Trying to decide where to stay in Reykjavik? Whether you're planning a short Iceland city break, a stopover or using the capital as a base for exploring the country, choosing the right location can make a huge difference to your trip.
Iceland isn't exactly known for cheap accommodation, but you don't necessarily need to spend a fortune on a hotel. There are some excellent budget-friendly options in Reykjavik, alongside comfortable hotels, apartments and properties with additional facilities.
We visited Reykjavik in November 2026 for a weekend that included whale watching, sightseeing and the Blue Lagoon. We decided not to hire a car, so finding somewhere central, close to restaurants and within easy walking distance of our coach transfers was particularly important.
We stayed at CityHub Reykjavik, a modern pod-style hotel in the city centre, and I was genuinely impressed by what we got for the money. However, it's not going to suit everyone, especially if you prefer a traditional hotel bedroom with a private bathroom.
In this guide, I'll explain the best areas to stay in Reykjavik, share seven accommodation options for different budgets and travel styles, and cover the practical things I think are worth considering before booking.
Our CityHub recommendation is based on our own stay, while the other six hotels have been researched and selected for their locations, facilities and suitability for different types of visitors.
What Is the Best Area to Stay in Reykjavik?
For most visitors, I think central Reykjavik is the best place to stay, especially if it's your first time visiting Iceland.
The city centre is relatively compact, with many of the main attractions within walking distance of one another. This makes it easy to explore without hiring a car or spending money on taxis every time you want to go somewhere.
During our November visit, we walked around the city, visited Hallgrimskirkja, explored Rainbow Street and headed down to the Old Harbour for our whale-watching trip.
Although Reykjavik is manageable on foot, the Icelandic weather can make even short walks feel much longer. We experienced heavy rain and wind during our visit, so being able to return to our hotel between activities was a real advantage.
I'd particularly recommend looking for accommodation around Laugavegur or Hverfisgata. Both are central streets with easy access to restaurants, shops and sightseeing attractions.
The Four Best Areas to Stay in Reykjavik
1. Downtown Reykjavik (101): Best for First-Time Visitors
If this is your first trip to Iceland, downtown Reykjavik is probably the easiest place to base yourself.
The 101 postcode covers much of the central area, including the Old Town, main shopping streets and many of the city's most popular attractions.
Staying here means you can usually explore without needing public transport. You'll find restaurants, bars, shops, museums and sightseeing attractions within easy walking distance.
This is particularly useful if you're only spending one or two nights in Reykjavik and want to make the most of your time.
The main disadvantage is that central hotels can be expensive, and some streets are lively late into the evening, especially at weekends.
For a convenient central stay, I'd look at CityHub Reykjavik, Hotel Fron or Center Hotels Plaza.
2. Laugavegur and Hverfisgata: Best for Restaurants and Shopping
Laugavegur is one of Reykjavik's main shopping streets, with restaurants, bars, cafés and independent shops. Hverfisgata runs alongside it and is another excellent location for accommodation.
We stayed on Hverfisgata and found it a really convenient base. We could walk to the main sightseeing areas and had plenty of places to eat nearby.
I'd especially recommend this area to couples, friends and anyone planning to explore the city without a car.
However, it's worth checking the exact hotel location if you're concerned about noise, as parts of Laugavegur can be particularly lively on Friday and Saturday evenings.
3. Old Harbour and Old Town: Best for Sightseeing and Whale Watching
Reykjavik's Old Harbour is another lovely area to consider, particularly if you're planning a whale-watching trip or want to spend time exploring the waterfront.
We visited the harbour during our trip and joined a whale-watching excursion departing from this area.
You'll find restaurants, museums, tour operators and views across the water, while still being close enough to walk into the city centre.
For anyone who enjoys exploring on foot, it's a good balance between the waterfront and central sightseeing attractions.
Center Hotels Plaza is a particularly convenient option if you want to stay close to both the harbour and the Old Town.
4. Hlemmur and Eastern Laugavegur: Best for a Slightly Quieter Base
If you want to stay close to the centre without necessarily being right in the busiest streets, the Hlemmur area is worth considering.
It's towards the eastern end of Laugavegur and has restaurants, shops and public transport connections, while still being within walking distance of central Reykjavik.
