Where to Stay in Reykjavik – 4 TOP Neighborhoods (+ Hotels and Prices!)

nothern lights iceland hotels

This Nordic island has been making “noise” in the social media scene for years already because of its breathtaking show of Northern Lights. It easily became a bucket list destination to almost every local of the world. Well, who would not want to lay eyes on an Aurora show that hits close to the Cosmos? I definitely loved doing so!

Did you decide to organize an excursion to Iceland? You will most likely land in Reykjavik, the capital, and staying for at least one day there is an excellent idea. Now you might be wondering where to stay in Reykjavik, right? No worries, I got you!

While there are many sights in Iceland to witness such beauty, allow me to put the spotlight right on this moment at Reykjavik, the capital and the largest city of Iceland. On top of the Northern Lights show, you will surely love the vibrant and pastel-colored buildings there, preserved establishments from the 1920s, geothermal pools, museums and galleries, nightlife, the amazing LGBT community, and the midnight sun that happens during summertime where the sun shines until the end of the day.

Now, here is the wide array of Reykjavik accommodations I curated especially for you for when your itchy feet caught the travel bug once again. In this post you can find the 4 best central neighborhoods to stay in Reykjavik with my hand-picked hotel recommendations in each of them!

Are you ready? Let’s go!

4 TOP Neighborhoods where to Stay in Reykjavik

If you’re in a hurry…

The best area to stay in Reykjavik for first-time visitors is Miðborg (Midborg), the very center of the city. This is the perfect place to stay if you want to be in the center of the action, close to all the interesting sights and attractions!

Which area should you choose?

First of all, here is a map of all 4 Reykjavik neighborhoods I am going to talk about in this article, so you get a better understanding of how the city is organized:

reykjavik neighborhoods

Now, even if Reykjavik is not a big city (it’s rather small, I might stay), it’s still divided into different neighborhoods, each of them with its own charm, advantages and disadvantages. Ok, but how can you choose? No worries, just check out my list of personalized recommendations below and pick the right area for you depending on your preferences, budget or travel interests:

  1. Midborg / Downtownfor the first time
  2. Hlídaron a budget
  3. Vesturbær (West Town)the coolest area
  4. Laugardalurwith a family

You might be wondering: Is Reykjavik expensive? Can any type of traveler afford to go to Reykjavik? The answer to both of these questions is yes! Reykjavik is not a cheap city, but you can find anything there in terms of accommodations, from hostels and guest houses to luxurious hotels with an on-site spa – and everything in-between!

PS: If you’re looking for more accomodation for your whole trip, make sure to check out my Iceland accomodation guide to find the best places to stay!

Keep reading in order to find out everything you need to know about the top 4 neighborhoods in Reykjavik:

1. Midborg / Downtown – where to stay for first time visitors

Midborg Downtown where to stay in Reykjavik for the first time

Midborg, known as Reykjavik 101 is the heart and soul of the city and the best area Reykjavik for any first time visitor!

Midborg, the city center, is an excellent choice for all types of travelers out there, as it’s full of great restaurants, museums, bars and, of course, shops. And yes, it’s true, Midborg is also the best area to stay in Reykjavik if you’re interested in nightlife!

Some of the highlights of this area include Hallgrimskirkja Church (one of the most important landmarks in the city), the National Museum of Iceland, Nauthólsvík Beach, the Volcano House and Harpa Reykjavik Concert Hall as well. While you’re around the downtown area, you can also do some shopping on Laugavegur Street!

If you feel like this is the right place for you, here are the best hotels to choose from:

Luxury (US$170 and up)

where to stay in reykjavik
  • Sand Hotel – Located on the high street of Laugavegur in the city center, Sandhotel is the newest boutique hotel in town that promises a clean and chic atmosphere throughout your stay. Sand hotel also makes it easy for you by arranging your tours to Iceland’s wonders. One of the best things about this place is that it’s located within walking distance to tons of restaurants and popular attractions in the area. Definitely one of the best places to stay!
  • Reykjavik Residence Apartment Hotel – Built with soundproof rooms, this is definitely the place to rest in when you want to veer away from the busy surroundings of the city. Definitely one of the best hotels in Reykjavik city center! Plus, you will be walking distance to many great restaurants, bar options and popular attractions and it’s a great place to enjoy the Northern Lights in Iceland as well!

