Iceland Accommodation Guide

Types of Accommodation

Iceland offers a surprisingly wide range of accommodation options, from world-class luxury hotels in Reykjavik to bare-bones mountain huts on remote highland tracks. What the country lacks in budget options by European standards, it makes up for in variety and the sheer quality of its settings. A modest guesthouse on the South Coast might not rival a Parisian boutique hotel on amenities, but the view of glaciers from your breakfast table is hard to beat.

At the top end, expect to pay 50,000 ISK or more per night for upscale hotels with spa facilities, fine dining, and designer interiors. The mid-range sweet spot sits between 25,000 and 45,000 ISK for clean, comfortable hotel rooms and well-run guesthouses, typically with private bathrooms and breakfast included. Budget travellers can bring costs down significantly with hostels (6,000-15,000 ISK), camping (1,500-2,500 ISK), or self-catering vacation rentals.

One important note for visitors from continental Europe or North America: Icelandic accommodation standards are generally high, but rooms tend to be smaller and more functional than what you might expect for the price. This is not a reflection of quality -- it is simply the reality of building and operating in one of the world's most expensive countries. What you are paying for is cleanliness, warmth, location, and access to landscapes that exist nowhere else on earth.

The accommodation landscape also varies dramatically by region. Reykjavik has hundreds of options across every price point. Popular tourist corridors like the South Coast and Golden Circle are well served. But venture into the Westfjords, East Fjords, or the interior highlands and your choices narrow sharply. Planning ahead is not just advisable in these areas -- it is essential.

Regardless of where you stay, a few things are consistent across Iceland. Wi-Fi is almost universally available, even at basic campsites and rural guesthouses. Tap water is drinkable everywhere -- some of the purest in the world, fed by glacial aquifers and volcanic filtration. Power sockets follow the European standard (Type C and F, 230V). And tipping is not expected or customary in Icelandic accommodation, though it is always appreciated for exceptional service.

Hotels & Guesthouses

Reykjavik is home to international hotel chains including Hilton, Marriott, and Radisson, alongside a growing number of Icelandic boutique hotels. Outside the capital, the accommodation landscape shifts to family-run guesthouses, country hotels, and small inns that form the backbone of Icelandic hospitality. These range from modern, purpose-built lodges to converted farmhouses with a handful of rooms and a host who cooks your breakfast from local ingredients.

Guesthouses in Iceland almost always include breakfast, which is a significant money-saver given restaurant prices. A typical Icelandic breakfast spread features bread, butter, cheese, cold cuts, skyr (the thick Icelandic dairy product), cereal, eggs, and strong coffee. Some country guesthouses go further with homemade jams, fresh-baked bread, and smoked fish or lamb. Hotels in Reykjavik may or may not include breakfast -- check before booking, as a hotel breakfast buffet can cost 3,000 to 4,500 ISK if purchased separately.

Hot tubs are a defining feature of Icelandic accommodation outside the capital. Many guesthouses and country hotels have outdoor geothermally heated hot pots where you can soak under the stars after a long day of driving and hiking. This is not a luxury add-on -- it is part of the Icelandic way of life and one of the genuine highlights of staying in rural Iceland.

Expect to pay 25,000 to 50,000 ISK per night for a standard double room with private bathroom in a guesthouse or mid-range hotel. Prices climb steeply in summer, particularly along the popular South Coast and Golden Circle routes. Some upscale country hotels charge 60,000 ISK or more. Booking directly with the property sometimes yields better rates than third-party sites, and many smaller guesthouses prefer direct bookings.

Hostels

HI Iceland (Hostelling International) operates a network of hostels scattered across the country, from Reykjavik to remote locations like Vestmannaeyjar and Hofn. These are the backbone of budget travel in Iceland, offering dormitory beds from 6,000 to 10,000 ISK and private rooms from 12,000 to 15,000 ISK per night. Non-HI members pay a small surcharge but can still stay at any location. The hostels are clean, well-maintained, and staffed by people who know the local area.

