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Where to stay in Iceland: the best cities and areas

Are you going to visit Iceland and still not sure where to stay in Iceland? In this article we recommend the best cities and areas of the country to choose the ones you like depending on the route you have planned to do. We suggest options in different areas of the country.

Iceland is Europe, but is also Arctic and an island that has always been reflected in the sea that surrounds and cuts it.

With their natural wicks, the Icelanders have built a country that they have made habitable and comfortable with remarkable efforts but also with extraordinary results.Iceland is a natural border of northern Europe that offers a unique nature built between moors with land of volcanoes, waters and skies.

The best places to stay in Iceland

There are many charming places to sleep in Iceland, but perhaps the most recommended is the capital Reykjavik, the area of Selfoss, Hveragerdi, Hella, the town of Vik Myrdal, Höfn, the town of Seyðisfjörður, the small town of Myvatn, Akureyri, Ísafjördur, Ólafsvik, Egilsstadir and KeflavíkWe see them in detail, we see why their attractions invite you to visit them:


Reykjavík is the capital of Iceland, the northernmost of all the capitals of the world and the most populated of the island.It is located in Faxaflói Bay in a natural environment that has been reshaped by glaciers for thousands of years.

The entire coast of the capital can be seen cut into dozens of coves and peninsulas, on which several islands are spread out, which are perfect places to observe animal life, such as Viðey.

To get around in Reykjavík, the best thing to do is to use the city buses, although if you are used to walking, the short distances invite you to discover the highlights of the city on foot, although it is also possible to get around by bicycle by renting them in the centre or in the commercial port.

In Reykjavík there are numerous museums, exhibition halls and galleries throughout the city, as well as live music in cafes, bars and concert halls, for example in the shopping area of Laugavegur or in the old harbour.

For music and other art lovers, the Icelandic capital hosts annual festivals including Iceland Airwaves, Reykjavík Pride, RIFF (The Reykjavík International Film Festival), The Reykjavík Literature Festival, Culture Night, Reykjavík Arts Festival, Food & Fun, Reykjavík Fashion Festival and Sónar Music Festival.

As unique activities, we recommend a walk around the city’s lake, the Tjörnin, a visit to the University of Iceland’s campus, the Nordic house or the Vatnsmýrin wetland or a pleasant swim at the artificially heated Nauthólsvík beach with geothermal water.

A walk along the beach of Ægissíða, with its old fishing huts, in the western part of Reykjavík also has a particular charm.

By far the best way to stay in Iceland is to stay in the Reykjavík area and enjoy a great variety of accommodations for all budgets. If you choose it take a look at the following article where we explain you which are the best areas to stay in Reykjavík.


2.Golden Circle: Selfoss and Hveragerdi

Golden Circle is the name of an Icelandic route where you can visit three of the most internationally known natural landmarks in the country: the Gullfoss waterfall, the Haukadalur valley, known for its geysers and the valley and the Thingvellir fault.

It is worthwhile to get close, at least to the area and see at least the landmarks of Selfoss and Hveragerdi, which is perfect if you want to stay in Iceland in the area of the capital.



Hveragerði is a city in southwest Iceland, which is called ‘the city of hot springs’ because of the abundance of geothermal hot water flows.Hveragerði is situated about 45 kilometres from Reykjavík.

It is inhabited by Icelanders who make their living from agriculture, the horticultural sector and, of course, tourism.The local greenhouses take advantage of the natural warmth of the soil to create unique growing conditions, ideal for plants that would not otherwise occur at these latitudes.

In the centre of the town, you can find shops, a wide variety of places to sleep in Iceland, as well as a cafeteria and several restaurants.

In the area you can go hiking with well marked routes that are perfect in the summer months and there is a campsite that can be a perfect alternative to stay in Iceland between July and August.

As for the cultural offer of the place, it is remarkable the existence of several museums, such as the Art Museum of Árnesingar or the Museum of Stone and Minerals of Hveragerði.The city even hosts an annual culture and family festival in August.