Depending on the exact hotel, you may have a slightly longer walk to the harbour and Old Town, but this isn't necessarily a disadvantage if you enjoy walking and want to explore different parts of the city.
Midgardur by Center Hotels is one of the accommodation options I'd consider in this area, particularly for a more comfortable stay with spa facilities.
Seven Reykjavik Hotels Worth Considering
I've selected seven accommodation options covering different budgets, from hostel accommodation and compact sleeping pods to traditional hotels and apartment-style stays.
Rather than choosing purely on star ratings, I'd recommend thinking about how you're going to spend your time in Iceland. If you're out exploring from early morning until late evening, you might not need a large hotel room. However, if you're planning a longer stay or travelling with children, having extra space and kitchen facilities could make a big difference.
| Accommodation | Best for | Area |
|---|---|---|
| CityHub Reykjavik | Budget-conscious couples and friends | Hverfisgata |
| Loft HI Eco Hostel | Social and budget travellers | Downtown |
| Guesthouse Sunna | Simple accommodation near the church | Hallgrimskirkja |
| Hotel Fron | Traditional central hotel | Laugavegur |
| Reykjavik Residence | Families and apartment stays | Central Reykjavik |
| Midgardur by Center Hotels | Couples wanting spa facilities | Eastern Laugavegur |
| Center Hotels Plaza | Old Town and harbour sightseeing | Old Town |
Hotel prices in Iceland vary significantly depending on the season, demand, room type and whether breakfast is included. Rather than quoting prices that may quickly become outdated, I've included booking links so you can check the cost for your own travel dates.
1. CityHub Reykjavik: Best Budget-Friendly Pod Hotel
Location: Hverfisgata 46
Best for: Couples, friends and short city breaks
Room types: Double and Twin Hubs
Bathrooms: Shared
Our price: £113 for one night, two people
CityHub Reykjavik is the only hotel in this guide where we've personally stayed, and it's one I'd happily book again.
We chose CityHub for our November 2026 weekend because we wanted somewhere central, reasonably priced and convenient for exploring the city without a hire car.
We paid £113 for a Twin Hub for two people, which worked out at £56.50 each for the night.
I'll admit that I wasn't entirely sure what to expect from a pod-style hotel, particularly because the bathrooms were shared. However, I was genuinely impressed by the facilities and how comfortable everything felt.
We stayed in an L-shaped Twin Hub with two separate sleeping areas. The beds were comfortable, and the pods had adjustable lighting, charging facilities and Bluetooth speakers.
The main drawback was the limited floor space. There wasn't much room for two people to stand and get dressed at the same time, although this wasn't a problem for our short stay.
Where CityHub really impressed me was the shared bathroom facilities. They were modern, spotless and had private enclosed shower and toilet cubicles. Towels, robes, toiletries and hairdryers were provided, so we didn't need to pack as much as we might have expected.
There's also a communal lounge called the Hangout, with seating, food preparation facilities and a self-service bar. This could be especially useful if you're trying to keep food costs down in Iceland by occasionally bringing something back to eat.
My favourite extra was the rooftop hot tub. After a cold day exploring Reykjavik and going whale watching, it was lovely to be able to relax in the warm water.
CityHub also worked really well for our transport arrangements. It was only a short walk to Bus Stop 6, Safnahusid, where we joined our Blue Lagoon transfer on the second day.
We were also within walking distance of Rainbow Street, Hallgrimskirkja, restaurants and the Old Harbour.
I'd recommend CityHub if you're planning a busy sightseeing trip and mainly want somewhere comfortable to sleep, shower and relax between activities. However, it won't suit anyone who needs a traditional spacious hotel room or private bathroom.
2. Loft HI Eco Hostel: Best for Social Budget Travellers
Location: Bankastraeti 7
Best for: Budget travellers and social stays
Accommodation: Dormitories and private rooms
If you're looking for hostel accommodation in central Reykjavik, Loft HI Eco Hostel is one option worth comparing.
It's located on Bankastraeti, right in the heart of the city, so you don't have to sacrifice convenience to stay somewhere more budget-friendly.
Loft offers shared dormitory accommodation as well as private rooms, which is useful if you like the social atmosphere of a hostel but don't necessarily want to share a bedroom with strangers.
One of its main features is the rooftop terrace and bar, with events and social activities throughout the year. It's a particularly good choice for travellers who enjoy meeting other people rather than simply returning to their accommodation to sleep.
