Where to Stay in Reykjavík, Iceland: A Frequent Visitor Shows You the Best Hotels & Neighborhoods

Reykjavík is a city I keep returning to. Sometimes, I do so as part of a bigger trip in Iceland. But on other occasions, I will happily stop over for a day or two when flying back to Europe from the US. I’ve been to Iceland’s capital 6 times (so far), and know a thing or two about choosing where to stay in Reykjavík.

During my trips to the city, I have stayed in all kinds of accommodation: Hostels, hotels, apartments, you name it. Some of these have been great, and others? Not so much. All of these experiences have resulted in me being much better at picking places to stay these days, and today, I’m sharing this information with you. 

In this complete guide, I’ll give you all the information you need for choosing a place to stay in Reykjavík. Besides outlining the best hotels and whatnot, I’ll also describe each area. While the city is small, where you stay will make a huge difference. You’ll also learn what to expect and more.

The Best Places to Stay in Reykjavík: My Overall Top Recommendations

In this section, I’ll share a handful of hotels I think are worth staying in when you visit Reykjavík. Once you’ve read through these, you should have a better idea of what might be the best option for your needs. 

1. Alda Hotel: Best Overall Stay in Reykjavík

My girlfriend and I stayed at Alda Hotel on a trip to Iceland in April 2024, and I was really happy with it. We actually had debated between 5-10 hotels before that, but this turned out to be a good choice. It’s on Laugavegur, the main shopping street, so it could not be more centrally located. 

Despite being right in the city center, we found that Hotel Alda was actually very quiet. We heard no noise from the streets outside, even on a Saturday night. It was also easy to walk around Reykjavík itself as we went to explore the city’s highlights. 

We paid around $190 per night for our room, which—for a four-star hotel in the center of Reykjavík—is reasonable. Our room was relatively spacious for a hotel room, and we also had a comfortable bed. A big shower was a nice bonus, especially after coming back from a day of traveling around places like the Golden Circle. 

The only real annoyance was that parking nearby was difficult. We found one spot, but this was taken the next day, and we therefore needed to park a bit further out. This is the part and parcel of staying in the city center, though; for us, we didn’t mind the trade-off. 

KEX Reykjavík: Best Place to Stay in Reykjavík for Budget & Solo Travelers

I stayed at KEX, which is a hostel and hotel, on my first trip to Reykjavík back in 2018. I was visiting overnight on my way back from visiting New York City, and I wanted somewhere simple and affordable to stay. I had heard a lot of good things about this place, and it very much lived up to my expectations. 

I stayed in a dorm here, and I was pleasantly surprised at how comfortable my bed was. I stayed in *a lot* of hostels in my early twenties, and I know all too well that comfortable bedding is by no means guaranteed. The bar was also really nice, and it’s actually a place that lots of locals also go to. 

KEX is probably the most charming budget-friendly accommodation you’ll find in Reykjavík. I also really like its location along the riverfront, which has stunning views toward the nearby mountains. My only gripe with the hostel rooms was that the showers were pretty small, but this wasn’t a deal-breaker for me at the time. 

3. Hilton Reykjavík Nordica: A Solid Choice Close to Downtown Reykjavík

After exploring Iceland’s South Coast on one previous trip, my girlfriend and I stayed at Hilton Reykjavík Nordica for a night before heading back to Copenhagen. We wanted to stay a bit outside the city center, but at the same time, we also wanted to be close enough to walk. 

Hilton Reykjavík Nordica met our needs in this respect. It’s just outside Downtown Reykjavík, but we could easily walk into town for dinner. We also had enough time to do a bit more exploring the following morning before catching our flight. 

One big perk of this hotel is that it has free parking. These spaces were limited, but we didn’t have issues finding one. You may struggle a bit more if you’re visiting in the high season, though, so keep this in mind. 

Our room was pretty nice, though it definitely could have done with a facelift. The views weren’t anything to shout home about, since it overlooks a busy street. There was also some noise, but it wasn’t anything unmanageable (even for me, who is very sensitive to noise). You’ll also find family rooms here. Everything else about our stay was nice, and the staff were polite. Note that we needed to pay a deposit at the reception; I got this back around a month later.

Where to Stay in Reykjavík: A Breakdown of Each Area

While I’ve outlined my recommendations for specific places to stay in Reykjavík, you might also want to know more about each area. Since there’s no such thing as a “dangerous” area in the city, convenience will be your main reason for choosing a specific district. I’ve outlined the main districts in and around Reykjavík below.

Downtown Reykjavík / Reykjavík 101

Downtown Reykjavík, also known as 101 because of its postcode, is where most of the city’s hotels are located. You’ll find most of the best things to do in Reykjavík here, both in terms of attractions and places to eat and drink. 

