The 10 best hotels in Iceland for 2025, according to Time Out editors

All ION’s hotels are intrinsically Icelandic, but ION Adventure is the true show-stopper. A sleek glass box emerging from the moss-laden Mount Hengill, the hotel is a bold contrast to the tumbling volcanic landscape around it. But that landscape is still incorporated into the design, with furniture made from locally-sheered wool and actual lava, and a menu of locally-sourced ‘slow-food’, all with sustainability at its heart. It’s an incredible feat of design in an incredible patch of the wilderness. 

Best for: a ‘hygge-filled hotel’ in a jaw-dropping landscape. 
Budget: Sleeping under the Northern Lights doesn’t come cheap, but this place is worth the price.

If you’re basing yourself in Reykjavik for your Icelandic adventures, there is simply nowhere more special than the Reykjavik Edition. This was the first five-star hotel built in the city, and it’s found over on Reykjavik’s sleepy harbour edge, overlooking boats, lighthouses and the surrounding mountains. Service is impeccable, the food champions locally-sourced seafood, and the beds in the rooms are draped with soft wool blankets made by local designers. It’s a cosy little haven in Reykjavik’s quietest neighbourhood, and is the perfect little hideaway between exploring. 

Best for: Icelandic luxury
Budget range? A real ‘treat-yourself’ price tag.

The famous Blue Lagoon, a steam-shrouded, mineral-rich, lake-sized natural hot pool, features on every Iceland itinerary and can consequently feel a bit overcrowded and institutional. The stunning Retreat nearby offers the select few who can afford it an alternative: a private bathing lagoon of their own, along with a spa complete with lava-heated steam room. The design is soberly stylish, the atmosphere serene (no TVs!) and the ethos eco-friendly, and all the supersleek rooms offer dramatic views through picture windows.

Best for: Easy access to the hot springs. 
Budget range? Spend more to do Iceland the right way. 

The tiny port town of Seyðisfjörður, gateway to eastern Iceland, is small but perfectly formed –mainly of buildings whose history speaks of changing ways of life. The Aldan comprises of three separate hotels: the Old Bank, the Old School (now apartments) and Snæfell, a former post office, scenically set at the river mouth. All share charming vintage-chic decor, a sushi bar and a restaurant set – you guessed it – in an old shop where there is no such thing as yesterday’s fish.

Best for: An authentic Icelandic experience. 
Budget range? Super affordable. 

This converted sheep farm, with its stone-coloured cladding and living roof, might look unassuming – but this reflects the discretion of its wealthy clientele rather than the simple life. The gorgeous 13-room lodge offers every luxury from flotation tanks to two helipads – though, the road journey is a bit of a schlepp. Of necessity: Deplar is in the back-country of the mountainous Tröllaskagi peninsula, a prime summer location for salmon-fishing, hiking and sea-kayaking. In winter, you can snowshoe, heli-ski, try your hand at snow cycling… or just float in the geothermal pool and watch for the Northern Lights.

Best for: Mountain views from the indoor pool and skiing adventures. 
Budget range? A price that reflects the entire experience. 

Reykjavik’s first luxury hotel, which opened in the 1930s, still trails the rest in its elegant Art Deco wake. The grand white building houses a spa, gym, plenty of period detail and a slick new restaurant. Rooms are silvery taupe in tone, Deco in style and equipped with the usual high-end comforts. Great central location and good views, particularly from the suites (Northern Lights watchers please note).

Best for: A deluxe hotel and spa for relaxing in style. 
Budget range? An affordable four-star option. 

The three-star ODDSSON hotel is located in the capital, Reykjavík, less than a mile away from the Laugardalur Family Park. The ODDSSON aims to offer affordable accommodations for guests, in the perfect location and at an excellent standard. The hotel is self-check-in only with no front desk or concierge presence on site, and guests have access to virtual reception 24/7. All rooms are modern and comfortable and range in size depending on needs, from solo rooms to large groups with bunk beds. There's an on-site restaurant and bar for breakfast and dinner, and free Wi-Fi is offered throughout the hotel. 

Best for: A place to stay in between tours and excursions. 
Budget range? A great price for its prime location. 

One of Iceland’s nicest hostels (with private rooms, too) is in its second city, Akureyri, the capital of Northern Iceland. It’s pretty and pristine, and well located among the cafes and restaurants of the main street next to the port, where you might spot a visiting whale. A good base for trips to Lake Mývatn and into the nearby wilderness, along with whale watching and Northern Lights tours.

Best for: A conveniently located stay with all the basics you require. 
Budget range? Backpacker-friendly. 

Even if you’re normally a hotel habitué, given Iceland’s volcanic accommodation prices it can make good financial sense to bed down in a hostel. Especially one as good as this Reykjavik staple (and note that it offers private rooms). Kex is a former biscuit factory, welcoming, atmospheric and eclectically furnished in a louchely hip style. At its heart is a gastropub; there’s also a gym, communal kitchen, tour desk and even a vintage-style tiled barbershop.

Best for: A hostel stay that's also stylish. 
Bidget range? A price that leaves you with plenty of spending money. 

Located in the Old Harbour area of the nation’s capital, this memorable hotel scores highly on the visually attractive scale. The rooms are a clever contemporary take on industrial-style coolness. Exposed concrete (bit of Brutalist touch there), strong black metal work and a paired-back selection of furniture and room accessories give it a city-living feel. But despite the leanings towards minimalism, it still manages to have a certain warmth to it – perfect for returning to after a day spent exploring the city (whatever the weather).

Best for: Design-conscious travellers who want a taste of urban Icelandic life.

Budget range? Higher end of ‘middle'.

As stark and geometric as the landscapes it inhabits, the low and long UMI is about inhospitality outdoors and hospitality within. It’s located along a dramatic stretch of black-sand beaches, at the foot on a famous volcano. Inside, the public areas are clean and elegant, with huge windows bringing the outside in; imaginative cocktails and toddies from the bar will warm you up if the bleakness gets too much. Rooms are simple, but they have all you’ll need. There’s a good on-site restaurant Japanese Nordic fusion restaurant and staff are notably friendly.

Best for: Fresh air and breathtaking landscapes as far as the eye can see. 
Budget range? Mid-range for Iceland.