The main types of accommodation in Iceland
Iceland’s accommodation landscape ranges from sleek Reykjavík hotels to rustic mountain cabins. The table below gives you a quick overview of each type, typical summer prices, and who it’s best for. Prices are per night for two people sharing (double room or dorm bed) in peak summer; winter rates are often 30–50% lower.
Where to base yourself around Iceland
Your choice of base determines how much driving you do and what you can see. Here’s how to plan your accommodation locations.
Reykjavík as a hub
If you have limited time (3–5 days), basing yourself in the capital allows day trips to the Golden Circle and South Coast. For a Reykjavík-based trip, allocate 3–6 nights in the city, with 1–2 nights at the start and end for arrival/departure logistics. For a full rundown of what to do in the city, see sightseeing in Reykjavik.
South Coast
The South Coast is a multi-day adventure best explored in 2–3 days, covering waterfalls, Dyrhólaey, Vík, Eldhraun lava fields, Fjaðrárgljúfur, and glaciers. Driving from Reykjavík to the first coastal stop takes just under 2 hours; to reach Jökulsárlón Glacier Lagoon comfortably, plan at least 2 days. Guesthouses and cottages in Vík, Kirkjubæjarklaustur, and near Skaftafell are excellent bases.
Golden Circle
The Golden Circle is a 300 km (187‑mile) loop that can be comfortably completed in 6–8 hours as a single-day trip from Reykjavík. If you want to linger, consider staying at a farm stay or guesthouse near Þingvellir, Geysir, or Gullfoss. See our detailed guide to driving the Golden Circle for itinerary tips.
Akureyri and the North
North Iceland (Akureyri to Mývatn) deserves its own base. Plan 6–7 hours of stops plus 2–3 hours of driving, totaling about 90 km (56 miles). Akureyri has hotels and guesthouses; Mývatn has self-catering cottages and campsites. This region is also prime for northern lights viewing in winter.
The Ring Road with multiple bases
For a full lap of the Ring Road (1,332 km / 828 miles), most travelers allow 7–10 days. A sweet-spot pace is 7–8 days (2–4 hours driving daily), a comfortable pace is 10–12 days (allowing side trips like Snæfellsnes), and a leisurely pace is 14+ days (perfect for the Westfjords). You’ll need a different base each night; plan stops around major towns and scenic clusters. Book well in advance, as rural accommodation fills quickly.
How to book smart and save on Iceland accommodation
Accommodation in Iceland is expensive due to geographic isolation, high taxes and import duties, a small population, and massive tourism demand. But you can save significantly with these strategies:
Book as far ahead as possible – ideally 6–12 months in advance for summer stays, 6–9 months for winter. Prices rise sharply closer to travel dates, and rural options sell out.
Travel in shoulder or low season – May, September, and November–March (excluding holidays) can cut accommodation, car rental, and flight costs by up to 50% compared to peak summer.
Choose self-catering options – hostels, guesthouses, and cottages with kitchen access let you cook meals using groceries from Bónus, Krónan, or Nettó. Eating out is far more expensive, with entrees starting at 3,500 ISK.
Use a campervan – renting a campervan and staying at campsites can save over $2,500 compared to hotel stays during a week-long trip. Check out a camping tour around Iceland for inspiration.
Stay just outside Reykjavík – accommodations 20–30 minutes from the city center can be significantly cheaper. Rural areas like Snæfellsnes or the North also offer lower prices than the South Coast.
Book directly via the accommodation’s own website – many offer lower rates or special deals for direct bookings, bypassing third-party platform fees.
Bring dehydrated or camping meals from home (within food import limits) and skip bottled water – Iceland’s tap water is pure glacier water and free.
Eat at bakeries (some offer end-of-day discounts) and gas stations (e.g., hot dogs, sandwiches).
Cross-check booking strategies on an independent reference like HotelsPedia's independent guide to booking hotels for less for a neutral rundown of how to find the best rates without falling for marketing tricks.
Always get the total price including taxes and fees – the US Federal Trade Commission’s rule on unfair or deceptive fees reminds travelers to look for all-in pricing. Many booking sites hide resort fees or cleaning charges until checkout.
For more budgeting tips, read how to spend a week in Iceland on a budget.
How to vet a place before you book
To avoid disappointment and hidden costs, follow this checklist before confirming any reservation:
Check the real location on a map – use Google Maps or Booking.com’s map feature to confirm proximity to attractions, city center, or transport. A listing that says “near Reykjavík” could be 30 km away.
Decode star ratings cautiously – in Iceland, a 5‑star hotel averages ~$1,070/night, 4‑star ~$288/night, and 3‑star ~$209/night, but ratings may not reflect Western standards. Verify amenities (private bathroom, breakfast, heating) independently.
Get the full price including all fees – cleaning fees, service charges, and taxes can add 20–30%. Always expand the price breakdown before booking.
Read critical reviews across multiple platforms – check TripAdvisor, Booking.com, and Google Reviews for consistent complaints about cleanliness, misleading photos, or hidden fees. Prioritize recent reviews from the same season you’ll visit.
Prioritize accommodations with kitchen access – hostels, guesthouses, and Airbnbs with kitchens let you cook, cutting daily food costs significantly. Grocery shopping at Bónus or Krónan and buying fish from fiskbúð can save a lot.
Use independent reference sources – cross-check facts with our full where-to-stay-in-Iceland overview, Visit Iceland, Rick Steves Forum, and I Heart Reykjavik to find small guesthouses not listed on mainstream sites.
The mistakes travellers make with Iceland accommodation
Booking too late – especially for summer and the South Coast, where inventory is limited and prices skyrocket.
Underestimating driving distances – the South Coast requires at least 10–12 hours to reach Vík and back from Selfoss; the Ring Road is 1,332 km. Don’t book accommodation that forces rushed driving.
Ignoring seasonality – many rural guesthouses and cottages close in winter, and some self-catering units lack proper heating. Always check winter availability and heating type.
Not self-catering – eating out for every meal adds hundreds of euros. A kitchen can slash your food bill by half or more.
FAQ
What is the cheapest way to sleep in Iceland?
The cheapest is camping at designated campsites (€10–€20 per person per night) or using a campervan and staying at campsites. Next are hostel dorm beds (€35–€65). If you want a private room, guesthouses with shared bathrooms offer the best value.
Where should I stay to see the northern lights?
For northern lights viewing, stay away from city lights. The countryside around Akureyri, Mývatn, the South Coast (near Vík), and the Snæfellsnes peninsula are excellent. Many farm stays and guesthouses offer aurora wake-up calls. See our list of hotels in Iceland for northern lights for more options.
Is wild camping allowed in Iceland?
No, wild camping is not permitted outside designated campsites. You must camp in official sites (many with facilities) or on private land with the landowner’s permission. The camping in Iceland guide covers all the rules and best campsites.
How far ahead should I book accommodation?
For summer (June–August), book 6–12 months in advance, especially for rural areas and popular guesthouses. For winter, 6–9 months ahead is wise, though last-minute availability is better than in summer. Booking early also locks in lower rates.
Should I stay in Reykjavík or around the island?
If you have less than 5 days, base in Reykjavík with day trips. For a Ring Road trip, you’ll need accommodation at different points each night. Splitting your stay gives you more time at each region and reduces driving fatigue. Use our full where-to-stay-in-Iceland overview to plan your route.
Sources
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