20 Coolest Hotels in Iceland: Unique, Boutique, & Affordable
TRAVEL GUIDE tO SOME OF THE MOST UNIQUE HOTELS IN ICELAND!
Are you planning a trip and looking for the coolest, most unique hotels in Iceland?
Iceland is a rugged island with some of the most dramatic landscapes in the world. You’ll find a wide array of unique places to stay, which will make your trip even more memorable.
So, I’ve compiled a list of 20 unique places to stay in Iceland. The list includes boutique guesthouses, luxury hotels, rooms with epic views of the northern lights, capsule hotels, and campervans.
While some of these cool hotels in Iceland are expensive, you’ll find a good mix of more budget-friendly options, too!
I’m going to break these unique hotels up BY REGION in Iceland:
Easy Search Tool for Iceland Hotels
You can plug your dates into this interactive map to search both hotel options and rentals. It’s powered by well-known and trusted companies like Booking and VRBO.
I set the map to center on Reykjavik, but you can move it around to check out hotels all over Iceland. Also, it’s much easier to use on a desktop!
Hotels in Reykjavik
Only 375,000 people live in Iceland, and two-thirds of them live in the capital city of Reykjavik. Still, you’ll be impressed with the unique hotel options here, and across the country.
1. ION Adventure Hotel
The ION Adventure Hotel is one of Iceland’s most unique places to stay. The hotel is affordable (even though it feels like luxury) and is just a short drive from the city. This hotel is excellent for travelers seeking a peaceful retreat, but the biggest draw is the spa, which has a plunge pool, a sauna, and a geothermal pool overlooking the hills of Mount Hengill.
Booking.com Link (7.8/10 – 469 Reviews)
Another reason to stay here is the proximity to Thingvellir National Park and the Silfra Fissure, the best place to try snorkeling in Iceland.
2. Hilton Reykjavik Nordica
I love hotel breakfasts, and the Nordica has an excellent one! I’ll also recommend the amazing ice-cold vodka martinis in the bar, too! 🍸
Aside from the food (and drink) options, the Hilton Reykjavik Nordica Hotel is a beautiful place to stay in the heart of Reykjavik. It’s close to the city’s best nightlife and top attractions, yet still has stunning views of the mountains or the bay from every room.
Did I mention the delicious breakfast comes complimentary with your room?
Then in the evening, guests can head to VOX Brasserie & Bar, a cozy bar with a nordic interior design, which is popular even among people not staying at the hotel!
Booking.com Link (8.1/10 – 673 Reviews)
3. EyJa Guldsmeden Hotel
Guldsmeden is a great family-owned group of hotels, based in Scandinavia. Their Manon Les Suites property in Copenhagen is one of my all-time favorites!
Guldsmeden takes special pride in sustainability at their hotels. The EYJA Guldsmeden Hotel is a great example of an eco-friendly hotel, right in the middle of Reykjavik.
The hotel is right off the main shopping street, and next to a former bus terminal, which is now a food market.
As with all of the Guldsmeden hotels, they mix luxury with bohemian and modern styles.
If you choose to stay here, try to book a room with a view! Some have balconies overlooking the water, while others overlook the city and Esja (the mountain off in the distance).
Booking.com Link (9.0/10 – 1,645 reviews)
Best Hotels in Southern Iceland
Southern Iceland is home to some of the country’s most spectacular natural wonders. If you’re renting a car, this is sure to be a highlight of your trip to Iceland.
From the majestic waterfalls of Skogafoss (photo below) and Seljalandsfoss to the rugged cliffs of Dyrholaey, this region is full of breathtaking landscapes and outdoor adventure opportunities. It’s also accessible year-round, unlike much of the northern parts of Iceland.
Here are a few of the coolest hotels in Southern Iceland.
4. Hotel Vik Myrdal
This is a favorite for both its location (Vik is an amazing base town for all kinds of sites) and its delicious breakfast 😋
Hotel Vik Myrdal is the best hotel in southern Iceland to use as a “home” for a few days while you explore a wide range of natural wonders. Vik is about two-and-a-half hours east of Reykjavik.
You can easily visit Reynisfjara Black Sand Beach (below), the Sólheimasandur plane crash site, and the ice caves on the Katla Volcano.
For those hoping to catch a glimpse of the northern lights during their stay, Hotel Vik Myrdal also offers an Aurora Borealis wake-up call so that you won’t miss it! Keep in mind: you’re far more likely to see the northern lights in the winter months.