Middle-priced (US$140 – US$170)

  • Guesthouse Galtafell – Set in a building dating back to 1916, this Reykjavík guest house has an amazing location in the city center, close to many shops and restaurants. I honestly believe this place is a great choice if you want to be close to all the popular landmarks in Downtown Reykjavik!
  • Hótel Centrum – This accommodation is established in one of the oldest streets of Reykjavik. I don’t know about you, but that is enough reason for me to stay here. What is more, its award-winning restaurant named Fjalaköttur is something you should definitely put on top of your list while you’re here. Another cool advantage is that you will have many restaurant and bar options nearby – great for all types of travelers!

Budget (up to US$140)

  • Central Guesthouse Reykjavík – When it comes to the question on where to stay on budget in Reykjavik city center, you can totally take a look at this hostel-guesthouse. Central Guesthouse features family rooms with views of Lake Tjörnin, and access to many shared areas, I recommend it to all travelers on a budget!
  • Freyja Guesthouse & Suites – Are you traveling to the city on a budget but still want to be right in the city center, walking distance to all the popular attractions, restaurants and bars? Then I definitely recommend checking out this place, you might fall in love! This is actually a super nice guest house that offers apartments to stay in, all of them containing everything you might need for an awesome stay. Just make sure you book it far in advance.. places here are always sell out!

2. Hlídar – where to stay in Reykjavik on a budget

Hlídar where to stay in Reykjavik on a budget

Are you traveling to the city on a tight budget? No worries, you’ll find plenty of affordable accommodation options in Hlídar, also known as Reykjavik 105!

One of the best things about Hlídar is that it’s right near Downtown Reykjavik, making it a GREAT solution if you want to be super close to all the action but still want to save some money on accommodation. A great combo, am I right? Another great advantage of staying in this area is that it’s a bit calmer than Reykjavik 101, so you can get some peace and quiet at night.

Talking about downsides, unfortunately, this area doesn’t have many bar and restaurant options to choose from, but you can always walk to Midborg to explore the best things there (it’s only 15 minutes by foot!). If you want to do some exploration, you should know that Reykjavík Art Museum is in this area, as well as the Phallological Museum, one of the most unusual museums in the world, I’d say (not meant for children for sure!).

That being said, here are the best hotels in this area that I hand-picked for you, but make sure you book it at least 6 months in advance if you don’t want to miss the spot here:

Luxury (US$160 and up)

cheap hotels in reykjavik
  • Eyja Guldsmeden Hotel – Here’s another amazing option for all travelers that want to be spoiled during their stay, while being located extremely close to the Downtown area as well. This beautiful hotel has an on-site lively bar, a restaurant and great reviews, which is why I am recommending it to all travelers that want to be based in Hlidar. I hope it will fit your travel plans!

Middle-priced (US$100 – US$160)

  • One – A Townhouse Hotel – Check out one of the best rooms in town, located in an industrial-chic boutique apartment hotel! The accommodation location is just perfect, within easy driving distance (10 minutes) from many amazing sights/activities in Reykjavik. I consider it to be a great choice if you want to explore everything that the city has to offer as well as the Northern Lights!
  • Stay Apartments Bolholt – If you like a hotel that offers great value for the money you’ll be paying and that is within walking distance to Downtown Reykjavik as well, then I totally recommend checking this place out! It’s great for families as well and for travelers going to the country to see the Northern lights! Get ready for a super pleasant experience, as you can choose from different suites and you’ll be close to plenty of bar and restaurant options as well!

Budget (up to US$100)

  • Hlemmur Square Hostel – Are you traveling to Reykjavik on a budget but still want to enjoy all the best things that this neighborhood has to offer? No worries, there are plenty of good options out there! For example, this hostel is set on the 3rd and 4th floors of the building where custom-made beds can be slumbered on. There are mixed bedrooms of 4 and 6 and this hostel offers enough lockers, chairs, a bar, two kitchens, and other spaces for you to store your stuff and mingle with the other guests.
  • Nordurey Guesthouse – Here’s another amazing option for all those of you that are planning to travel on a low budget but still want to be in a good neighborhood, close to Downtown as well. The modern rooms here are spacious and have access to a lovely garden and  a shared kitchen… Check out the deals and get ready to be amazed, budget travelers!