The thermal waters of the valley on the river Varmá can be enjoyed in a series of very rustic natural pools that can be enjoyed by travellers freely.



Hella is a small Icelandic town in the southeast of the country, 95 kilometers from the capital Reykjavik.

The location was chosen by the first occasional settlers because of the abundance of salmon, but the first inhabitant who decided to stay in Hella until winter was a merchant who opened a shop there.Today, Mr. Thorsteinn Björnsson has his monument in the center of the village.

Hella is a quiet tourist destination for those who are looking for peace and nature and the advantage of an acceptable road connection to the capital.

A visit to Hella is a must to visit the highlights of the southern coast, such as the Seljalandsfoss and Skógafoss waterfalls, the Reynisfjara beach area and the glacial lake of Jökulsárlón.

But there are still other less known places that deserve the attention of the more curious traveller like a couple of Icelandic style alternative farms: Sólheimar Eco Village and Fridheimar Tomato and Horse Farm.

Activities include horseback riding, hiking in the summer (from Þórsmörk to Landmannalaugar), salmon fishing (Ytri-Ranga river) or visits in the winter on dog sleds.To spend a day in them it is not usually necessary to make a reservation, but to go to the bathing area of the nearby Laguna Negra, it is necessary to do so well in advance.

In July, a family style festival is held in Hella, bringing together many Icelanders from all over the island.

There are several guest houses and bungalow complexes in the area that are comfortable and welcoming to stay in Iceland off the southern coast.

5.Vík í Mýdral

Vík í Mýdral, or simply Vík as the Icelanders call it, is the southernmost town on the island, just under 200 kilometres from the capital Reykjavík.Vík í Mýdral is small, but it is much visited by tourists looking for accommodation in Iceland to enjoy the beautiful landscapes of this part of the country.

Landscapes along the Reykjavík-Vík í Mýdral road, including the famous Skógafoss and Seljalandsfoss waterfalls in Iceland.

In front of the village of Vík í Mýdral itself you can see what they say is the most beautiful non-tropical beach in the world. Its black sand gives it a unique note, the particular geology of the place an honourable mention.

In the columns of Reynisdrangar, a local story wanted to see two trolls frozen by the first morning sun as they pulled a boat to shore.

Tourists passing through Vík í Mýdral are going to the Skaftafell Nature Reserve (which has the largest glacier in Europe) and the Jökulsárlón Glacier Lagoon.Despite its size, Vík has a wide variety of public services, due to its remoteness and its importance on the route connecting the east and west of Iceland.

There are service stations, shops and cafes, as well as a swimming pool, a wool factory that can be visited!and a wide range of accommodation options in Iceland, in this part of the island, for all budgets.



Höfn is another small Icelandic village, in this case located in the southeast of the island.It is a fishing village, in fact its name means ‘port’ in the local language, the coastal environment of Höfn is flat and the town has its own (national) airport.

In Höfn, it is recommended to see the largest glacier in Europe, Vatnajökull which is located in the middle of the Vatnajökull National Park, within sight of Höfn.

Höfn is usually a place chosen to stay in Iceland in the area immediately before the attractive places on the south coast or in the eastern fjords of the island.You should also stop off at Vestrahorn, which is said to be one of the most magical places in South-East Iceland for photographers.

Recommended are also the Diamond Beach and especially the Vestrahorn Mountain.This is a peak with an irregular profile that forms two high points that some have interpreted as the Batman Mountain!

Like many other small coastal towns in Iceland, Höfn has a surprising variety of landmarks and cultural events.

Not surprising when you think of the historical importance of fishing in the town, but Höfn also has several art museums where visitors can admire local crafts.


It is another tiny Icelandic community located in the eastern fjords of the island and has the particularity of being surrounded by mountains and the sea.The place was founded by Norwegian fishermen who exploited the fishing grounds in this part of Iceland from the second half of the 19th century.