There's also a communal kitchen, which is a useful way to reduce the cost of eating out in Iceland.
The main consideration is noise. Because Loft is so centrally located and has an active social atmosphere, it may not be the best option if you're looking for a particularly quiet stay, especially at weekends.
For younger adults, groups of friends or anyone who enjoys hostel accommodation, though, it could be an excellent base.
3. Gistiheimilid Sunna: Best for Simple Accommodation Near Hallgrimskirkja
Location: Thorsgata 26
Best for: Couples, independent travellers and short stays
Accommodation: Guesthouse rooms with different bathroom arrangements
Gistiheimilid Sunna, also known as Guesthouse Sunna, is another accommodation option I'd consider if you're looking for somewhere central without necessarily paying for a large hotel.
It's situated close to Hallgrimskirkja, one of Reykjavik's most recognisable landmarks, and within easy walking distance of the main shopping streets.
The location is a particular advantage if you're visiting without a car. You'll be able to walk to restaurants, shops and sightseeing attractions, while Bus Stop 8 near the church is useful for many organised tour pickups.
Sunna offers simple guesthouse accommodation, with different room types and bathroom arrangements. Some have private bathrooms, while others use shared facilities, so it's important to check exactly what you're booking.
Guests also have access to communal kitchen facilities, which could be useful if you're planning to prepare some of your own meals.
Iceland can be expensive when it comes to eating out, so even having somewhere to prepare breakfast or a simple meal can help keep costs down.
I'd particularly consider Sunna if you're looking for a straightforward, practical place to stay, without needing all the additional facilities of a larger hotel.
It's also worth comparing it against CityHub if you're comfortable with shared bathrooms but would prefer a more traditional guesthouse room.
4. Hotel Fron: Best for a Traditional Hotel in Central Reykjavik
Location: Laugavegur 22A
Best for: First-time visitors and couples
Accommodation: Hotel rooms, studios and apartments
If you would prefer a traditional hotel rather than a pod or guesthouse, Hotel Fron is well worth considering.
It's located on Laugavegur, one of Reykjavik's main shopping streets, so you're right in the middle of the action.
This makes it a particularly convenient choice for first-time visitors who want to explore the city on foot, with plenty of restaurants, bars and shops nearby.
Hotel Fron offers a range of accommodation, from standard rooms to studios and larger apartments. That flexibility is useful if you're travelling as a couple, with friends or as a family.
Some of the apartment-style options provide kitchen facilities, which could help reduce food costs during a longer trip.
The hotel also has a 24-hour reception, and breakfast is included in its advertised room offering, although I'd always check the exact conditions when comparing booking rates.
The biggest advantage here is convenience. You can step outside the hotel and immediately find yourself among Reykjavik's main shops and restaurants.
The location may be less suitable if you're particularly sensitive to noise, as Laugavegur can be lively in the evenings, especially during weekends.
However, for a straightforward city break where location is your main priority, Hotel Fron is one of the options I'd shortlist.
5. Reykjavik Residence Hotel: Best for Families and Apartment-Style Accommodation
Location: Several central Reykjavik buildings
Best for: Families, groups and longer stays
Accommodation: Studios, suites and apartments
For families or anyone planning to spend several nights in Reykjavik, I think apartment-style accommodation is definitely worth considering.
Reykjavik Residence Hotel offers studios, suites and apartments in several centrally located buildings, giving guests more flexibility than a standard hotel bedroom.
Depending on the accommodation type, you'll find kitchen facilities, separate living space and options for larger groups.
This could be particularly helpful if you're travelling with children or want somewhere to relax between sightseeing activities without everyone having to sit on their beds.
One of the advantages of booking an apartment is the potential saving on food. Icelandic restaurant prices can quickly add up, particularly for families, so being able to prepare breakfasts, snacks and occasional meals makes a difference.
Reykjavik Residence is also well located for exploring the city centre, with the main shopping streets, restaurants and attractions within walking distance.
One detail I'd pay attention to is the exact building and apartment type, as the accommodation is spread across several properties rather than one conventional hotel building.
If I were planning a longer family trip to Iceland, this is the type of accommodation I'd be looking at, particularly when comparing the total cost against booking multiple hotel rooms.
