve food that’s local and organic when possible.

These stays tend to be in quiet, scenic areas where the idea is to feel more connected to the environment. A few even run optional activities like foraging walks, hands-on workshops, or volunteer days with local conservation efforts.
 

Average prices per night

Prices swing pretty widely depending on the season and location. Summer (June through August) is the most expensive, sometimes double the price of winter.

Reykjavik and the South Coast are the priciest areas, while the Westfjords and East Iceland usually come with lower rates.

In peak season, budget stays range from 8,000–15,000 ISK ($55–105 USD), mid-range lands between 15,000–30,000 ISK ($105–210 USD), and luxury stays can climb to 80,000 ISK ($560 USD) or more. Most places include breakfast and VAT (11%) in the price.

If you’re driving, keep in mind that parking in Reykjavik can come with extra fees. In rural areas, a two-night minimum stay is often required during busy months.

The biggest savings come from traveling outside high season—those same rooms can cost half as much in October compared to July.

Where to stay in Iceland: Best areas by region

Iceland’s accommodations tend to cluster around its major natural highlights and regional hubs, with each area giving you a slightly different experience. Some areas are good for being close to nature, while others are better for food, culture, or easy road access.

Reykjavik

This is where most people start, and it’s an easy place to get your bearings (see our sample 3-day Reykjavik itinerary). The downtown area (101) is compact and walkable, with restaurants, bars, museums, and shops all within a few blocks. 

If you want to be close to the harbor for boat tours or just like a sea view, staying near the waterfront makes sense. For cheaper places, Laugardalur is a quieter neighborhood with good bus links and the city’s biggest swimming pool. See our guide to the best areas of Reykjavik.

South Coast

This stretch is packed with famous sights like waterfalls and black sand beaches (in fact some of the best beaches in Iceland), and a lot of people base themselves here to explore the Golden Circle.

Selfoss is a practical town with everything you need and makes it easy to reach nearby attractions. Vik is smaller, but right by the sea and close to Reynisfjara, which is great if you're into landscapes and photography.

If you’re driving and want somewhere quieter, look at the smaller guesthouses and farm stays along the way—they’re usually in peaceful locations between the bigger stops.

Snæfellsnes Peninsula

This area feels like a condensed version of Iceland—coastline, mountains, lava fields—all in one place. Stykkishólmur is a good little town to base yourself, with harbor views and a ferry link to the Westfjords. Coming here is one of the best things to do in Iceland.

Arnarstapi is great if you're planning to hike near Snæfellsjökull, and the coastal views are really memorable. Hellnar is tiny but peaceful, and it’s a nice place to stay if you want something low-key. Just be aware that places here can book up, especially in summer.
 

Westfjords

This is one of the quietest parts of the country, and it takes a bit longer to get to, but it’s worth it if you’re looking for dramatic landscapes and fewer crowds. 

Ísafjörður is the main town and has a mix of restaurants, shops, and older buildings that have been turned into guesthouses.

Patreksfjörður is smaller but puts you near places like Rauðisandur beach and the sea cliffs where you can see birds nesting in summer. Around the region, you’ll find small places to stay in villages or on farms—often you’ll be the only guest, which can feel pretty special.

North Iceland

Akureyri is the main town up north and has a relaxed vibe, plus restaurants and shops. It’s a good base if you want town comforts while still being close to nature. 

Húsavík is known for whale watching, and there are some small places to stay near the harbor. If you're heading to Lake Mývatn, you’ll find places with views of the lake or near geothermal areas—good if you’re into walking, birdwatching, or just being near interesting landscapes.
 

Booking tips and travel advice

Planning where to stay in Iceland takes a bit of foresight, especially if you’re visiting in summer or heading to remote areas. Weather, road conditions, and demand all play a role, so booking early and staying flexible makes a big difference. Here are some Iceland travel tips when considering your accommodation:

• Book 3–6 months ahead for summer trips. June through August is high season and arguably one of the best times to visit Iceland. The South Coast, or Snæfellsnes, tends to fill up fast. Winter trips are a bit easier to plan last-minute, but if you're going during Northern Lights season (September–March), it’s still smart to book early, especially in rural areas. 
• Check cancellation policies. Weather in Iceland can be unpredictable. Roads close, flights get delayed, and plans can shift quickly. Look for places that let you cancel 24–48 hours in advance—just in case a storm or eruption changes your route.
• Pick location over luxury if you’re road-tripping. Being close to where you want to explore saves time and stress. A simple guesthouse in Vík might be a better call than a high-end hotel in Reykjavik if it cuts out long drives on icy roads.
• Double-check winter readiness. If you’re heading somewhere rural in colder months, make sure the place has proper heating, good insulation, and backup power. Some cabins don’t operate in winter, and a few can only be reached with a 4WD vehicle.
• Think about meals when comparing prices. Food can be expensive, and options are limited outside of towns. Places with kitchens—or those that include meals—can help you stretch your budget. A big farm breakfast can easily carry you through until dinner.
• Book highland huts through official channels. If you’re planning to hike and stay in the highlands, you’ll need to reserve huts in advance through groups like the Iceland Touring Association (Ferðafélag Íslands). These huts have limited capacity and sell out quickly during hiking season.
• Check seasonal road conditions. Some areas, like the Westfjords or interior highlands, may be off-limits in winter due to closed roads. Check road.is for updates and confirm with your host before booking anything in more remote areas.
• Look for places with geothermal access. Some guesthouses and cabins have their own hot pots or access to natural springs. After a cold, windy day out, soaking in a warm pool can really hit the spot and is sometimes worth the extra cost.