Choosing where to stay in Reykjavik can make a big difference during a trip to Iceland–especially if you don’t plan on renting a car.
The capital is compact and easy to explore on foot with colourful streets, museums and waterfront attractions all within a relatively small area. However, deciding where to base yourself in Reykjavik depends on your budget and whether you want to be in the heart of the action or enjoy a quieter neighbourhood.
If it’s your first visit I recommend staying in central Reykjavik, particularly around Laugavegur or the Grandi areas (I did both). I found it handy being so close to the city’s main attractions, restaurants and shops, and many guided tours had convenient pickup points nearby or right from my hotels.
From stylish boutique properties to budget-friendly accommodations, here are the best places to stay in Reykjavik including the top neighbourhoods and hotels worth considering.
Quick guide for where to stay in Reykjavik
Top hotel pick: Midgardur by Center Hotels. I loved its central location and the spa area is fantastic, especially after a day of sightseeing in the cold.
Best areas to stay in Reykjavik: For most visitors, downtown is the most convenient choice. The city centre is compact enough that you can explore many of the main sights on foot, which is especially handy to avoid car rentals or paying for expensive taxis.
Do you need a car in Reykjavik? No, you don’t need a car to explore central Reykjavik. The city centre is walkable, and guided tours take you to many of Iceland’s major attractions. If you’re planning a self-drive trip around the country, I recommend booking through Discover Cars which usually has the best prices.
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Hotels in Reykjavik: Best overall pick
Midgardur by Center Hotels
The Center Hotels group has multiple properties around the city, including Miðgarður by Center Hotels located near one end of Laugavegur, making it a good base for exploring the city. There’s also a bus stop right out front which is extremely convenient if you plan to head out on organized excursions.
I loved its great city views: be sure to reserve a corner room on one of the higher floors for a panoramic vantage point.
The spa is fantastic, and guests have access to a large sauna, plunge pool and outdoor hot tub which are the perfect place to relax after a fun day of adventures (or warm up, if you visit Iceland in winter like I did!).
Its location gives you easy access to Reykjavik’s restaurants, shops and cafés, while still putting the main attractions within reach on foot. It’s a good option if you want a central hotel without necessarily choosing a high-end luxury property.
Best luxury hotels in Reykjavik
The Reykjavik EDITION
If you’re looking to splurge on accommodation in Reykjavik, The Reykjavik EDITION is one of the city’s most impressive luxury hotels.
Located right on the waterfront beside Harpa Concert Hall, this five-star property boasts contemporary design, upscale amenities and a fantastic location with views of Mt. Esja and the Snæfellsjökull glacier.
The rooms have a sophisticated Nordic-inspired aesthetic, with floor-to-ceiling windows, bespoke furnishings and luxurious bathrooms featuring Le Labo toiletries. If you’re celebrating a special occasion, consider upgrading to one of the spacious suites which offer separate living areas and beautiful harbour views.
One of the hotel’s biggest draws is its collection of restaurants and bars. Michelin-recommended TIDES is its signature restaurant, serving Icelandic seafood and locally sourced ingredients, while The ROOF rooftop bar is a great spot for cocktails overlooking the harbour and surrounding mountains.
There’s also a spa featuring a sauna, steam room, hammam and thermal plunge pool.
Hotel Borg by Keahotels
Hotel Borg has bragging rights as Iceland’s first luxury hotel. Built in 1930, the historic 4-star property in downtown Reykjavík overlooks Austurvöllur Square.
Elegant art deco-inspired interiors give it a more classic feel than many of the city’s contemporary hotels, making it a great choice if you want somewhere with a little more character.
The central location is another major draw; you’ll be within walking distance of many of Reykjavik’s main attractions, including Hallgrímskirkja church.
There’s also a spa, making this a solid option for couples, special occasions or anyone who wants a luxurious hotel without sacrificing location.
Best hotels in Reykjavik: Mid-range budget
Hotel Reykjavik Marina
I also stayed at this hotel in the Grandi neighbourhood that overlooks the harbour, and is a short walk from FlyOver Iceland, Harpa and Rainbow street.
The cozy decor gives it a fun, boutique feel with nice touches like a fireplace and cozy seating in the lobby, and rooms have lots of storage and huge bathrooms.
Since it’s along the Old Harbour, Hotel Reykjavik Marina is a great choice if you prefer a waterfront setting over the busier shopping streets while still having attractions nearby. The surrounding area has colourful harbour buildings, seafood restaurants, cafés and boat tours departing nearby.
It’s also a convenient base for whale-watching excursions and exploring the Grandi district.
Grandi by Center Hotels
Another pick near the Old Harbour, Grandi by Center Hotels is a good option for travellers who want to explore Reykjavik’s creative side.