6. Midgardur by Center Hotels: Best for Couples Wanting Spa Facilities
Location: Laugavegur 120
Best for: Couples and comfortable city breaks
Facilities: Spa, hot tubs, restaurant and bar
If you're visiting Reykjavik as a couple and fancy somewhere with a little more comfort, Midgardur by Center Hotels is worth considering.
The hotel is located towards the eastern end of Laugavegur, close to the Hlemmur area, so you can still walk into central Reykjavik while being slightly away from the busiest part of the Old Town.
One of its main attractions is Midgardur Spa, which includes indoor and outdoor hot tubs, a sauna and additional wellness facilities.
After a cold day sightseeing in Iceland, I can certainly see the appeal of being able to return to a hotel with its own spa facilities.
The hotel also has a restaurant and bar, making it convenient if you don't want to go out every evening to find somewhere to eat.
It's worth checking whether spa access is included with your chosen room rate or requires an additional payment. These details can vary depending on the package you book.
Compared with the more basic options in this guide, Midgardur is better suited to travellers who want their accommodation to be part of the experience rather than simply somewhere to sleep.
I'd particularly consider it for an anniversary trip, a couples' weekend or a winter break where you might appreciate spending a little more time at the hotel.
7. Center Hotels Plaza: Best for Old Town and Harbour Sightseeing
Location: Adalstraeti 4–6
Best for: Couples and first-time visitors
Accommodation: Traditional hotel rooms
Center Hotels Plaza is another option I'd consider if you're looking for a traditional hotel in a particularly central location.
It's situated beside Ingolfstorg Square in the Old Town, with shops, restaurants and historic streets nearby.
One of the biggest advantages is how close you are to the harbour. If you're planning a whale-watching excursion or want to spend time exploring Reykjavik's waterfront, it's a convenient base.
We went whale watching from the Old Harbour during our November trip, and it's an area I'd certainly recommend visiting even if you're not joining a boat excursion.
Center Hotels Plaza offers a range of hotel rooms, including options with additional space, and has a bar where guests can relax after sightseeing.
The hotel is also within walking distance of central Reykjavik's main attractions, so you won't necessarily need public transport for exploring the city.
If you're planning a busy itinerary and want a conventional hotel rather than shared facilities or apartment accommodation, this is a good option to compare.
I'd especially recommend looking at Center Hotels Plaza if location is your biggest priority and you want to be close to both the Old Harbour and Reykjavik's historic centre.
Which Reykjavik Accommodation Would I Choose?
Having stayed in Reykjavik myself, I think the best accommodation really depends on how you're planning to spend your time.
For a short trip on a budget, I'd personally choose CityHub again. It was considerably more comfortable than I'd expected, and I loved having the rooftop hot tub, spotless shared bathrooms and such a convenient location.
For a longer stay with children, I'd look more closely at Reykjavik Residence Hotel, where having kitchen facilities and additional space could make the trip easier and potentially more affordable.
If I wanted a traditional hotel right in the heart of the city, Hotel Fron and Center Hotels Plaza would both be worth comparing.
For a couples' break where relaxation is part of the trip, Midgardur would appeal because of its spa facilities.
The most important thing I'd recommend is choosing the location first and then comparing accommodation within that area, rather than simply booking the cheapest hotel you can find.
Getting from Keflavik Airport to Your Reykjavik Hotel
One thing worth understanding before booking accommodation is that Reykjavik's main international airport, Keflavik Airport, isn't actually in the city centre.
It's approximately 50 kilometres from Reykjavik, with the journey generally taking around 45 to 60 minutes by road, depending on conditions and where you're travelling to.
During our November 2026 trip, we used airport coach transfers rather than hiring a car, and I found this a practical way to visit Iceland.
Using the Flybus Airport Transfer
Flybus operates transfers between Keflavik Airport and Reykjavik, with services connecting to flight arrivals.
The main coach travels to BSÍ Bus Terminal in Reykjavik. From there, you can either walk to your accommodation or arrange an onward transfer to one of the designated city bus stops.
We travelled to BSÍ and then walked into the city centre.
However, if you're travelling with large luggage, in bad weather or with someone who doesn't want a long walk, it's worth comparing the cost of an onward hotel-area transfer.
Not all city-centre hotels can be reached directly by the larger coaches, so you may be dropped at a nearby designated stop instead.