In the surroundings of Seyðisfjörður you can admire a series of waterfalls and the area is known for its old wooden buildings, some of which were renovated by the first Norwegian inhabitants.

The abandonment of fishing activity has, however, led to an increase in tourism and visitors can visit several museums and a local art centre and stay in Iceland in this part of the island in a wide variety of establishments.


Mývatn is a famous lake full of islands which is the fourth largest in the country.

A place where you can breathe tranquility, where it is possible to see up to thirteen varieties of ducks in freedom and communities of marine birds (cliffs of Látrabjarg and Dyrhólaey, between May and September).A place where volcanic activity also dominates the scene.

A setting so special that it was chosen at the time to record several outdoor scenes of the Game of Thrones series.

In the landscape of Mývatn you can discover the figure of the Víti volcano and the Krafla boiler, which are the visible parts of a particularly incredible geothermal activity in the area.

The traveller who wants to experience nature as a local should not miss bathing in the waters of Mývatn’s natural baths.

For the more intrepid, there is the option of venturing into the Dimmuborgir wash fields which are an example of the chaos created on the surface of the earth by a volcanism that has never stopped, it’s just on pause.

This area is rich in local stories and legends. It is, for example, the place where Iceland’s thirteen Santa Clauses, the Yule Lads, are said to live.

In Mývatn, there is a good offer of rural lodgings that are perfect for sleeping in Iceland in this area as a couple or even in groups of friends or family.



Akureyri is ‘the second largest city in Iceland’ and the Icelanders call it ‘The Capital of the North’ because it is on the northern coast of the island, a hundred kilometres from the Arctic Circle.

And, yes, its climate is extreme in winter. Akureyri is also situated on a fjord, the Eyjafjörður fjord, which protects it from the waves while the inlet acts as a natural harbour.

The place is an important fishing centre accompanied by an auxiliary industry that has been in recent times the main engine of the local economy, in addition to tourism, which has benefited from the existence of a small airfield and the capacity of its bay to host arctic cruises.

Among the activities that can be carried out in the area, without a doubt, the most outstanding are those related to snow sports. Skiing at the Hlíðarfjall resort, where the Ak Extreme is held, an annual competition of skiing and snowboarding of international interest.

The area around Akureyri has a very rugged terrain, with the highest peak in the region, Kerling, 1538 metres, which is usually climbed by hiking tourists in the summer months.

A recommended place to sleep in Iceland in the area of Akureyri is the surroundings of Lake Mývatn which happens to be one of the most popular destinations in Iceland for Icelanders.

In the Mývatn you can see details of the intense geothermal activity of the place, the typical bird life (especially the puffin communities) and the Dettifoss waterfall, which is said to be the largest waterfall in Europe.

Akureyri has the advantage of having a good connection to the capital Reykjavík thanks to being linked by the Icelandic ring road.

The use of the rental car is highly recommended to facilitate the mobility and autonomy of travellers when it comes to plotting routes and managing their time.In any case, the road trip between Reykjavík and Akureyri usually takes about five hours.



Ísafjörður is a town in the northwest of Iceland where the country’s widest western fjords are located.

Icelandic history tells that the place was first inhabited in the 9th century.

The traditional wooden house is now a museum of Icelandic folklore and two other old wooden houses in Ísafjörður can be visited, one is a maritime museum, the other a restaurant.

Ísafjörður has always competed with Reykjavik in the fisheries sector, however, the depletion of species in the local fishing grounds has changed the centre of the local economy with the tourism sector gaining weight.

In Ísafjörður, it is not difficult to find a place to stay, to find accommodation in Iceland in this part of the country by choosing from a wide variety of hotels and hostels.

In local restaurants, order what is part of Icelandic gastronomy to enhance the travel experience, e.g. hákarl, fermented shark meat, skata, taya, also fermented, or graflax, a kind of appetizer made from smoked fish, served before meals.