I recommend spending a good chunk of time in Downtown Reykjavík anyway, even if just for its pretty streets and great restaurants. But if you choose to base yourself here, you’ll be within walking distance of basically all the main tourist attractions. Many tours will pick you up from within Downtown Reykjavík, too. 

Staying in Downtown Reykjavík does, however, have its downsides. I’ve already mentioned that parking is difficult to find here. This can get exhausting if you’re basing yourself in Reykjavík for the entire trip. 

Beyond that, Downtown Reykjavík’s main streets are pretty crowded with tourists. If you like retreating to a neighborhood without crowds after exploring, this might not be the best place to stay for you. In many cases, though, it’s a solid choice. 

The Old West Side

Reykjavík’s Old West Side is mainly residential. It’s to the west of the Tjörnin pond, and I’ve stayed in this part of the city a couple of times. The main advantage is that it’s quiet and within walking distance of Downtown Reykjavík. 

For the sake of convenience, I’m also counting the Old Harbor as part of the Old West Side. This is where whale-watching tours in Reykjavík depart from, and it’s therefore convenient if you plan to take one of those. 

The main drawback of the Old West Side is that there isn’t much accommodation here. You’ll find some guesthouses and hotels, but nowhere near as many as in Downtown Reykjavík. While the fact that it’s quiet is beneficial for some visitors, it might not be for others. 

The Waterfront, Including Tún

When I refer to the waterfront, I’m mainly talking about the stretch from the Reykjavík EDITION Hotel and Harpa Concert Hall up to Tún. If you’re looking for the best views in town, this is the absolute best place to stay. You’ll be right next to the North Atlantic Ocean, with stunning views of Mount Esja in the background. 

Tún is Reykjavík’s main business district, and you’ll find a handful of hotels here. I stayed in Hotel Cabin once, and it’s also where you’ll find Fosshotel Reykjavík. Despite being outside the city center, it’s very easy to walk into town. 

Another advantage of staying in this part of Reykjavík is that you can easily get out of the city without needing to drive through the center’s narrow streets. 

Laugardalur

Laugardalur is a pleasant residential area, and I stayed here when I visited Iceland for the Midnight Sun Run in 2019. It’s where you’ll find one of the city’s main hot springs, along with the national soccer stadium. 

There are a handful of hotels and hostels in this part of Reykjavík, but most accommodation will be apartments. Many tours will pick you up from bus stops here, as a nice bonus. 

Laugardalur is a reasonable distance outside Reykjavík’s city center, but it’s still walkable. If the weather doesn’t play fair, or you’re feeling tired, you can also take the bus into town. 

Close to BSÍ and Reykjavík Domestic Airport

The BSÍ Bus Terminal and Reykjavík Domestic Airport are close to each other on the outskirts of Reykjavík’s downtown area. You’ll find the ultra-cool Perlan Museum around here, too. 

You will use Reykjavík’s Domestic Airport if you’re flying to another part of the country. I also used it myself when taking a day trip to Greenland in 2019, though sadly, this tour doesn’t seem to run anymore. 

As for BSÍ, many buses to and from Keflavík Airport will stop here. On top of that, a lot of tours will also depart from the bus terminal. So, staying nearby is ideal if you’re mainly going to be taking tours when you visit Iceland. 

While Reykjavík’s Domestic Airport doesn’t serve a huge number of flights, I have to say that I do sometimes find the sound from planes taking off and landing quite annoying. So, if you’d feel the same, keep this in mind. 

The Outskirts of Reykjavík

My girlfriend and I actually considered this on one of our trips to Iceland. However, we decided against it. I would also not recommend staying here unless you’re exploring the Reykjanes Peninsula or have an early flight, since it’s a 45-minute drive into Reykjavík. If either of those applies to you, though, it can be a good place to stay. 

Important Things to Know When You Book Accommodation in Reykjavík

Besides showing you the hotels and districts worth staying in, I also wanted to give you some extra tips for booking accommodation in Reykjavík. 

1. If You’re Taking a Tour, Check if You Can Get Picked Up From Your Hotel

On each of the times that I’ve visited Iceland without a car, I’ve based myself in Reykjavík. While you can’t see the whole country by doing that, you can take day tours to numerous places, such as the Golden Circle and Snæfellsnes Peninsula. 

When you book a tour that starts in Reykjavík, you can often choose to get picked up from a bus stop near a hotel. If you’re planning to stay in the capital but take tours, I strongly recommend checking to see if you’re based near a pick-up spot for the tour. 

Even if you’re staying in accommodation other than a hotel, you should still check to see if you can get picked up nearby. If you can’t, your best option will be to choose the BSí Bus Terminal—Reykjavík’s main bus terminal—for pick-up. This also includes when getting transport to and from Keflavík Airport. 

2. Parking in Downtown Reykjavík Is Not Fun. At All.

Driving is the best way to get around Iceland, and I strongly recommend renting a car if you want to see as much of the country as possible. Having one is especially important if you plan to drive around the Ring Road.