Grandi by Center Hotels is a stylish four-star hotel with an industrial-chic design, combining contemporary interiors with warm, Scandinavian-inspired touches. The hotel has 195 rooms ranging from standard doubles to spacious suites, including a luxe top floor suite with a separate bedroom, two bathrooms and a private balcony.
A highlight is the Grandi Spa which features two hot tubs, a sauna, relaxation lounge and massage treatments. The hotel also has its own restaurant and bar serving modern Icelandic-inspired dishes, as well as Hygge Bakery, where you can pick up freshly baked pastries and coffee.
I particularly like that you have everything under one roof, from breakfast and coffee to dinner and a spa visit. It’s a great option if you want a comfortable, design-forward hotel with a few extra amenities without paying five-star luxury prices.
Cool places to stay in Reykjavik
Sand Hotel
Located in the heart of the city on Laugavegur, Sand Hotel is an elegant boutique hotel in the middle of the city with a millenial-approved complimentary breakfast (hello, ginger shots and green smoothies).
Rooms in the 78-room property have comfortable Serta beds, Nespresso coffee machines and Molton Brown bath products (my fave!). Heated bathroom floors are another welcome touch, especially after a chilly day exploring Iceland.
One of the hotel’s best perks is the included breakfast buffet, which includes freshly baked bread and pastries from the neighbouring Sandholt Bakery, a Reykjavik institution that’s been around for over a century. There’s also a gym, and inviting lounge and bar where you can enjoy a drink after a day of sightseeing, with a daily happy hour from 4–7 pm.
If you’re looking for something a little more spacious, Sand Hotel has several suite options, including the 78-square-metre Sand Suite, which features a separate dining area, kitchenette, two bathrooms and complimentary champagne on arrival.
Reykjavík Konsulat Hotel
Reykjavík Konsulat Hotel, part of Hilton’s Curio Collection, combines historic character with a polished boutique-hotel feel. It’s in a restored early-20th century building that was once a department store, and you’ll find subtle nods to its history throughout like vintage photographs and original architectural details.
The hotel has just 50 rooms featuring a mix of contemporary Icelandic design and vintage-inspired furnishings, with comfortable seating areas, premium bedding, espresso machines, minibars and modern bathrooms.
One of the standout features is the Bathhouse, where guests can unwind in the hot tub, sauna and relaxation area surrounded by original stone walls. Access is included with your stay, and there’s also a 24 hour fitness centre.
For dining and drinks, Konsúlat Wine Room offers a cozy setting for a glass of wine and small bites, while the lobby bar is another inviting spot to relax. Breakfast is available each morning, and the hotel also offers concierge services to help arrange excursions and sightseeing.
Best places to stay in Reykjavik for families
Reykjavik Residence Hotel
For more space and independence than a traditional hotel room, Reykjavík Residence Hotel is a great choice in downtown Reykjavik. This boutique apartment hotel has 101 studios and apartments spread across nine restored historic buildings.
Each apartment has a kitchenette or full kitchen so you can make your own meals and save on food costs, as well as a coffee machine, daily housekeeping and Wi-Fi. Room sizes range from one-bedroom apartments up to three bedroom options that are perfect for families or groups travelling together. There are laundry facilities, and some rooms have separate living spaces so parents can enjoy their evening while the kids sleep.
Note: Apartments are spread across different buildings, so check which one your room is in before confirming since they don’t all have elevators or step-free access. Breakfast is an additional charge, and there’s no private parking directly at the properties. A 24-hour airport shuttle is available.
Black Pearl – Reykjavik Finest Apartments
This luxury apartment hotel offers a more private, residential-style experience with plenty of room to spread out.
Black Pearl has 22 fully serviced suites ranging from junior suites to expansive two and three bedroom penthouses. The minimalist interiors have large windows, heated marble floors, comfortable living areas and balconies. You’ll be within walking distance of Harpa Concert Hall, and there’s a parking garage.
Every suite has a full kitchen and Nespresso machine, daily housekeeping, an in-suite breakfast option, and a shopping service where they can deliver groceries right to your apartment.
Cheap places to stay in Reykjavik, Iceland
KEX Hostel
Housed in a former biscuit factory, KEX (which is the Icelandic word for ‘biscuit’) is one of Reykjavik’s most distinctive budget accommodation options.
The hostel has a fun vintage-industrial aesthetic with salvaged furnishings, communal lounges, a library, shared kitchen and an outdoor heated patio. You can choose between shared dorm rooms and private rooms with ensuite bathrooms, making it a good option even if you’re not keen on sharing a room.
There’s also an on-site restaurant and bar, which has a lively social atmosphere in the evenings. It’s a particularly good choice for solo travellers or anyone who wants to meet other people while visiting Iceland.
