The best places to stay in Iceland

A key player on the aurora borealis trail, decorated deep in powdered snow and yuletide cheer, Iceland is one of those winter destinations that just keeps giving. With coastal capital Reykjavík as its beating heart, this Northern European nation is both in touch with nature and entirely modern, even in the remotest wilderness, where state-of-the-art architecture and eco principles make for some fantastic Iceland resorts. Discover some of our favourites with our guide to the top 10 best places to stay in Iceland below.

Let Us Book Your 5-Star Hotel

Don’t just book a room. Book your 5-star hotel with Mr Hudson and unlock an extraordinary VIP experience with complimentary breakfast, resort credits, and room upgrades. Benefits you won’t find when booking yourself.

Book Your Luxury Vacation With Mr Hudson Book Your Luxury Vacation With Mr Hudson Book Your Luxury Vacation With Mr Hudson

Photo: Hotel Geysir

Accommodation in Iceland

Iceland is a star when it comes to accommodation choices, from the Iceland igloo hotel to the novelty bubble hotel Iceland has it all. While at first glance an Iceland ice hotel may seem somewhat of a gimmick, these properties are a fantastic way to experience the country’s extreme natural environment in safety and comfort. If interested in these alternative stays, try Reykjavik Domes or the glamping-style Iceland Igloo Village. Before booking your ice hotel in Iceland, plan your journey with our ultimate Iceland itinerary.

1. The Retreat at Blue Lagoon

The epitome of Icelandic luxury less than an hour from Reykjavik is The Retreat at Blue Lagoon Iceland, a minimal property carved into the stark landscape of an 800-year-old lava field. Designed in slate and earthy tones with exposed lava walls throughout, The Retreat uses its surrounding habitat to stunning effect, hiding a mineral-rich geothermal lagoon beneath the rooms. As well as that, all the hotel’s electricity and heating being powered by geothermal sources and a sustainable ethos is delivered through eco-friendly spa products, a seasonal farm-to-table menu and ongoing community initiatives.

Photo: The Retreat at Blue Lagoon

Photo: The Retreat at Blue Lagoon

2. Deplar Farm

Once an 18th-century sheep farm and now a rustic yet luxurious resort in the remote Troll Peninsula valley, Deplar Farm is sure to make you feel at home. Guests sleep in cosy suites under a living grass roof, enjoying inclusive meals of locally-caught seafood and free adventure activities led by staff. Trekking, skiing, kayaking and horse-riding are all popular by day but come evening it’s the spa, games room and open fireplace that will widely appeal. The farm’s remote northern location also makes it prime for aurora hunting, especially in the hotel’s geothermal pool (heated to a toasty 37°C), for which you’ll want to don your swimmers and a woolly hat, buying a drink from the swim-up bar while you wait for peak darkness.

Deplar Farm | Photos: Eleven Experience

Deplar Farm | Photos: Eleven Experience

Mr. Hudson highlight image

The farm’s remote northern location also makes it prime for aurora hunting, especially in the hotel’s geothermal pool (heated to a toasty 37°C)

3. Torfhús Retreat

Next up is Torfhús Retreat situated on Iceland’s Golden Circle, the popular route that starts in Reykjavik and connects the three key attractions of Thingvellir National Park, Gulfoss Waterfall and the Great Geysir. Close to Selfoss, Torfhus Retreat itself comes with attractions of its own, including the Landjökull glacier, the Highlands and the South Shore. Those looking for Iceland Northern Lights hotel options should look no further that the hotel’s eco-luxury cabins, each fitted with their own geothermal open-air pool – the perfect aurora viewpoint. Inspired by Icelandic Viking architecture, Torfhús blends with its volcanic surroundings in local stone, reclaimed wood and living turf roofing, operating entirely on sustainable energy.

Photo: Torfhús Retreat

Mr. Hudson highlight image

Hotel Rangá, the only 4-star resort in South Iceland, boasting sensational views over Eystri Rangá river, Mt. Hekla and various glaciers

4. Hotel Rangá

Another of the luxury hotels in Iceland for aurora viewing is Hotel Rangá based south between the villages of Hella and Hvolsvöllur. Most of Iceland’s luxury resorts lie up north except Hotel Rangá, which is the only 4-star resort in South Iceland, boasting sensational views over Eystri Rangá river, Mt. Hekla and various glaciers. Just an hour’s drive from Reykjavik – along beautiful coastal roads and through fields of wildflowers, the hotel is a great addition to any road trip, allowing guests to recharge in classic rooms with gourmet dining on site.

