18 best hotels in Iceland for a bucket list escape
Green by definition – its energy provided by more than 200 volcanoes and a huge number of hot springs – Iceland is a must-visit for anyone who loves nature in its rawest, wildest incarnation. And the best hotels in Iceland are the perfect place to start if you're planning an adventure to the Land of Fire and Ice.
One of our favourite cold-weather destinations, along with Rovaniemi for the magic of Lapland and even the Scottish Highlands where the mountains are usually covered in snow from December to March, Iceland is a delight whatever the season, from Reykjavik to Tromsø.
Whether you're here to see the Northern Lights or to relax in its thermal waters, there's plenty to keep you entertained in this nature-lover and adventurer's playground.
In Iceland, glaciers loom roadside, waterfalls thunder down within arm’s reach, geothermically toasty rivers invite you to strip off and plunge right in, and whales leap out of the sea beside you - it's a place like nowhere else.
While this country is pretty much all about the great outdoors, the best hotels in Iceland respond to the landscape in very special ways, providing alfresco amenities such as hot tubs but also warmly welcoming interiors that emulate rather than try to rival the landscape.
Local stone, wood, grasses and other materials are used in their construction - as seen most dramatically in the Torfhús Retreat with its green-roofed turfhouses - and earthy, sombre palettes echo the colours of the local moss, heather, berries and black-sand beaches.
A world away from this are the cosmopolitan temptations of Reykjavík, one of Europe’s smallest capitals but one that punches above its weight in terms of art, history, shopping and dining. And tucked in among these treasures are some of the best hotels in Iceland – chic but welcoming urban boltholes such as the Sandhotel, where you can hole up in the bar-bistro with cinnamon-spiced buns still warm from the adjoining bakery.
Check out the best hotels in Iceland for 2025.
Highland Base Kerlingarfjöll
Rooms, suites and lodges at Highland Base Kerlingarfjöll, along the banks of the Ásgarðsá River in the heart of the Ásgarður valley in a remote setting north-east of the Golden Circle, come in gorgeous earthy colours, with a minimalist but super-cosy vibe. Stay at this top Iceland hotel or in its on-site hostel, huts or campsite and you can recharge for your adventure in its Highland Baths – natural hot springs with soul-stirring views of the surrounding mountains.
Summer and winter alike, the restaurant is a charming refuge for seasonal menus of bistro-style comfort food plus snacks including waffles and coffee, and you can also ask for breakfast or lunch takeaway packages to take out into the wilds with you.
Hotel Budir,
Nestled on the edge of Snaefellsjokull National Park in a lava field, Hotel Budir is one of Iceland's most iconic hotels. Formerly a 17th-century trading post, it is situated next to the most photographed church in Iceland: Búðakirkja, a quaint black church often featured on postcards.
Inside, the hotel pays homage to its storied past with classic design touches and references to Icelandic folklore. There are 28 elegant rooms with heated hardwood floors, minimalist decor, cosy furnishings, and large windows for views of the glacier and breathtaking landscape.
Don't leave without dining in the hotel's restaurant. Offering authentic West Icelandic cuisine, guests will be taken on an unforgettable culinary journey. Fresh, locally sourced ingredients (including fish) are paired with hand-picked wines by in-house sommeliers. Your dinner may be interrupted by the Northern Lights, but it's part of the experience. Words Lisa Joyner
Hotel Von, Reykjavik
Planning a city break to Reykjavik? Add Hotel Von to your travel wishlist. Situated on the main shopping street in downtown Reykjavik, the building is a far cry from its former days as a butcher's shop.
Today, it houses 52 smart rooms, a shared lounge, terrace, and a French-inspired restaurant. It's the perfect base for exploring Reykjavik, with plenty of surrounding shops, restaurants and bars (including must-dine-at Sumac). Its sister hotel, ION City, is a five-minute walk away.
The Retreat at Blue Lagoon, Southwest Iceland
Spa hotels don’t come any more atmospheric than this luxury property at the world-famous thermal pools in their otherworldly setting of lava fields. Tucked away in the island’s south-west corner but closer to the airport than Reykjavík (and hence great for a pre- or post city-break stop-off), The Retreat at Blue Lagoon blends designer furniture with low-key references to the surrounding landscape such as fireplaces made of lava bricks.
But the spa’s the star, of course – vast, state-of-the-art, and with access to its own tranquil section of the Blue Lagoon, far from the madding Instagrammer crowds. Complimentary yoga sessions and hikes add to the feel of a blissed-out escape.
Siglo Hotel
If you’re looking for something low key and off the tourist trail, Sigló Hótel may be just the ticket. Set by the marina in Siglufjörður, a small fishing town in a skinny fjord of the same name, northwest of whale-watching hotspot Akureyri, it has landing-pier views from its restaurant, a lounge with a wood-burning stove, a sauna, and simple rooms and and suites, some with fjord views and balconies.
As well being a great place for simply watching the world go by, the hotel is just a short stroll from the Herring Era Museum of fishing history and on hand for magnificent hiking trails that will reward your efforts with glorious views.