Hotel Cabin
Hotel Cabin is a good option if you’re looking to keep accommodation costs down without staying in a hostel.
The hotel has 260 rooms, ranging from compact standard rooms to larger superior rooms and family rooms. There’s a lobby bar with daily happy hour specials, and the hotel has good (free!) parking options.
It’s about a 20 minute walk from downtown Reykjavik, so you’ll trade a little convenience for potentially lower room rates, and the Laugardalslaug Geothermal Pool is a 10 minute walk from the hotel.
Best areas to stay in Reykjavik
Still deciding which neighbourhood is right for you? Here’s a closer look at the best areas to stay in Reykjavik and what makes each one different.
Downtown Reykjavik: Best for first-time visitors without a vehicle
If you’re visiting Reykjavik for the first time, downtown is my top recommendation. Often referred to as the 101 district, this is the central area around the main shopping streets, historic squares and waterfront.
You’ll be within walking distance of many of the city’s best-known attractions, including Hallgrímskirkja, Harpa Concert Hall, the Old Harbour and the streets around Laugavegur.
Staying here makes it easy to explore the city without renting a car or constantly arranging (and paying for) transportation.
Laugavegur: Best for sites, shopping and restaurants
Laugavegur is Reykjavik’s main shopping street and one of the most convenient places to stay if you want restaurants, cafés and shops right outside your hotel.
It’s a great area for travellers who like to explore on foot, stop for coffee between sightseeing stops and head out for dinner without worrying about getting back to their accommodation.
You’ll find a mix of boutique hotels and larger properties in and around the street, so there are options for different budgets.
Old Harbour and Grandi: Best for waterfront views, museums and dining
The relatively quiet Old Harbour and neighbouring Grandi districts are ideal if you’d prefer to stay near the water rather than directly on the main shopping streets.
The area has a mix of working harbour activity, converted industrial buildings, cafés, restaurants and cultural attractions. It’s also where many whale-watching and other boat excursions depart, which can be handy if you have a tour planned.
Grandi has a creative feel with museums, galleries and attractions like FlyOver Iceland, with the main downtown area still within walking distance.
Laugardalur: Best for families
Laugardalur is more of a residential area east of the city centre with parks, recreational facilities and family-friendly attractions.
The neighbourhood is home to Laugardalslaug, a large geothermal swimming pool, as well as the Reykjavik Park and Zoo. It’s a good option for families who want access to outdoor space and activities beyond the main downtown sights.
However, it’s less central than the 101 district so if most of your plans involve restaurants, shopping and sightseeing downtown, factor in the extra travel time and costs before booking.
Tips for booking a hotel in Reykjavik
- Stay central if you only have one or two nights. Reykjavik is a compact city, and being able to walk to restaurants and attractions saves time and money.
- Check parking if you’re renting a car, since central hotels may have limited parking options. You might be better off using taxis or public transport during your time in Reykjavik, then picking up the car on your way out for your road trip.
- Book early for peak travel periods like summer. Accommodation can be expensive, particularly around major events. Booking ahead gives you a better selection of properties and room types.
FAQs about where to stay in Reykjavik
What are the best areas to stay in Reykjavik?
Downtown Reykjavik, particularly the 101 district around Laugavegur and the central streets, is the best area for most first-time visitors. You’ll be close to restaurants, shops, museums and many of the city’s main attractions, with plenty of options for exploring on foot.
How many days should you stay in Reykjavik?
A couple of nights is enough to see many of Reykjavik’s main attractions, but if you’re using Reykjavik as a base for guided excursions you’ll want more (I stayed for five nights, which gave me lots of time to see the city and head out on multiple excursions).
Is it better to stay in downtown Reykjavik or outside the city centre?
Downtown is more convenient if you want to walk to attractions and restaurants. Staying outside the centre can offer a different atmosphere or potentially lower accommodation costs, but you’ll need to consider transport and the time required to get around.
Is Reykjavik expensive for accommodation?
Reykjavik can be an expensive city for accommodation, particularly during peak travel periods. Comparing different room types, booking ahead and considering accommodation slightly outside the centre can help you manage costs.
Final thoughts on the best places to stay in Reykjavik
For most travellers, I’d choose a hotel in downtown Reykjavik or near Laugavegur. You’ll be close to the main attractions, have plenty of restaurants to choose from and can explore much of the city without needing a car.
If you prefer a waterfront setting, look around the Old Harbour and Grandi. For a quieter stay, consider Vesturbær or Laugardalur. And if you’re travelling on a budget, compare the savings at properties outside the centre with the cost and convenience of getting around.
Wherever you stay, Reykjavik makes a great starting point whether you’re spending a weekend in the capital before heading out on a road trip around the country, or using it as a base for day trips around Iceland.
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