Photo: Hotel Rangá

Stargazing at Hotel Rangá | Photo: Hotel Rangá

5. 360 Hotel & Thermal Baths 

Combining the two Icelandic loves of geothermal spas and dark sky views, 360 Hotel & Thermal Baths is a stellar choice for travellers keen on staying cosy while stargazing even in the dead of winter. Based hilltop near Selfoss, 360 Hotel stands out from its competition thanks to its 200-acre grounds and proximity to the Golden Circle. The hotel’s underground geothermal pool, sauna and spa will soothe you come evening, but daytime adventures will have you hiking volcanos, ice climbing and dog sledding to your heart’s content. Besides main attractions, the ‘Earthquake Town’ of Hveragerði and Reykjadalur Hot Spring River can be found just 30 minutes away.

Deplar Farm | Photos: Eleven Experience

6. Magma Hotel

Sticking with the volcanic theme is Magma Hotel, named for its views over moss-covered lava fields, volcanoes and the Vatnajökull glacier. There’s also a lake and black-sand glacial river, both alive with birdlife in the right season. Located close to Kirkjubæjarklaustur in South Island, Magma Hotel is one of a handful of boutique hotels in the region, offering seclusion and intimacy never far from adventure. Plus, the on-site lounge and restaurant, Bistro 1783, is exactly what’s needed after a day of touring Jökulsárlón lagoon by boat (between May and September), walking on ice at Diamond Beach or hiking in Skaftafell Nature Reserve.

7. Hotel Geysir

Over in Haukadalur Valley, Hotel Geysir warrants the name with its position just a stone’s throw from Geysir geothermal area, not far off the Golden Circle route in South Iceland. The hotel’s huge windows and balconies make for cinematic views, while on the rooftop terrace romantic meals take place with valley panoramas to die for. Fishing, hiking and glacier tours are top choices by day, but by night you’ll have easy access to hot springs, mud pits and geyser eruptions, all with the Northern Lights hovering overhead.

Photo: Hotel Geysir

Photo: Hotel Geysir

8. Umi Hotel

While there are many hotels in Vik Iceland, Umi Hotel is worth considering despite being 30 minutes outside, next to one of Iceland’s most stunning volcanic mountain ranges, approximately 150 kilometres from Reykjavik on the southern coastline. As well as providing unique views of the Westman Islands, the hotel’s lounge bar gives a lookout over Eyjafjallajökull subglacial volcano, the Svaðbælisá river and the mountains beyond, a decent enough location to watch the star- and aurora-lit skies alongside resident dog, Breki! Those staying at Umi Hotel and other Vik hotels Iceland are also fortunate for being in easy reach of Game of Thrones filming locations and black sand beaches on the coast.

Photo: The Retreat at Blue Lagoon

9. Kvosin Hotel

Urbanites can get what they’re seeking at Kvosin Hotel, a late 19th-century townhouse turned stylish boutique hotel in the centre of downtown Reykjavik. The majority of home-away-from-home suites come fitted with kitchenette and lounge area, though you’ll want to go to Klaustur bar for the best Icelandic G&T. For everything else, downtown is your oyster, hosting a burgeoning restaurant and bar scene as well as myriad museums, cafés and shopping streets (such as Laugavegur) nearby both the hotel and tranquil Lake Tjornin.

10. Sand Hotel by Keahotels

Defying assumptions Sand Hotel by Keahotels comes totally sand-free in Central Reykjavik. Don’t let the lack of beaches disappoint you however because Sand Hotel, in partnership with Sandholt Bakery, can provide something even sweeter. Swapping the city’s favoured industrial design for something a little more elegant, Sand Hotel ensures its rooms and its guests come kitted out in masculine chic fits, thanks to artwork by Birgir Andrésson and on-demand tailoring from Gudsteinn Eyjólfsson haberdashery, Iceland’s oldest. After nibbling on fresh cinnamon-spiced buns from your bedside, get out on main street to explore the culture capital.

Photo: Sand Hotel

Photo: Sand Hotel

Want to simplify luxury travel planning?

Whether you want a resort vacation, wildlife safari, city break, luxury cruise, wellness retreat, honeymoon, once-in-a-lifetime adventure or weekend escape, the trip curation experts at Mr Hudson make travel planning a breeze. Find out how we can handle the finer details of vacationing in style.

Powered by Booking.com

Northern lights | Photo: Hotel Rangá

Subscribe to our newsletter

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing.

Sign up for exclusive insider promotions