Kitchen access is one of the biggest advantages of staying in hostels. Self-catering is the single most effective way to control costs in Iceland, and every HI hostel has a communal kitchen with pots, pans, utensils, and a fridge. A trip to Bonus, Kronan, or Netto supermarket for pasta, sauce, bread, and cheese can feed you for a fraction of what a restaurant meal costs. Many experienced Iceland travellers use hostels specifically for the kitchen, even when they could afford hotels.

Beyond the HI network, independent hostels and budget guesthouses have expanded rapidly in recent years, particularly in Reykjavik and Akureyri. Some of these lean more toward the boutique end, with private rooms, stylish common areas, and organised social events. For solo travellers, hostels are an excellent way to meet other people exploring Iceland -- the common rooms and kitchens naturally foster conversation and shared travel tips.

Location is a key advantage of HI Iceland hostels. They are strategically placed at intervals around the Ring Road and in popular tourist areas, making them natural stopping points on a driving itinerary. The hostels at Vik, Hofn, Akureyri, and Seydisfjordur are particularly well positioned. Most can be booked through the HI website or through standard platforms like Booking.com and Hostelworld. In summer, reserve at least two weeks ahead -- popular hostels outside Reykjavik fill quickly, and some have fewer than twenty beds total.

Farm Stays

Staying on a working Icelandic farm is one of the most rewarding accommodation experiences the country offers. Iceland has a long tradition of rural hospitality, and farm stays connect visitors directly to the agricultural life that has sustained the nation for over a thousand years. You might wake to the sound of sheep outside your window, eat breakfast made from ingredients produced on the property, and spend the evening watching horses graze against a backdrop of mountains and glaciers.

Icelandic Farm Holidays is the main booking platform for farm stays across the country, listing everything from simple rooms in working farmhouses to polished country lodges on agricultural land. You can also book many farms directly through their own websites. Expect to pay 15,000 to 30,000 ISK per night for a double room, with breakfast typically included. Some farms offer sleeping bag accommodation at lower rates -- you bring your own sleeping bag and use a bed without linen.

Horse riding is available at many farm stays, either as short rides around the property or multi-hour treks through the surrounding landscape. The Icelandic horse is a unique breed known for its additional gait, the tolt, and riding one through Icelandic scenery is a singular experience. Farm stays also work exceptionally well for families -- children can meet animals, explore open spaces, and experience a pace of life far removed from city routines.

The quality and character of farm stays varies widely. Some are basic rooms with shared bathrooms in a farmhouse where the family lives on the other side of the wall. Others are renovated cottages with private facilities and hot tubs. Read reviews carefully and manage expectations accordingly, but almost universally, the hospitality and warmth of Icelandic farm hosts leave a lasting impression.

Camping

Camping is by far the most affordable way to travel Iceland, and the infrastructure to support it is excellent. More than 170 registered campsites operate across the country, concentrated along Route 1 and in national parks. The camping season runs from late May through mid-September, though a handful of sites near Reykjavik remain open year-round. Campsite fees range from 1,500 to 2,500 ISK per person per night, making it possible to cut accommodation costs by 80% compared to hotels.

Facilities vary enormously between sites. The best campgrounds -- particularly those in Thingvellir, Skaftafell, and at larger towns like Vik and Akureyri -- offer hot showers, cooking shelters, laundry machines, electricity hookups, and even small shops. Basic rural sites may provide nothing more than a flat grassy area and a toilet block. Regardless of the facilities, Icelandic campsites are generally clean and well-maintained. Arriving early in the day secures better spots, especially in popular locations during July and August.

The Camping Card is one of Iceland's best travel deals. For approximately 22,000 ISK, the card covers 28 nights of camping at participating sites across the country. If you plan to camp for more than nine nights, the card pays for itself. It covers up to two adults and four children, making it particularly good value for families. Purchase the card online before your trip or at major campsites upon arrival.

Wild camping in Iceland requires more nuance than many visitors realise. Technically, you may camp on uncultivated land with the landowner's permission, staying no more than one night in any location. However, wild camping is strictly prohibited in national parks, nature reserves, and on cultivated land. In practice, the Icelandic authorities strongly encourage all campers to use designated campsites to protect fragile ecosystems. If you do camp outside established sites, leave absolutely no trace -- pack out all waste and avoid lighting fires.

