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Where to stay in Iceland along the Ring Road

It’s that time of year! If you haven’t booked your accommodation for Iceland in the next few months, it’s time to get on it because the options are limited and often book up months in advance. Not only that, but there are a number of considerations you’ll want to keep in mind when booking a hotel in Iceland, which are different from your typical vacation. Read on for information on the best hotels and accommodation in Iceland near the Ring Road, plus tips for picking your hotel, my personal favorites, and what to look out for.

Budakirkja Iceland

What to look for in a hotel in Iceland

Even though the entire point of visiting Iceland is to spend time outdoors and enjoy the beautiful scenery, the fact is you’ve got to sleep somewhere. It’s pretty popular to book a camper van, but depending on the season and the wind, you’re in for a rough ride.

So assuming you’re staying in a hotel, how should you make your decision? Here are a couple of pieces of criteria that quickly became critical during my last trip.

Well-paved road

Even though you definitely got gravel protection when you booked your car, nothing’s a bummer like needing to rough it to your hotel. Especially in winter when the roads can get covered in snow or ice over. Check the accessibility of the hotel from the road and determine whether the car you’re planning to rent is up for the challenge.

Good on-site restaurant

Oftentimes, when you end up at a hotel for the night in Iceland – that’s it. Your hotel could very well be in the middle of nowhere, with no restaurants or supermarkets in the vicinity. Unless you came prepared, the hotel restaurant is your only option. So make sure that you not only read reviews for hotels, but also for their food. There’s nothing worse than crappy food at Iceland prices!

Reindeer Carpaccio at Hotel Ranga

Hands down the best food at any hotel of the trip at Hotel Ranga .

Hot tub is a plus

A surprising number of hotels offer a hot tub for warming up after those long hikes in the cold. It doesn’t even need to be excessively fancy to offer a hot tub. For example, when we stayed at River Hotel we had no idea there would be a hot tub waiting for us!

Breakfast included

Similar story to dinner, you want to get breakfast included but for another reason: food in Iceland is ungodly expensive. If you can get a hotel that has breakfast included, you can easily knock a huge chunk of daily expenses off your budget. Typically we ate breakfast at our hotel, made sandwiches on the road, and only ate at a restaurant for dinner and this helped keep the expenses lower.

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Guesthouses vs. hotels

Speaking of saving money, if you want to be able to cook for yourself, guesthouses are a great option because you can get them with equipped kitchens. Personally we never took advantage of this when staying at guesthouses, but a lot of other guests did and I can definitely tell you – even Iceland groceries are cheaper than Iceland restaurants 😉

Hotel Ranga Iceland

The coziest lounge in Iceland, Hotel Ranga .

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Best hotels for…

Now I can share with you a few of the favorite places that I stayed in Iceland. At least for me, after roughing it out in the cold, snow, and mist, being able to warm up somewhere nice at the end of the day was something to look forward to. So it’s got to be cozy!

Best hotels in Iceland for seeing the northern lights

Our first time seeing the Northern Lights in Iceland was at Guesthouse Hafnarnes in Höfn on the southeast tip of Iceland. What makes it special is that you can see the lights dancing over the water and mountains, and this guesthouse was far enough out of the town that we had no trouble watching the lights from our bedroom window.

Another great place to see the northern lights is Guesthouse Dimmuborgir in Mývatn. Again, you get the reflection on the lake but with a wide open space around you. The tricky part here is that the north is often cloudier than the south so you need to get a little luckier in order to see the lights.

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Best hotels in Iceland for couples

Easily the most romantic place we stayed was Hotel Ranga near Hella on the Golden Circle. Jacuzzi, gourmet restaurant, ultra cozy lodge – what more could you wish for? The only down side is that it’s expensive so staying more than a few nights is likely to break the bank. But at the very least you can enjoy a little luxury in between all that driving the Ring Road!

Best hotels in Iceland for a small budget

Easily the best value accommodation we had in Iceland was Guesthouse Hof on the Peninsula, but it’s a little like comparing apples and oranges. Here you stay in a shared house with other guests, but every guest has their own room and a shared bathroom. If you’re fine with that, you can appreciate the fact that it’s only about 60 EUR per night for two people, and yes – they have a hot tub.

Reykjavik Iceland

Where to stay in Iceland

Alright, so now that we’ve gotten an idea about the different things you’ll want to look for and some of my favorite spots for different ocassions, let’s take a look around the Ring Road for your (few but sometimes special!) options.

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Depending on when you land or depart, you may feel compelled to stay near the airport. On our last evening flying out of Iceland we did exactly the latter to save ourselves some time. But coming in, we knew we wanted to see explore the nearby peninsula before embarking on the Ring Road tour so Reykjavik was the best place to crash on the first night.

Some of the most popular places to stay in Reykjavik are:

Kex Hostel – Honestly a bit pricey for a hostel but it’s what the cool kids are doing. If you are not traveling alone you may want to opt for a hotel instead, given that their private rooms cost as much as any other hotel. But if you’re traveling solo, you might find some friends to travel with during your stay in Iceland.