In most of Iceland, parking spots are easy to come by. You’ll have to pay for them at the main tourist spots (such as Skógafoss), but you won’t struggle to find one. However, parking in Downtown Reykjavík is—to put things bluntly—challenging. 

How much you pay for overnight parking in Reykjavík will depend on the zone you’re in. You’ll find a map of tariff zones on this page, and a rundown of their associated costs here. Unfortunately, not all hotels include free parking; this is especially true in Downtown Reykjavík. Even those that do will sometimes not have sufficient parking spots. 

If you don’t want to pay for parking, your best options are to find a place to stay on the outskirts of Downtown Reykjavík (or something with free parking included). Otherwise, you can stay in the city center but park outside.

3. The Hot Water Might Smell Like Eggs

Switch on the hot water in your accommodation, and you may well get a whiff of what can only be described as the smell of rotten eggs. Don’t worry; the water isn’t contaminated. This smell actually comes from the sulfur, since Iceland is almost entirely powered by geothermal energy. 

I’ve mainly had this issue when staying in apartment rentals, but it can also happen in hotels. While it’s not the most enjoyable smell at first, you will get used to it after a few days. And when you take a shower, you won’t stink of eggs afterward. Just keep it in mind, though, as it can be initially off-putting. 

4. I’m Not Going to Sugarcoat This… Accommodation in Reykjavík Is Expensive

Reykjavík is not a cheap city, and there is no getting around this. Iceland as a whole is expensive, but Reykjavík is particularly pricey. Even “budget” stays will still cost a lot of money. 

I’ve visited Reykjavík at all times of the year, and even in the off-season, finding a place to sleep still comes with a significant price tag. Even a hostel dorm will still likely cost you at least $40 per night. 

The good news is that you will find places to stay in Reykjavík for both small(er) and big budgets. However, it will eat up a big chunk of your money for the trip. 

5. You Absolutely Should Book in Advance

Iceland is a super popular tourist destination, and many travelers either base themselves in Reykjavík or start and end their trip here. You will see this first-hand when you’re in the city center, where tourists massively outnumber locals (and yes, this is the case even outside the summer). 

Needless to say, accommodation in Reykjavík is in high demand. To get something you actually want, you should book as far in advance as possible. 

If you’re visiting Reykjavík in the summer, I suggest booking 3-6 months in advance. For those of you who’ll be in the city during the winter or other seasons, finding something 1-3 months before (minimum) is a good idea.

You can also browse accommodation options in Reykjavík via the map below. 

6. While Reykjavík Is Small, Where You Stay Can Make a Big Difference

While it is the capital of Iceland, Reykjavík itself is home to less than 150,000 people. And although it doesn’t have a huge number of neighborhoods and districts, where you stay can make a big difference. 

Again, this will largely depend on your own needs and preferences. Staying in the city center is ideal if you want to spend a lot of time in Reykjavík, but if you have a car, it can be annoying. On the flip side, you can stay a bit further out. This is ideal for getting out into Iceland’s nature more quickly, but if you want to visit Reykjavík, you’ll either need to drive or take the bus. 

7. Some Hotels May Require You to Pay a Deposit

This hasn’t happened to me on many occasions, but in some instances, I have had to pay a deposit when checking into hotels in Reykjavík. This isn’t a huge issue, since you’ll get it back if you don’t cause damage to the room. 

However, it can be annoying to pay the deposit if you didn’t know in advance. This will pretty much always be included somewhere on the booking page, and you should check to see if you’ll need to pay one. If in doubt, you can always contact the hotel as well. 

8. Reykjavík’s Accommodation Varies Significantly

I have visited each Nordic capital at least six times, and I also live in one (Copenhagen). With my experience, I can tell you with confidence that Reykjavík’s accommodation is much more varied than the others. 

Firstly, you’ll find different types of accommodation. The city has several hotels, along with hostels, guesthouses, and apartment hotels. Further out, you can also go camping. 

Beyond that, though, you will also find different levels of luxury. Some places to stay in Reykjavík will be the basics, and while usually clean, they’re not necessarily exciting. On the other hand, you’ll find some fancier places with beautiful views, spas, and other niceties. 

9. Read the Small Print Before Booking

Since Reykjavík is quite touristy, you will see excitable claims when booking some accommodation. So, if you’re booking for specific perks, I strongly recommend digging deeper to ensure that the place you’re about to book meets your expectations. 

For example, some places will claim to have mountain or volcano views. This doesn’t, however, mean that this won’t be miles away and barely visible unless it’s sunny. 

If these are deal-breakers for you, be sure to read what other people have said in the reviews. They might still be worth booking if the other aspects are good, but make sure you’re not going to feel disappointed. 