3. Vesturbær / Reykjavik 107 – the coolest area to stay

Vesturbær West Town Reykjavik 107 best hotels

Vesturbær, which literally means the “West Town”, is also known as Reykjavik 107 and it’s one of the coolest and most underrated areas in Reykjavik!

It’s a central area located relatively close to Midborg (3 km away, but no worries, there’s always public transportation).

Vesturbær is actually located near the old harbor of Reykjavik and it’s a great place to stay both in terms of accommodation but also because you will always be surrounded by awesome restaurants, cafes, bars and clubs as well.

While you’re around the area, make sure to pay a visit to The Living Art Museum, the Whales of Iceland (a very cool whale exhibition), the Saga Museum and more! Plus, I definitely recommend going to Aurora Reykjavik Museum in case you won’t be able to see them during your trip but still want to learn everything about them!

Convinced? Here are the best hotels in this neighborhood to choose from, all sorted by budget for your convenience:

Luxury (US$150 and up)

places to stay in reykjavik
  • Sudurgata – Luxury Dream Apartment – Are you looking for one of the best apartments in the city? No worries, you just found it! If you’re traveling to Iceland with one thing in mind and that is completely luxury and splurging, then I’m pretty sure this accommodation will make all your dreams come true. One of the top advantages about staying here is that this place is not far from the Downtown area either and I definitely recommend it if you want to see the Reykjavik lights!
  • Black Pearl Apartment Hotel – Being “passionate perfectionists,” father and son Klaas Hol and Bert repurpose existing buildings to a new one, which explains how Black Pearl Apartment Hotel came to life. It was once an apartment and they gave a whole new meaning to it by transforming it to as one of the best accommodations in Reykjavik. Plus, you’ll have plenty of restaurant options nearby, as well as the Downtown area! Totally recommended for a great budget stay!

Middle-priced (US$70 – US$150)

  • Embassy Apartments Downtown – In case you’re looking for the best hotels out there that offer great value for the money you’ll be paying, you are on the right route! This is one of my top mid-range hotel recommendations in Vesturbaer and a great choice if you’re planning to see the Reykjavik lights during your stay. All the apartments they offer are very beautiful and sparkling clean, by the way!
  • Icelandair Hotel Marina – If you’re looking for a wonderful mid-range place that has beautiful and clean rooms, an on-site restaurant and that offers an excellent service for your Iceland vacation, then you should definitely book a room here! Besides the good reviews and the awesome facilities, one of the top things about staying here is that you will be super close to many green spaces and many restaurants and bars. Just check out the pictures and get ready for a great experience!

Budget (up to US$70)

  • Refurinn Reykjavik Guesthouse – Unfortunately, I could only find a good budget hotel in Vesturbaer, but no worries, it indeed offers a very good service! In all honesty, this is one of the best options out there if you’re looking for a cheap place that will offer a great night sleep after a full day of chasing the Northern Lights or exploring all the best things that Reykjavik has to offer. The guest house is super clean and the staff is very friendly and always willing to help!

4. Laugardalur – where to stay in Reykjavik with a family

Laugardalur where to stay in Reykjavik with a family
photo credits: (rinse). ”Laugardalur”. Photograph under creative commons license, available on Flickr. All rights belong to the photographer.

Wondering where to stay in Reykjavik so you can enjoy a calm atmosphere? Laugardalur is a charming neighborhood located in the Northern part of the city, not far from the city center. It’s my top recommendation for people traveling to Reykjavik with their families because you will have TONS of activities to choose from that will please both grown-ups and children alike!

This area in Reykjavik is also known as the “Hot Spring Valley” because there are plenty of thermal baths (natural hot tubs) there where you can go regardless of the time of year you visit.

If you’re wondering about the sights located here, then you should totally add Grasagardur Botanical Garden to your list, as well as Húsdýragarðurinn Park & Zoo, Laugardalslaug (if you love swimming), Asmundur Sveinsson Sculpture Museum and more. You can do hiking here as well, which I think is a great bonus for all those of you seeking some adventure!