ION Adventure Hotel, Nesjavellir, Southwest Iceland
Another property encouraging you to stay longer outside Reykjavik, this dramatic stilted structure beside a dormant volcano was built from the abandoned relics of a nearby power plant as a temple to both nature and pampering. The two combine in its superlative spa with its sauna built of lava rocks and its treatments based on Icelandic herbs, and in its outdoor deck with its long hot tub fed by local hot springs.
As the name suggests, guests at ION Adventure Hotel are encouraged to head outdoors, with offerings including diving in the Silfra fissure between continental plates. The bar was specially designed to maximise Northern Lights sightings, too.
Torfhus Retreat, Selfoss, South Iceland
East of Reykjavik, this charming, cosseting collection of traditional grass-roofed stone turfhouses is proof that the area containing Geysir, Gullfoss waterfall and Thingvellir National Park is worth more than a day’s coach tour from the capital. Check into the remote Torfhus Retreat far from light pollution and you’ll enjoy glorious night-sky views from your private geothermally heated basalt hot tub – and, in winter, a high chance of spotting the Aurora Borealis.
There are also a few Torfbaer – individual suites, with a geothermally heated plunge pool shared between three. Staff will arrange local outings ranging from snorkelling between tectonic plates to horse-riding and Super-Jeep expeditions through the Highlands.
Sandhotel, Reykjavik, Southwest Iceland
Unobtrusive Art Deco touches and polished oak floors blend serenely with contemporary decor and artworks and restful natural hues to make the boutique Sandhotel a calm retreat in the heart of the Icelandic capital, just steps from the iconic Hallgrimskirkja and the National Gallery of Iceland.
You’re in a plum spot on the Laugavegur, too, for the city’s best shopping – think everything from digitally printed knitwear to one-off Nordic homewares – and some of its most tempting bars. The hotel was founded by the team behind the legendary Reykjavik bakery Sandholt right next door
Kvosin Downtown Hotel, Reykjavik, Southwest Iceland
Chic but homely, this intimate urban haven in a historic building right by the Icelandic Parliament and the old cathedral offers everything from ultra-bijou ‘Cozy’ rooms to spacious apartments. The apartments at Kvosin Downtown Hotel have kitchenettes complete with coffee machines, fridges that can be pre-stocked to your exact requirements before arrival and, in most cases, hobs for those who want to whip themselves up a light snack.
But you won’t be able to resist the call of the snug bar, Aldamot, which translates as 'meeting of centuries’ and offers an enticing array of wines, gin pairings, cocktails, and charcuterie and cheese platters.
Tower Suites, Reykjavik, Southwest Iceland
All of Reykjavik and the surrounding coastline, mountains and glaciers lie at your feet at this eight-suite eyrie on the 20th floor of the city’s tallest building, Tower Suites. When you’re not tracking the changing weather and light patterns courtesy of your in-suite telescope, you’re a short stroll from landmarks including Hofdi lighthouse and Klambratun Park with its art gallery and zip-wire.
Some of the sleek modern suites come with eggshell baths set in front of floor-to-ceiling windows. Invisible check-in via smartphone is available for those who like to keep things discreet, but champagne on arrival, a full concierge service and the Sky Lounge with an honesty bar bring a human touch to proceedings.
Fosshotel Myvatn, Skutustadahreppur, East Iceland
In the lesser-visited north of the island where few overseas visitors ever tread, the uncompromising Fosshotel Myvatn sits in the midst of the almost lunar landscape of Lake Mývatn. It’s hard to know what’s most stunning: the low-rise, grass-roofed feat of modern architecture, the stylish interiors, the eye-catching innovative cuisine or the surrounding natural wonders – some of which may be familiar to you from Game of Thrones.
You’re right on hand for the Myvatn Nature Baths, a naturally heated artificial lagoon with mineral-rich waters that make it a good alternative to the Blue Lagoon across the island.
Hoepfner and Tulinus Historical Houses, Akureyri, North Iceland
If you’re looking for a characterful place to stay in the whale-watching capital of the north, this classic Scandinavian merchant’s house constructed in 1911, when Iceland was still under Danish rule, ticks all the boxes.
Affordable but furnished with taste and imagination, Hoepfner and Tulinus Historical Houses has a handful of apartments all with kitchenettes and up to three bedrooms, and some with sea views, making it a great option for families. The prize spot is the lovely wooden-floored loft with its original beams.
Umi Hotel, Hvolsvollur, South Iceland
With its own deserted stretch of black-sand beach, friendly resident pooch Breki and fresh modern decor, this tiny gem of a family-run hotel on the road out to Vik is an alluring stop-off for those making their way along the south coast.
Just a few minutes from the mighty Skógafoss waterfall, Umi Hotel also has views of the Westman Islands from its restaurant, and the subglacial volcano Eyjafjallajokull (the one that caused all the ash-cloud dramas of 2010) from its lounge-bar. Nearby activities include ice-cave exploring, glacier hikes and snowmobiling sorties.
