Best Hotels in Iceland

A listicle of the best hotels in Iceland for city breaks, hot springs and northern lights viewing. Discover what makes our hotel selections so special when you book one of our tailor-made Iceland tours.

Iceland has a wide range of excellent hotels, suitable to various budgets, preferences and interests. Below are some of the best hotels in Iceland based on our first-hand experiences, guest reviews and particular interests. In this listicle, we focus on excellent hotel options for a city break, hot springs and northern lights viewing.

Best hotels in Iceland for a city break

For a city break in Iceland, Reykjavik is the clear choice. The capital city of Iceland offers a blend of cultural attractions and urban comforts as well as easy access to many natural wonders. Below are some of the best hotels for a city break in Reykjavik.

Hotel Borg is a historic and elegant Art Deco style hotel and Reykjavik landmark, conveniently located in the heart of downtown Reykjavik. With its easy proximity to culture and entertainment, Hotel Borg is a fantastic option for travellers interested in immersing themselves in Reykjavik's culture and architecture. The hotel also has a rooftop spa and sauna, ideal unwinding and taking in the cityscape after a day of exploration.

Alda Hotel Reykjavik is a contemporary hotel with a stylish design, situated on the main shopping street in the trendy district of Borgartún in the centre of Iceland's vibrant capital city. One of the highlights is the hotel’s rooftop terrace with stunning city views. It’s the perfect spot to relax and enjoy the scenery, including the picturesque Faxaflói Bay and the nearby mountains.

Best hotels in Iceland for hot springs

Iceland offers many excellent hotels that provide easy access to hot springs. Below are three of our favourites for experiencing Icelandic hot springs.

Surrounded by the world-famous milky-blue waters of the Blue Lagoon, The Retreat Hotel naturally belongs on this list. Guests at this luxurious hotel enjoy exclusive access to the Blue Lagoon geothermal spa at their convenience, providing a more private and luxurious experience compared to other Blue Lagoon visitors.

Located in the South of Iceland, close to the Golden Circle attractions, Hotel Grimsborgir offers access to several nearby hot springs in the geothermal area. Some of the main hot springs guests can visit during their stay include the famous Geysir Hot Springs Area, the more authentic and less crowded Secret Lagoon, the Fontana Geothermal Baths, the lesser-known Hrunalaug, and the Bruarfoss Waterfall.

The Siglo Hotel is located right on the waterfront in Siglufjörður, a charming town in North Iceland. The hotel offers a quiet and romantic setting with intimate access to an outdoor thermal hot tub against stunning fjord scenery. There are also several geothermal areas and hot springs located a bit further away, which guests can visit during their stay.

Best hotels in Iceland for Northern Lights

For the best chances of seeing the Northern Lights in Iceland, travellers should visit between September and April when the nights are darkest and head to areas with minimal light pollution. With this in mind, below are some of the best hotels for witnessing the magical Aurora Borealis in Iceland.

Located in Southern Iceland, Hotel Rangá is a fantastic hotel for Northern Lights viewing opportunities. The hotel has an on-site stargazing observatory on the roof with telescopes, and they offer an Aurora wake-up service to ensure guests don’t accidentally miss the lights. The hotel’s location also ensures minimal light pollution and provides unobstructed views of the stunning landscapes surrounding the hotel.

Less than a 2-hour drive from Reykjavik, in a rural area designated as a Dark Sky Preserve with very low light pollution, lies Hotel Husafell – prime positioned for Northern Lights viewing. The region frequently enjoys clear skies which is essential for being able to see the lights during the aurora season. This hotel also has an Aurora wake-up service, and guests are able to join a number of Northern Lights excursions during their stay. The panoramic views and an outdoor hut tub provide the cherry on top.

A five-minute drive from the Blue Lagoon, we find the Northern Light Inn . As the name suggests, the hotel is dedicated to helping their guests enjoy this magical phenomenon during the aurora season, from Aurora wake-up service and outdoor seating areas ideal for aurora viewing to guided Northern Lights excursions. The very location of the hotel is known for its clear skies as well as low light pollution. And the benefit of being able to visit the Blue Lagoon during your stay adds to the relaxing and rejuvenating experience.

Finally, moving to the Snæfellsnes Peninsula in western Iceland, we find the beautiful and tranquil Hotel Búðir. Its remote location in stunning surroundings away from major light pollution provides another ideal setting for Northern Lights viewing. Although the hotel doesn’t have dedicated Aurora gazing facilities, the unobstructed, dramatic views of the surrounding coastline and mountains are perfect for spotting the Northern Lights on clear nights. This is a wonderful place to experience Iceland’s natural wonders while steering away from the crowds.

For pre made tour package options that include a bit of everything (Reykjavik, hot springs and chasing the elusive Northern Lights), see for example the following tours:

Private Iceland Premium Short Tour - a premium tour with all private activities.

Fire, Ice & the Blue Lagoon – winter - 5 days self-guided visit to the south of Iceland.

Northern Lights Exploration- small group with focus on seeing the Northern Lights.

Golden Circle & Northern Lights – Winter- 7 days self-guided visit filming locations from the Game of Thrones.