Laugardalur is also more laid-back because it’s a residential area, so I totally recommend it to all those of you looking for some peace and quiet! If you feel like you belong here, scroll down to find my list of recommended hotels in this area:

Luxury (US$190 and up)

best family hotels reykjavik
  • Grand Hotel – This one’s for all travelers out there looking for a super spoiled and luxurious stay in the city! This awesome hotel offers a great service and if you book your room here, you will have many restaurants and bars nearby. It has an on-site restaurant and the rooms are simply superb, I’m sure you will fall in love! Some other cool facilities here include free gym access, a huge outdoor swimming pool, free Wi-Fi, free parking and more!
  • R13 – A Townhouse Hotel – In case you want to enjoy the ultimate stay in one of the best places for families in Reykjavik, then I urge you to check out this awesome accommodation! This beautiful offers clean and nicely decorated rooms, free Wi-Fi, a great location, a sun terrace, gorgeous city views and more! Plus, you will find many food places close to you in case you get bored and want to explore some Icelandic cuisine!

Middle-priced (US$50 – US$190)

  • Nordurey Hotel City Garden – Here’s my first recommendation for all travelers that are looking for an excellent mid-range hotel that offers a very good value for the money and that will help them save some bucks for their Iceland trip. Free wifi, a flat-screen TV, a very good location right in the heart of the neighborhood, free toiletries – these are just some of the advantages you’ll benefit from if you choose to book your stay here!
  • Hilton Reykjavik Nordica – In case you are looking for a very good mid-range hotel that is perfect for families as well, this one’s for you! This superb hotel offers a delicious breakfast buffet, friendly and helpful staff, a 5-star gourmet restaurant with amazing dishes, free Wi-Fi and a top-rated location – what more can you wish for your Iceland vacation?! Plus, you will be within walking distance to many green spaces, restaurants and cafes – a big plus!

Budget (up to US$50)

  • Galaxy Pod Hostel – This kind of futuristic and budget accommodation should not be missed on your list. This relaxing and cozy hostel offers dormitory rooms with cool sleeping capsules in Reykjavík, free WiFi, free public parking on site, and more!
  • Lækur Hostel – This cute and cozy hostel is fit for both solo travelers and families that are looking to save some money on accommodation so they can spend them on visiting some other beautiful parts of this incredible country. If you choose to stay here, you will enjoy free Wi-Fi, an on-site restaurant, a shared kitchen, luggage storage and many other cool facilities and amenities. Trust me, this hostel offers everything you’ll need and more for an unforgettable Iceland trip!

Best apartments in Reykjavik

For those of you looking for a cozy, homey feeling during your stay in Reykjavik, then I definitely recommend booking an apartment. Luckily for you, there are plenty of Airbnb options in Reykjavik for all tastes and budgets out there!

Below I have selected the best ones I could find in Midborg, the city center and my top recommendation for travelers visiting Reykjavik for the first time:

Luxury (US$160 and up)

Best apartments in Reykjavik

  • Old Charm Reykjavik Apartments – If you’re wondering if it’s possible to enjoy an upscale stay in Reykjavik even if you choose an apartment instead of a hotel, let me give you a quick answer – yes, a million times yes – and this place is the perfect example! It’s one of the best places to stay because it’s located walking distance to all the important attractions in the center. Plus, it’s great for big families or groups of friends as well; I’m sure you’ll like it a lot!
  • City Center Superb Studio – Here’s another excellent choice in case the apartment above is not available for your travel dates. This one’s walking distance to the main sights in the city as well and it offers everything you might need for a super pleasant stay – including a nice view of the garden. Just check out the pictures, I’m sure you’ll love it!

Middle-priced (US$130 – US$160)

  • Guesthouse Sunna – In case you’re looking for a true gem located in the Downtown area, walking distance to all the interesting sights and activities, let me tell you that you just found it my friend! This is a family-run property featuring modern rooms with wooden furnishings. Just perfect for all those of you that want to save some money.
  • Perfect Accommodation for Low Price – Here’s another one on my list of the best mid-range apartments that has excellent reviews. Trust me, even though your budget is not that big, you will still find superb accommodation for your stay, especially if you’re visiting the city to see the Northern Lights. For example, this cute studio is a very good option for you!