Inside the Hotel Vik Myrdal, guests will enjoy free wifi, free parking, rooms with a view, and most importantly: a delicious buffet continental breakfast each morning!
Booking.com Link (8.7/10 – 2444 Reviews)
5. Converted Water Tower
The Converted Water Tower is one of the coolest hotels in Iceland because it’s the first purpose-built micro house in Iceland! And when you book this extreme Airbnb-style hotel, you get the entire two-bedroom house.
This is half of the living area on the top floor.
This unique hotel is very close to Reykjavik (about a 45-minute drive) on the Reykjanes Peninsula in Iceland. You may have heard of the town just south of here, Grindavik, which was evacuated in 2023 during volcanic activity.
It’s a great place to use as a base while you visit sites like the Blue Lagoon, Brimketill Lava Rock Pool, and Gunnuhver Hot Spring (photos below). It feels remote, but not isolated.
While the price to stay at the Converted Water Tower is somewhat steep, its three floors have enough space to fit a group of friends!
If you’re looking for a unique way to experience Iceland, the Converted Water Tower is definitely a place to consider! It’s one of my favorites in Iceland.
Booking.com Link (9.9/10 – 19 Reviews)
6. Foss Hotel Nupar
Fosse Hotel Nupar is a great place to stay in Southern Iceland, as you make your way on the country’s “Ring Road.” It’s a pretty good deal, too.
With panoramic views of the nearby mountains and glaciers, this sprawling hotel is just one-story, and each room feels like a separate apartment.
Guests can enjoy Icelandic dishes at the in-house restaurant and have drinks at the bar before settling in to watch Aurora Borealis right from their beds!
This is about three-and-a-half hours east of Reykjavik, but close to some of Iceland’s famous sites, including the Mossy Lava Fields and Diamond Beach:
Booking.com Link (8.1/10 – 1446 Reviews)
Best Hotel in East Iceland
The drive from Reykjavik (on the west coast of Iceland) to the east coast is roughly eight hours. Eglisstadir is a popular small town to stay in, to use as a base for more remote sites in Iceland, including Studlogil Canyon.
7. Lake Hotel Eglisstadir
Lake Hotel Eglisstadir offers a unique experience for those looking to explore the wonders of East Iceland.
You’ll almost feel like you’re staying in a big old farm house. For those who want an even better view during their stay, you can choose the deluxe rooms that overlook Lagarfljót!
Additionally, the hotel features a fantastic restaurant with Icelandic and international cuisine made almost exclusively from locally grown Icelandic ingredients.
In addition to the cows living next door, you’ll likely see Icelandic reindeer wandering around nearby.
Booking.com Link (8.4/10 – 803 Reviews)
Hotels in West Iceland
West Iceland is known for outdoor activities such as whale-watching cruises, kayaking trips on the fjords, and glacier walks. There are also some excellent hotels on this part of the island for visitors to spend the night. Here are my top recommendations.
8. Fosshotel Reykholt
In Icelandic, “foss” means waterfall. And the Fosshotel Reykholt is close to some of the best waterfalls on the island. Among them: Hraunfossar and Barnafoss.
In addition to the natural scenery around Fosshotel Reykholt, staying here will provide you with spacious rooms, a jacuzzi, a spa & sauna, heated floors in the bathroom, and exceptional staff.
Booking.com Link (8.5/10 – 746 reviews)
9. Arnarstapi Cottages
Arnarstapi Cottages is a unique and secluded hotel located in West Iceland made of a series of really cool cottages. It’s close to Gatklettur (the stone bridge) and offers incredible views of the surrounding mountains.
The rooms are simple, but each cottage has its own patio, bathroom, kettle, and microwave.
These modern “tiny houses” are perfect for couples seeking a peaceful escape together in Iceland. The best rooms are 12 or 13, offering the most awe-inspiring views.
Booking.com Link (7.9/10 – 442 reviews)
10. Hotel Husafell
For a truly memorable experience in Iceland, Hotel Husafell is a great choice. It’s a bit less than two-hours north of Reykjavik.
Located near the majestic Langjökull Glacier and other popular attractions like Krauma Baths and Vidgelmir Lava Cave, this hotel offers guests a comfortable place to stay close to the best things to see in West Iceland.
This hotel has a modern aesthetic and multiple room options, from standard suites to three-bedroom houses with special touches like Icelandic wool throws and sheepskin throw pillows.