Hotel Stracta, Hella, Southwest Iceland
Close to the attractions of the Golden Circle, this contemporary family-owned property has saunas and hot tubs dotted throughout its garden. Close to geologic attractions including the Caves of Hella and Ægissíðufoss Waterfall, Hotel Stracta offers clean-lined Nordic rooms including spacious studios with kitchenettes perfect for families, as well as two-bedroom apartments with their own hot tubs.
The restaurant with its Eyjafjallajökull and Hekla views fuses traditional Icelandic and global cuisine while the bistro bar is focused on clean eating. Local activities include horse riding, hiking, kayaking, swimming, helicopter tours, golf and cave exploring.
The New Post Office, Heimaey, Southwest Iceland
Off the beaten track on the only inhabited island in the majestic Westmans, or Vestmannaeyjar, (home to Iceland’s largest puffin colony, as well as to one of its loveliest golf courses), this one-time telephone office and then post office is now home to welcoming apartments sleeping up to four.
Decorated in minimalist greys but with a warm feel, each apartment at The New Post Office includes its own kitchen and balcony. On the ground floor, you’ll find a spacious sundeck, a sociable lounge and storage for bikes and golf sets.
Hótel Kría, Vík, South Iceland
In Vík midway along the south coast, perfect for exploring all the attractions of this stretch of coastline with its eerie black sands, Hótel Kría is revered for its traditional Icelandic cuisine with a modern twist, accompanied by glorious mountain views through vast double-height picture windows.
Among the highlights are smoked Arctic char and beetroot with pickled blueberries. There’s also a rustic-chic cocktail bar with a daily happy hour. Tours on offer from the property include snowmobile adventures on Mýrdalsjökull Glacier and snorkelling in Silfra.
Árnanes Country Hotel, Höfn, East Iceland
Simple, homely and utterly charming, this hotel, restaurant and stables is situated in the Vatnajökull National Park and boasts panoramic views from Arnanes to the main glacier from all of its cosy wood-panelled rooms and from its restaurant.
Árnanes Country Hotel is just a few minutes’ drive from the fascinating, lively fishing village of Hôfn, from which it sources its lobster and fish of the day; the beef, lamb and potatoes are hyper-local, the beers are all locally produced, and the salad and fresh herbs come from the on-site organic garden. As well as riding tours, it offers other excursions including birdwatching sorties by kayak.
Fosshotel Hellnar, Snaefellsnes peninsula, West Iceland
On the remote Snæfellsnes peninsula north of Reykjavik, this charming country hotel sites beneath the Snæfellsjökull Glacier, a national park made famous by Jules Vernes’ novel Journey to the Centre of the Earth. Said to be one of the seven great energy hubs of the earth, the glacier is believed to have various mysterious powers.
Fosshotel Hellnar has 39 understated, spacious doubles, twins and triples, some with heart-racing ocean views. The restaurant, too, accompanies its unique Icelandic dishes with views out over Hellnar's cliffs and regular orca spottings.
Fisherman Hotel, Westfjords, Northwest Iceland
Far removed from it all in Suðureyri in the Westfjords, this down-to-earth hotel is run by a passionate foodie who adores giving visitors from all over the world a unique insight into local culture and slow food with a free summer-time Seafood Trail. The experience at Fisherman Hotel includes gourmet tastings and the chance to hear about how the sustainable local fishing industry has shaped Iceland's culture, both int he past and today.
You can also visit Dynjandi waterfall and remote local villages for a taste of the true Iceland beyond the tourist trails. The rooms include family options and in summer the hotel has a pop-up coffee shop with cakes and other treats.
The Greenhouse Hotel, Hveragerði, South Iceland
Hip and hybrid, this refreshingly different property combines a hotel, boutiques and a food hall. But most of all, the Gróðurhúsið (Greenhouse) has a location perfect for enjoying the Reykjadalur hot spring valley with its hot river you can bathe in after an unforgettable two-hour hike past bubbling mud pools and achingly beautiful views.
Sustainably conceived, the hotel offers hip street-food-style dining ranging from tacos to self-assemble wok dishes, while its boutiques proffer home-grown furniture and design, Icelandic tweed clothing and deli treats.
Hotel Blonduós, Blonduos, North Iceland
Off-the-beaten track in northern Iceland, in a fantastic location for the Northern Lights (as well as the Icelandic Textile Centre), this one-time sheriff’s house was built in 1900 and turned into a hotel in 1943, making it one of the oldest in the country. Fully reimagined in recently, Hotel Blonduos offers 19 boutique-style rooms, some with Hunafloi Bay views (you may even spot the occasional passing whale).
There’s also one jaw-dropping (and huge) suite in the old church a few steps away, complete with wooden pews, stained-glass windows and a vaulted ceiling. The hotel’s Sýslumaðurinn Restaurant with its sea views serves mainly Icelandic dishes, some taking in global flavours and influences; don’t miss the baked cod with homemade pesto, Icelandic cheese and orzotto.
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