Gear rental is readily available in Reykjavik if you do not want to fly with camping equipment. Several outfitters rent tents, sleeping bags, cooking stoves, and mats at reasonable daily rates. Renting locally saves luggage space and airline baggage fees, and means you get gear suited to Icelandic conditions -- a three-season tent rated for wind is far more appropriate here than a lightweight festival tent. Book rental gear in advance during summer months, as popular items sell out.

Airbnb & Vacation Rentals

The vacation rental market in Iceland has exploded over the past decade, and Airbnb listings now number in the thousands across the country. In Reykjavik, you can find everything from studio apartments in the city centre to suburban houses with multiple bedrooms. In rural areas, listings range from modern cottages to remote cabins accessible only by gravel road. The variety is a genuine asset for travellers who want more space, privacy, or a kitchen for self-catering.

Self-catering through a vacation rental is one of the most effective strategies for managing food costs in Iceland. A well-equipped kitchen means you can prepare your own meals using supermarket ingredients, potentially saving thousands of kronur per day compared to eating every meal in restaurants. For groups and families, renting a single house or large apartment is often cheaper per person than booking individual hotel rooms.

Book well in advance for summer stays, particularly for popular areas like downtown Reykjavik, the Golden Circle region, and the South Coast. The best properties are claimed months ahead. Also be aware that Iceland has introduced regulations governing short-term rentals -- hosts must be registered and there are limits on how many days per year a property can be rented. This has brought more professionalism to the market, but it also means fewer casual listings than you might find in other countries.

Remote cabins deserve a special mention. Some of the most memorable accommodation experiences in Iceland come from renting a standalone cabin in a location with no neighbours, no light pollution, and nothing between you and the landscape. These properties are scattered across the highlands, along fjords, and in valleys far from any town. They typically sleep two to six people, come with basic kitchen facilities, and may rely on geothermal hot water and limited electricity. For couples or small groups seeking solitude, a remote cabin for two or three nights is an unforgettable splurge.

Where to Stay by Region

Choosing where to base yourself in Iceland depends entirely on your itinerary, and spreading your stays across multiple regions is far better than commuting from a single base. Each region has a different character, and the accommodation options reflect the local landscape and community.

Reykjavik

Reykjavik offers the widest choice of accommodation in Iceland by a considerable margin. You will find international hotels, boutique properties, hostels, and hundreds of Airbnb listings. The city is the natural base for your first and last nights in the country, and for day trips to the Golden Circle and Reykjanes Peninsula. Book central accommodation on Laugavegur or in the 101 postcode to walk to restaurants, bars, and cultural attractions.

South Coast

The South Coast corridor from Selfoss to Hofn is the second-best-served region, with accommodation concentrated in Vik, Kirkjubaejarklaustur, and Hofn. Guesthouses and farm stays dot the route between towns. Vik is the natural midpoint for an overnight on a two-day South Coast trip, while Hofn is the gateway to Vatnajokull National Park and the glacier lagoons.

North Iceland

The North centres on Akureyri, Iceland's second city, which has a good range of hotels and hostels. Myvatn is another accommodation hub with guesthouses and camping suited to exploring the volcanic landscapes nearby. The Diamond Circle route through the north is well served with places to stay at Husavik, Myvatn, and Dettifoss area.

East Fjords

The East Fjords are quieter, with Egilsstadir serving as the main hub and the artistic town of Seydisfjordur offering a handful of charming guesthouses. Small fishing villages along the coast have individual guesthouses that provide intimate, unhurried stays far from the tourist crowds.

West Iceland & Snaefellsnes

The Snaefellsnes Peninsula has accommodation in Stykkisholmur and Grundarfjordur, both well positioned for exploring Kirkjufell, Snaefellsjokull glacier, and the peninsula's coastal villages. Borgarfjordur in West Iceland has farm stays and country hotels near Hraunfossar and Deildartunguhver.