Check Your Tour Pickup Stop Before Booking
Another thing I'd strongly recommend is checking where your planned tours depart from before choosing a hotel.
Many Iceland tours use numbered pickup stops around Reykjavik, and the closest one isn't always immediately outside your accommodation.
For example, during our stay at CityHub we used Bus Stop 6, Safnahusid, for our Blue Lagoon transfer.
It was only around four minutes' walk from our hotel, which made an early departure much easier.
If you're booking the Golden Circle, Northern Lights tours, the South Coast or a Blue Lagoon transfer, check the exact pickup point shown on your booking confirmation.
It could save you a long walk with your bags or an expensive taxi journey.
Do You Need a Hire Car in Reykjavik?
For a short Reykjavik city break, I don't think hiring a car is necessary.
We managed our November trip entirely without one, using coach transfers for the airport and Blue Lagoon and walking between the main attractions.
If your main plans involve exploring Reykjavik, visiting the harbour and joining organised excursions, staying centrally is often much more convenient than paying for car hire and parking.
However, if you're planning to explore Iceland independently over several days, including more remote areas or stops that aren't easily reached by organised tours, a hire car may make more sense.
For anyone visiting without a car, I'd put a convenient hotel location ahead of having a particularly large room.
How to Save Money on Accommodation in Reykjavik
Iceland can be an expensive destination, but there are still ways to keep accommodation costs manageable without sacrificing too much comfort or convenience.
Compare the Total Room Price
When looking at hotels, check the total price for everyone travelling rather than simply the headline rate.
This is particularly important if you're comparing private hostel rooms, hotel rooms, pods and apartments, as some prices are displayed per person while others are per room.
We paid £113 in total for two people at CityHub. For a central Reykjavik stay, I thought that represented excellent value, particularly given the facilities.
Consider Shared Bathrooms
Before our stay at CityHub, I would probably have ruled out accommodation with shared bathrooms.
However, the facilities were much better than I'd expected, with private enclosed cubicles, good toiletries and very clean communal spaces.
If you're happy using modern shared bathrooms, you may find that you're able to book somewhere more affordable without compromising too much on comfort.
Look for Kitchen Facilities
Eating out in Iceland can quickly become expensive, especially if you're travelling as a family.
Accommodation with a kitchen, kitchenette or communal food preparation facilities could help reduce the overall cost of your trip.
We particularly liked that CityHub had a communal fridge, microwave and dining space, allowing guests to bring their own food rather than eating out for every meal.
Check Whether Breakfast Is Included
Some hotels include breakfast, while others charge extra.
For a short trip with an early departure, breakfast can be particularly useful, although it's worth checking what is actually provided.
At CityHub, we had a grab-and-go breakfast included with our booking, which worked well because we were heading to the Blue Lagoon that morning.
I'd compare the total price of the room with and without breakfast rather than automatically selecting the inclusive option.
Book a Central Location
One of the easiest ways to avoid unnecessary transport costs is to stay within walking distance of the places you want to visit.
A slightly cheaper hotel further outside the centre may not save much money if you then need taxis or public transport every day.
For our short Iceland trip, being able to walk from the hotel to restaurants, sightseeing attractions and our coach pickup point was definitely worth prioritising.
Practical Tips Before Booking Your Reykjavik Hotel
There are a few things I'd recommend checking before making your booking, particularly if you're travelling during the winter months.
- Tour pickup points: Check which numbered bus stop is closest to your hotel, especially if you're joining early morning excursions.
- Airport transfers: Find out whether you'll be walking from BSÍ or booking a transfer to a designated city-centre stop.
- Room layout: Pod hotels, guesthouses and apartment properties can have very different layouts, so check the room photographs carefully.
- Bathroom facilities: Don't assume every room has a private bathroom, particularly in guesthouses and budget accommodation.
- Breakfast: Check whether it's included in your selected rate and whether the serving times suit your plans.
- Parking: If you're hiring a car, check the availability and cost of parking before booking a central hotel.
- Cancellation policy: If your trip is some time away, compare flexible booking rates with non-refundable prices.
Eating Out Near Your Reykjavik Hotel
One of the things I enjoyed about staying centrally was having so many places to eat within walking distance.