Guests can enjoy a delicious breakfast and dinner at the on-site restaurant. You can also participate in outdoor activities such as hiking, cycling, and horseback riding.
Booking.com Link (8.6/10 – 482 reviews)
11. Hotel Budir
Hotel Budir is one of the most popular hotels in Western Iceland. It’s right next to the Budir Black Church, Búða beach, and only 14 miles east of Snæfellsnes National Park.
This makes exploring all the best parts of the Snæfellsnes Peninsula easy. The hotel itself is just over two-hours from Reykjavik.
The Hotel Budir offers several rooms, from standard rooms to luxury ocean-view suites, each with great views of the glaciers, lava fields, and ocean. The rooms are cozy and inviting, creating a very “historic” hotel atmosphere.
A highly-rated restaurant at the hotel also serves breakfast and dinner menus of Icelandic and specialty seafood dishes.
Booking.com Link (8.8/10 – 359 reviews)
Coolest Hotels in Northern iceland
Northern Iceland is a region of wild and rugged beauty, with staggering mountain ranges, crystal-clear lakes, and great beaches. These are the best places to stay as you travel through the north, but they’re not always easily accessible during the harsh winter months.
12. Siglo Hotel
The coolest hotel in Northern Iceland, Siglo Hotel, has insanely good reviews. There are over 1000 reviews averaging a 9.5/10, most praising the location in Siglufjörður, on the northern tip of the country.
Guests who stay in one of the premier rooms overlooking the harbor are consistently blown away by the view. This is about a five-hour drive from Reykjavik, depending on road conditions.
You can enjoy a sauna and a hot tub at the property, and a continental breakfast is provided every morning for no extra charge.
Booking.com Link (9.5/10 – 1,193 reviews)
13. Fosshotel Myvatn
Fosshotel is another one of the premier hotels in northern Iceland. The hotel sits along the famous Ring Road, just off Lake Mývatn.
Despite being right off a main road, the trendy hotel is quiet and designed to blend into the landscape. In addition to comfortable rooms and a reputable hotel restaurant, one of the best things about staying at Fosshtoel is their complementary sauna (open to all guests 10 am – 10 pm).
Booking.com Link (8.9/10 – 850 reviews)
14. Hotel Laxa
A second hotel near Lake Mývatn is Hotel Laxa. This beautiful hotel prioritizes seeing the northern nights with a wake-up service and wonderful sky views from each room.
The hotel is actually quite affordable for a couple or small family traveling together and offers the best value for your money in Northern Iceland.
Breakfast for each guest is even included with each booking.
Furthermore, if you would like a tour, the hotel is known to recommend and help arrange high-quality nature baths, horse-riding, and hiking tours around the area!
Booking.com Link (8.8/10 – 1,237 reviews)
Most Unique Hotels in Iceland
While none of the hotels in this post are traditional, some hotels in Iceland stand out as exceptionally unique and memorable.
15. Coolest Luxury Hotel in Iceland: The Retreat at Blue Lagoon
The Retreat offers a much more elevated experience to Iceland’s famous Blue Lagoon. It features its own geothermal lagoon waters for swimming, plus in-water massages and other spa treatments.
It’s relatively new, and consists of 60+ suites, with a variety of experiences. Some of the priciest options include your very own, private blue lagoon to swim in!
My only complaint is: everything there shuts down at 8:00pm. Early to bed, early to rise, I suppose!
Booking.com Link (9.5/10 – 190 reviews)
16. Coolest Cabin in Iceland: Hrafnavellir Guest House
Hrafnavellir Guest House appears as the Icelandic version of an oasis in the middle of nowhere, right off Route 1 in South Iceland.
It’s a great stop if you’re road-tripping around the Ring Road! It’s truly a family-run hotel operation, made of seven guest cabins, backed by snow-capped peaks.
The closest town, Hofn, is 30 kilometers southwest.
One of the owners, Eyrun Axelsdottir, was staying at the property during our visit. The family built the cabins in 2018. One family member owned the land, and they bought pre-fabricated home kits from Estonia.
Each morning for breakfast, the family puts out a spread of homemade jams, breads, and yogurt, plus a local favorite: caviar paste, which was surprisingly good on eggs!
17. Coolest Glamping in Iceland: 5 Million Star Hotel
Arguably the most surreal experience in Iceland is staying at the 5 Million Star Bubble Hotel. This hotel room is a completely transparent bio-bubble right in the middle of the forest. It’s about 90 minutes east of Reykjavik.