Westfjords

The Westfjords have the most limited accommodation options in Iceland. Isafjordur is the only town with a meaningful choice of hotels and guesthouses, and elsewhere you may find a single guesthouse serving an entire valley or fjord. If you plan to explore the Westfjords, book every night before you leave Reykjavik -- driving between towns hoping to find a room is a genuinely risky strategy in this region, especially from June through August when the few available beds fill quickly.

Booking Tips

The single most important booking rule in Iceland is simple: book summer accommodation three to six months in advance. June through August is peak season, and popular properties along the Ring Road sell out months ahead. This is especially critical outside Reykjavik, where the number of beds in small towns and rural areas is genuinely limited. Waiting until the last minute in July often means either paying inflated rates for whatever remains or rearranging your entire itinerary.

Winter travel (October through April) is far more relaxed. Outside holiday periods like Christmas and New Year, you can often find accommodation with just a few days' notice, sometimes at significantly reduced rates. Shoulder seasons -- May and September -- offer a middle ground with more availability than peak summer but better weather and longer daylight than deep winter. These months represent excellent value for flexible travellers.

Booking.com is the dominant platform for Icelandic accommodation, but direct booking through a property's own website sometimes yields lower prices and more flexible cancellation terms. For guesthouses and farm stays, a direct email or phone call may also open up rooms not listed on major platforms. Always check cancellation policies carefully, as some smaller properties charge full fees for late cancellations.

Watch for hidden costs that can inflate your bill beyond the quoted room rate. Some hotels add peak-season surcharges that are not immediately obvious during booking. Breakfast may or may not be included. Sleeping bag accommodation -- where you supply your own sleeping bag and the property provides only a mattress -- is cheaper but requires you to either bring or rent a sleeping bag. Laundry facilities, where available, often charge 500-1,000 ISK per load.

Budget Breakdown

Understanding the true cost of accommodation in Iceland requires looking beyond the nightly rate. A week of hotel stays at an average of 35,000 ISK per night totals 245,000 ISK (roughly $1,780 USD) for accommodation alone. Switching to hostels at 8,000 ISK per night drops that to 56,000 ISK ($405 USD). A week of camping at 2,000 ISK per night costs just 14,000 ISK ($100 USD). The difference between these options can fund an entire extra week of travel or several premium experiences like glacier hikes and whale watching.

Hidden costs add up quickly regardless of which accommodation type you choose. Sleeping bag rental from a Reykjavik outfitter runs 1,000 to 2,000 ISK per day if you need one for hostels or camping. Breakfast, when not included, costs 2,500 to 4,000 ISK at a hotel restaurant. Laundry runs 500 to 1,000 ISK per load at campsites and hostels. Parking at Reykjavik hotels can add 2,000 to 3,000 ISK per night. These costs are manageable if anticipated, but they can surprise travellers who budget only for the room rate.

The most effective money-saving strategies combine accommodation choices with food planning. Stay in hostels or vacation rentals with kitchens and cook your own meals from supermarket ingredients. Use the Camping Card if you plan to camp extensively. Mix accommodation types -- camp on clear nights, switch to a guesthouse when weather turns rough, and treat yourself to a hotel with a hot tub when you need to recharge. This flexible approach keeps daily costs between 8,000 and 20,000 ISK per person while maintaining comfort and variety.

For a realistic weekly budget comparison, here is what to expect per person:

• Hotel trip (7 nights): 350,000-500,000 ISK total including accommodation, dining out, fuel, and activities
• Hostel trip (7 nights): 150,000-220,000 ISK with self-catering and selective dining
• Camping trip (7 nights): 80,000-130,000 ISK with supermarket meals and Camping Card
• Mixed approach (7 nights): 180,000-280,000 ISK combining 2-3 nights hotel, 2 nights hostel, 2-3 nights camping

These figures assume a rental car, which is a fixed cost regardless of where you sleep. The accommodation choice is where your budget has the most flexibility, and mixing accommodation types throughout your trip gives you both comfort and savings.