During our November trip, we were able to explore the main streets, visit the Old Harbour and find plenty of restaurants and takeaway options without needing any transport.
One of Reykjavik's most famous inexpensive food stops is Baejarins Beztu Pylsur, which sells Icelandic hot dogs.
If you're visiting Iceland on a budget, grabbing something quick for lunch and saving restaurant meals for the evening can help keep the overall cost down.
I'd also recommend looking at accommodation with a fridge or kitchenette if you want to prepare some of your own food.
For us, the convenience of being able to walk everywhere was one of the biggest advantages of staying in the city centre.
Frequently Asked Questions About Where to Stay in Reykjavik
What is the best area to stay in Reykjavik for first-time visitors?
For most first-time visitors, I'd recommend central Reykjavik, particularly around Laugavegur, Hverfisgata or the Old Town. These areas are convenient for sightseeing, restaurants and organised tour pickups.
Where should you stay in Reykjavik without a car?
If you're travelling without a car, central Reykjavik is the most practical choice. During our trip, we stayed at CityHub on Hverfisgata and were able to walk to the main attractions and our Blue Lagoon coach pickup.
Is Reykjavik expensive for hotels?
Accommodation in Reykjavik can be expensive, particularly during busy periods. However, there are budget-friendly options such as hostels, pod hotels and guesthouses. We paid £113 for a Twin Hub for two people at CityHub during our November 2026 stay.
Is it better to stay in Reykjavik or near Keflavik Airport?
For sightseeing, I'd recommend staying in Reykjavik. Keflavik Airport is approximately 50 kilometres from the city, so an airport hotel would be much less convenient if you're planning to explore the capital. An airport hotel may make more sense for a very early departure or late arrival.
How many nights should you stay in Reykjavik?
One or two nights can work well for a short city break, particularly if you mainly want to explore Reykjavik itself. However, if you're using the capital as a base for the Golden Circle, South Coast or other excursions, three or four nights may be more practical.
Can you visit Reykjavik without hiring a car?
Yes. We visited without hiring a car and used airport coaches, a Blue Lagoon transfer and walking to get around. Reykjavik is a good base for visitors who prefer organised excursions rather than driving in Iceland.
Where should families stay in Reykjavik?
For families, I'd consider apartment-style accommodation such as Reykjavik Residence Hotel, where kitchen facilities and additional space can make a longer stay more comfortable. It's worth comparing the total apartment cost against booking multiple hotel rooms.
Is CityHub Reykjavik suitable for couples?
Yes, particularly if you're happy with a compact sleeping pod and shared bathroom facilities. CityHub offers Double Hubs as well as Twin Hubs, and we found the hotel comfortable, modern and good value during our stay.
Do Reykjavik hotels offer Northern Lights views?
Some hotels have rooftop areas or outdoor hot tubs where it may be possible to see the Northern Lights when conditions are favourable. However, Reykjavik's city lights, cloud cover and weather can affect visibility, so I wouldn't choose a hotel solely on the expectation of seeing them from the property.
Our Verdict: Where Would I Stay in Reykjavik Again?
If I were planning another short trip to Reykjavik, I'd happily book CityHub again.
It suited our November weekend perfectly, offering a central location, comfortable sleeping spaces, excellent shared bathrooms and a rooftop hot tub for a price I thought was very reasonable.
However, I wouldn't automatically recommend it to everyone.
For a family trip, I'd be more inclined to look at Reykjavik Residence Hotel, particularly for the extra space and kitchen facilities. For a couples' break with a focus on relaxation, Midgardur's spa facilities would appeal, while Hotel Fron and Center Hotels Plaza are worth considering if you prefer a traditional hotel.
Ultimately, I'd recommend prioritising location, room type and the facilities you'll actually use rather than simply choosing accommodation by its star rating.
Reykjavik is a fantastic city to explore on foot, and having somewhere convenient to return to makes a real difference, particularly when the Icelandic weather isn't cooperating.
More Iceland Travel Guides
During our November 2026 trip, we spent time exploring Reykjavik, went whale watching and visited the Blue Lagoon before travelling home.
If you're planning to include the Blue Lagoon in your own itinerary, read our Blue Lagoon Iceland Review, where I share our experience of the Premium package, facilities and transfers.
You can also browse our other Iceland travel guides for more ideas and practical advice on planning your own trip.