In the summer, you can enjoy the midnight sun in the heart of nature, and in the winter, you can enjoy views of the aurora borealis from the comfort of your bed.
Getting to the bubble involves a short trek, but your host will give you a tour of the area along the way.
It’s about $400 per night but one of the most memorable experiences you will have in Iceland.
18. Coolest Tent: Rent a Tent
Rent a Tent is one of the coolest companies in Iceland. Their goal is to make camping similar to a hotel experience by providing and setting up all your camping equipment, then tearing it down for you after you leave the campsite.
The luxury tents include sleeping bags, mattresses, heaters, camera equipment, car power converters, and even cooking equipment.
The only catch is that you must stay at the campsite through the night. You cannot hang out for the evening, then stay the night elsewhere.
19. Coolest Capsule: Puffin Capsule Hostel
Puffin Capsule Hotel is a one-of-a-kind place to stay in Iceland. It’s a capsule in a dorm room, which is great for solo travelers and is significantly more private than a traditional hostel.
Each capsule has a TV and independent lighting so you can sleep whenever you need (excellent for the ‘midnight sun in the summer)
The futuristic hotel is actually located on an island called Vestmannaeyjar. You can get there by ferry from Landeyjahöfn in southeast Iceland.
Booking.com Link (7.8/10 – 249 Reviews)
20. Coolest Van: Kuku Campers
Looking to rent a van in Iceland? The best company to book with is Kuku Campers.
They have so many different kinds of campervans available, from small cars with a tent on top to large vehicles that can sleep up to 5 people. A chart on the website makes it super easy to match a campervan to your specific preferences and personal Iceland itinerary.
You can also choose a 4×4 campervan, which you will need in Iceland if you want to drive on F-roads and to remote attractions around the island.
They also offer campsite recs for people interested in more traditional camping.
Unique Hotels in Iceland FAQs
Iceland is an amazing place to visit, but if you’re planning a trip to the island, you may have some important questions about the places to stay here.
What Part of Iceland is Best to Stay in?
There’s no “right” answer for this.
For tourists, I’d say: Southern Iceland and Reykjavik are the best places to stay. They’re open all year, and offer easy access to the most popular natural wonders around the country.
Does Iceland have 5-star Hotels?
Yes, Iceland has plenty of 5-star hotels for people dreaming of a more luxurious stay. You don’t have to spend a fortune on a nice place in Iceland. But if you are traveling here for your honeymoon or a special occasion, I’d recommend this world-famous 5-star hotel: The Retreat Hotel.
Is there an ice hotel in Iceland?
No, there are no ice hotels in Iceland.
People think they can stay in the “Ice Palace” from one of the Bond movies, but it was a fictional site belonging to a villain in the 2002 film: “Die Another Day.”
Wrap: Coolest Hotels in Iceland
Visiting Iceland is an experience unlike any other, and there are a ton of unique and affordable hotels to make your trip even better!
I hope this list of the coolest hotels in Iceland has helped you feel even more excited about traveling to the Land of Ice and Fire.
Iceland is so unique, you’ll never run out of things to check out. Here are just a few to put on your list:
✅ Snorkeling in Silfra Iceland
Located in Thingvellir National Park, snorkeling in the Silfra Fissure offers crystal-clear visibility of up to 100 meters and the opportunity to explore underwater lava formations and other geological marvels. Snorkelers can even get close enough to touch the walls of the two continental plates separating Europe from North America.
✅ Sky Lagoon
Sky Lagoon is a geothermal lagoon with an infinity-edge pool close to Reykjavik. It’s one of the newer things to do in Iceland and a great alternative to Blue Lagoon. The pool is not deep and stays at 38°C (100°F) year-round.
✅ Ice Cave by Katla Volcano
The Ice Cave by Katla Volcano is a natural wonder in southern Iceland. It’s an otherworldly cave system with transparent walls, deep blue hues, and ice formations formed over thousands of years.
✅ Waterfalls
Iceland is home to some of the world’s most spectacular waterfalls, each with its own unique beauty. The most well-known is Skogafoss waterfall, which plunges over 60 meters (200 feet) down and can be seen from up to 5km away! But other waterfalls are also worth visiting, such as Seljalandsfoss, Kvernufoss, and Nauthusagil.
Check out some of our other blogs on Iceland:
🌎 Jared’s Detours Blog: Renting a 4×4 in Iceland
🌎 Jared’s Detours Blog: Hike to Iceland’s Plane Wreckage