Budget (up to US$130)

  • Downtown Apartments – In case you don’t have a big budget but you still want to be in the Downtown area, no worries, I have found one of the best places for you! Besides the nice and clean rooms, one of the top advantages about staying here is that you’ll enjoy free parking without paying any extra fee – a good plus!
  • Live Like a Local Room – Are you traveling to the country to see the Northern Lights? Is your budget kind of little? Do you still want to be in the center of the city? No worries, this private room is the right choice for you! It’s located within walking distance to nearly everything Reykjavik has to offer – just check out the pics!
👑 Luxury price:$200
💵 Mid Range:$150
🛏️ Budget:$100
📍 Best neighborhood:Midborg / Downtown
🛎️ Best luxury hotel:Sand Hotel
💵 Mid-range hotel:Hótel Centrum
👛 Best budget hotel:Central Guesthouse Reykjavík

BONUS: Best hotels near Reykjavik Airport

Best hotels near Reykjavik Airport

Reykjavik International Airport (KEF), officially called Keflavik Airport, is the main airport of the city and the place where you’ll most probably land when you arrive in the country. In case you have a super early or super late flight or if you have to wait until the morning to pick-up your rented car for your Iceland trip, then spending the night close to the airport might be a very good idea for you!

If you decided to do so, scroll down to find my recommended airport hotels in Reykjavik (one per each type of budget):

  • (Luxury) Hotel Duus by Keflavik Airport – This is my recommendation for all those of you that want to enjoy some luxury. This hotel offers an on-site restaurant, free Wi-Fi, a 24-hour front desk, beautiful rooms, a tour desk and more! Plus, it’s located only 3.4 km from the airport and it offers an airport shuttle as well.
  • (Middle-priced) Bergas Guesthouse – Here’s one of the best mid-range hotels near Keflavik airport! Located only 3 km from Keflavík International Airport, it offers a self-catering option, with free WiFi and parking!
  • (Budget) Nupan Deluxe – And here I present to you one of the best budget options out there in case you want to be 3 km from the airport and save some money as well. This accommodation offers free Wi-Fi and many other nice facilities and amenities that you will surely enjoy! Just a note: make sure you book it FAR in advance if you want to secure a spot here!

Frequently Asked Questions about Hotels in Reykjavik

💵 Is it expensive to stay in Reykjavík?

Yes, Reykjavik is generally an expensive city, but you can also find also more affordable accommodations like hostels and guest houses, to stay on a budget!

👪 Where to stay in Reykjavik with the family?

The best area where to stay in Reykjavik with the family is Laugardalur, at Nordurey Hotel City Garden or Hilton Reykjavik Nordica, both offering great value for the price!

🌌 Where to stay in Reykjavik to see the northern lights?

The best place to stay in Reykjavik to see the northern lights is outside the city center. If you want the chance to see the lights from your hotel you will need to stay in a location with low light pollution.

📍Where to stay in Reykjavik for the first time?

The best place where to stay in Reykjavik for the first time is Midborg, Reykjavik city center. Choose Sand Hotel if you’re looking for luxury or Central Guesthouse to stay on a budget!


booking reykjavik iceland

There you have it, ladies and gents! You have reached the end of my complete guide on Reykjavik accommodation!

In this post I have told you everything you need to know about the top 4 neighborhoods where to stay in Reykjavik, together with my hand-picked hotel recommendations for each of them. I have also given you some awesome recommendations for apartments in the city center, as well as airport hotels suitable for business travelers. In short, you have everything your heart might desire in the post above!

I hope you found this post useful and maybe you already found the ideal hotel for your preferences and budget from my recommendations above, am I right? If not, here’s my absolute favorite choices with great reviews and central location:

If you want to witness the incredible midnight sun, I suggest you pay a visit to Reykjavik from the month of mid-June to August. If you want to celebrate the Reykjavik Pride Festival alongside its amazing community, I suggest you come by early August.

P.S.: Make sure to check out my list of awesome things to do in Reykjavik on a budget – I am sure it will help you to plan your vacation and not to overpay where not needed to!

Are you traveling to Reykjavik soon? Need more help with your travel plans? Let me know in the comments below, I am happy to help! And in case you need more travel inspiration for this wonderful country, here you can find all my posts about Iceland.


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