10. Space in Reykjavík Is Limited; Expect Some Quirky Solutions

When I say that Reykjavík isn’t very big, I’m talking about the actual city size in addition to its population. Space here is quite limited, especially in the main downtown area. As a result, some people have gotten creative with where accommodation is placed.

For example, I’ve stayed in places behind restaurants on some visits. On other occasions, I have stayed in a place that was in the person’s garden. These can be charming in some cases and somewhat annoying in others. 

You probably won’t have this issue with hotels, but it might be something that pops up with private rentals. I don’t actually recommend private rentals anyway, given how much of a strain they’ve caused on the local housing market. I’ve stayed in them before, but I would not do so again (and instead would choose a purpose-built apartment hotel). However, I’m not going to act holier-than-thou; if you choose to, just keep in mind that the location might be odd. 

11. Some Hotels in Reykjavík Have a Happy Hour

Alcohol is very expensive in Reykjavík, though that doesn’t stop the locals on a Friday night. Happy Hour is very popular throughout the Icelandic capital, and it’s a good way to save some money if you plan to go out. 

The good news is that in addition to many pubs and bars offering Happy Hour deals, it’s also common at hotels in the city. So, if this is important to you, it’s worth looking for when you book your accommodation. 

Tips for Finding Budget Accommodation in Reykjavík

Since accommodation in Reykjavík is expensive, I wanted to give some extra tips to help you find something more affordable. I’ve visited the city on a budget a few times, and these are some of the biggest things I’ve learned. 

1. Look for Hotels With Free Breakfast and Affordable Dinners

I’ve sometimes had breakfast included in my hotel bookings, but it’s not a given. If you find something with free breakfast, you can reduce your costs significantly. As I mentioned earlier, eating out in Reykjavík can quickly get expensive. 

Some hotels also offer affordable dinners, which are worth looking into. For example, I quite like the dinner we had when staying at Hotel Cabin in 2018. While this is very much a “you get what you pay for” hotel, the dinner helped me keep my costs down.

2. You’re Better Off, for Hotels, Looking Outside the Downtown Area

If you specifically want to stay in a hotel, I’d recommend looking for places to stay in the suburbs near Reykjavík. More often than not, doing this alone will reduce your costs. 

You can, however, stay in the city center on a budget in some instances. CityHub Reykjavík is one such option. 

You’ll really need to decide on whether convenience is more important than your style of accommodation. If you stay further out, you should also check to ensure that tours will pick you up from there (if you’re taking them). Otherwise, you’ll need to factor the bus schedule into your trip, too. 

3. Apartments Often Cost Just as Much as Hotels, if Not More

I’ve already spoken about why I’m not the biggest fan of private rentals in Reykjavík for tourists, but even if you choose them, it’s not a guarantee that you’ll save money. Much of the time, these rentals cost just as much as hotels or are marginally cheaper. 

I wouldn’t recommend staying in apartments just for the sake of saving money on your accommodation price, since this often won’t be the case. Again, you’ll find better deals if you stay further out of Downtown Reykjavík in this respect.

4. Having Access to a Kitchen Is Very, Very Useful

This sounds obvious, I know, but I can’t stress enough how expensive eating at restaurants in Reykjavík is. Groceries are hardly cheap, but cooking your own meals will still bring down your costs compared to eating out all the time. 

You’ll find several apartment hotels in Reykjavík, where you can cook breakfast and dinner—along with preparing lunch for your day trips. These are a great place to start. Booking a hostel with a kitchen is another good idea. 

At the very least, a hotel room with a fridge means that you can prepare some meals, like sandwiches. Skyr is also a nice, cheap, and cheerful breakfast that you can store in these. 🙂

5. Filter by Price, Rating, and Facilities

This one works pretty much everywhere you go, but it’s particularly true for Reykjavík. While you may want to travel on a budget, you also don’t want to stay somewhere that you really dislike. So, I’d recommend balancing price with ratings when you search for your accommodation. 

I would also recommend filtering based on the facilities that are non-negotiable to you. While a shared bathroom may not be an issue for some, for example, it will be for others. Figure out your absolute musts and go from there. 

Final Thoughts: Everything You Need to Know About Choosing Where to Stay in Reykjavík

Determining where to stay in Reykjavík will depend on your own needs, but you have plenty of options. Iceland’s capital has a good tourist infrastructure, and I always enjoy spending a few days here before either heading home or going out to explore the rest of the country. 

You’ll find several types of accommodation in Reykjavík, with some quirks that you may not be used to elsewhere. You might also find some annoyances that you’d prefer not to deal with, which is why picking a place that fits your criteria is important. 

Before booking, I recommend looking not just at the area you stay, but also that you think about your needs with tour pick-ups or parking. Now that you’ve read this guide, you can make a more confident choice. If you still have questions, feel free to drop a comment and I’ll do my best to help. 

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