Icelandair Hotel Reykjavik Marina – I did not stay at this Icelandair hotel but another, and can vouch for how nice they can be! Check out my recommendations in North Iceland for more about this chain.

Heida's Home Center – A good blend between the comforts of a hotel and the prices of…less than a hotel :) The prices are pretty consistent with the rest of the city around 80-90 EUR per night. Not a bargain but not bad compared to most European cities.

Reykjavik Iceland

South Iceland (Golden Circle)

The South Coast of Iceland is where you’ll find some of Iceland’s most famous waterfalls and national parks (Geysir anybody?). Naturally, this makes it one of the parts of Iceland that is most visited by tourists. If you’re planning a tour of this area, be sure to book ahead. Here are my recommendations for the places I enjoyed staying near the Golden Circle!


Hotel Ranga ($$$) – Hella (Southwest)

A great location to explore both the Golden Circle and Iceland’s south coast. It’s absolutely a luxury location but there’s no reason not to treat yourself, you’re in Iceland anyways! There are three jacuzzis, a Northern Lights wakeup list, and mimosas included in the complementary breakfast 😉 Absolutely worth the splurge, you don’t have to stay in an expensive room to enjoy the facilities and eat at the fantastic restaurant.

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Hotel Ranga Iceland

Reindeer Carpaccio in Iceland

River Hotel ($$) – Hella (Southwest)

A more budget-friendly alternative to Hotel Ranga, you still get a jacuzzi and a view over the river. Unlike Ranga, this hotel doesn’t have its own restaurant (they’ll organize for you if you have a group of 10+ people) so you’re left with Hella’s four restaurants as dining options which are honestly lackluster. Super friendly staff, they brought us towels to keep our ears warm as we sat in the jacuzzi despite gale-force winds!

River Hotel Iceland

East Iceland

After traveling along the south coast, you’ll obviously meet the eastern part of the country. We stayed in Höfn for one night before doing a long hault up the east coast to Myvatn in the North. For that reason I only have one recommendation for the East but it’s a good one!


Guesthouse Hafnarnes ($) РH̦fn (Southeast)

This place is a really great deal, located a bit outside of Höfn – which makes it dark enough to see Northern Lights! We were able to see them from our view over the bay. If you want to save on food costs, it’s easy to cook here.

Guesthouse Hafnarnes Iceland

If you don’t decide to cook for yourself, you can enjoy Pakhus , a favorite of the locals and the home of the best food I ate in Iceland. I mean just look at this – a three course meal and it only cost me 50 EUR 😵 (No really, once you get here you’ll understand why 50 EUR is an absolute bargain for this much food)

Even if you don’t decide to stay at Guesthouse Hafnarnes I would still stay in Höfn just to eat a this delicious restaurant.

Pakhus restaurant in Iceland

North Iceland

North Iceland is where things get extra sparse. Going around the Ring Road, you have three main places you can stay: Egilsstaðrir , Myvatn , and Akureyri . I don’t recommend staying in Egilsstað,r, given it’s a pretty average tiny city and there’s not much to do there. Here are my recommendations in the North:


Guesthouse Dimmuborgir ($$) – Mývatn (Northeast)

If you’re going to be staying in Mývatn (and you should!), you cannot go wrong with this guesthouse. Here you can stay in the cutest individual guesthouses, complete with roofs lined with Christmas lights and a view over the Mývatn lake. Many come with kitchens, so there’s another opportunity to cook while you’re in Iceland.


Iceland Air Akureyri ($$) – Akureyri (North)

This hotel has a super stylish interior, and the individual rooms are compatatively spacious. Easy to walk to Akureyri’s main streets, as well as the city’s famous church. After staying in several guesthouses, this hotel felt pretty swanky.

Icelandair hotel Akureyri

Icelandair Hotel Akureyri

Icelandair hotel Akureyri

West Iceland

If you’re planning to wake up early (or be out late) to take photos of Kirkjufell (Iceland’s most recognizable mountain), Grundarfjörður is possibly the most efficient place you can stay. But if you’re looking for somewhere more remote on the Snæfellsnes Peninsula (or a little more affordable), I have a few recommendations.

Snæfellsnes Peninsula

Guesthouse Kast ($$) – One of the only places you can eat dinner in the sparsely populated peninsula, staying here would be a great optimization. Here we really experienced more home-style Icelandic food, and the staff was incredibly kind. They also have a northern lights wakeup list, and the wifi works really well.

Guesthouse Hof Iceland

Guesthouse Hof ($) – Some real budget accommodation in the area, as I mentioned earlier you actually share a guesthouse with other people. That said, at roughly 65 EUR a night, it’s hard to complain…especially when each house also comes with a jacuzzi! If you don’t need a lot of privacy, the view of the sunset over the ocean and jacuzzi combo is pretty amazing.

Where’s the best place you stayed in Iceland?

I would love your recommendations for my next trip to this beautiful country.

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About the author

Hi there! I'm Monica, an American expat living in Germany for nearly six years and using every opportunity to explore the world from my homebase in Berlin. My goal is to capture my memories in photos and posts that show how easy it is to start from scratch and travel the world by working abroad.

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