Winters in the area are cold due to its subarctic climate, while summers are cool due to the fact that the area is surrounded by high mountains.The coast is a perfect place to watch sea birds, but also seals on land and whales.

More to see

Drangajökull which has a glacier that does what no other in Europe, expand rather than shrink.

Ísafjörður, despite its isolation and the small size of its population, offers a series of events that no one would expect to find in an area like this, such as the Ski Week Festival, the Act Alone theatre festival, the European Swamp Soccer Championship or the alternative music festival Aldrei fór ég suður.


11.Ólafsvik, Snaefellsens peninsula

Ólafsvik is a fishing village with just over a thousand inhabitants located in the west of the island on the Snaefellsnes peninsula and is a good natural harbour where a fishing industry has developed.

There is only one formal place to stay, a hotel, unless you prefer to stay at the Lysuholl Community Centre or the shelters, which are only open from June to August.

In the area, you should not miss the Pakkhus in Ólafsvik, a regional museum and a centre for art and culture that is a reference for Icelandic artists (open only in the summer months).

A curiosity, at a short distance from the village is the Gufuskalar Radio antenna which is 412 meters high, which is the tallest structure in Iceland that, for a time, was the tallest in Western Europe.

In the area you can also go hiking and explore the truly inhospitable black sand beaches, and near the town there is a rather striking waterfall called Baejarfoss, which is worth visiting.

Ólafsvik is located near the Snaefellsjokull National Park.In the park you can see among other places the ‘The Singing Cave’ in Songhellir; the beautiful beach of Djupalonssandur next to the village of Arnarstapi, with its incredible lava formations; the crater of the Saxholl volcano or the magnificent lava rocks of Londrangar.


Egilsstadir is the largest town of all on the east side of the island. It is situated next to the local river, the Lagarfljót in the middle of a valley where agriculture is practised.

Travellers who travel around the island on the national ring road often stop here for overnight stays, to stretch their legs, eat something or to make a detour to some of the attractive places in the area such as the nature reserve in the Vatnajökull National Park.

Egilsstadir can also be reached by air, using the light aircraft services on Icelandic domestic air routes.

In Egilsstadir there is a busy supermarket, some shops, a tourist information office and some acceptable route hotels.

In Egilsstadir, you should also visit the Heritage Museum where you can see a life-size recreation of ancient grass-covered houses and the famous Dettifoss waterfall is just a few hours drive from the town.

Iceland is not exactly a tree-rich place, so the Hallormsstaðaskógur is a reforestation area that is exceptional by Icelandic standards (740 hectares of land and 80 tree species from all over the world).

For lovers of enchanted places, the recommendation is certainly a visit to the more than mysterious Lagarfjlót Lake.The landscape around it is incredible.

In the area, several musical events take place throughout the year, in Egilsstaðir, an electronic music event, in the nearby Hringrás, a jazz event.

For lovers of mountain bikes, there are about 25 kilometres of unpaved roads in the area, which can be combined with bird-watching in the middle of nature.



Keflavík is a city in the southwest of Iceland located along the coast of the Reykjanes area about 50 kilometers from the capital Reykjavik.Keflavik was founded in the 16th century by a group of Scots who set up a factory to process fish on their land.

The area became famous during the Second World War for an American military base that extended its functions during the Cold War.However, there is much to see here.

For example, see the Icelandic Rock ‘n’ Roll Museum, an exhibition that tells how the American military introduced rock and roll culture to the country through the NATO base and how local musicians opened up to the world with their bands.

You should also see ‘Viking World’, an exhibition that shows the ancestral traditions and the influence of this culture in its time.A small zoo attached to the exhibition shows visitors the animals that the Vikings raised for their sustenance and use.

Iceland is a perfect place to have adventures on a first-name basis with nature and to catch up with it.Of course.


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