The Best Boutique Hotels to Book in Iceland

Billed as “Iceland’s only five-star hotel”, Diamond Suites is actually a hotel within a hotel. Located on the top floor of Hotel Keflavik, it has seven individually decorated suites, most named after a different gem. If you’re looking for an ultra-luxe group option, rent out all of them as a private penthouse, and receive exclusive use of a Range Rover and a personal driver.

As the name suggests, the Retreat is built around the iconic geothermal spring in the southwest of Iceland. A selection of suites offers lagoon or rugged landscape views. Besides a private section of the Blue Lagoon, it also has a spa built into an 800-year-old lava flow. Opt for the Ritual spa journey to exfoliate, cleanse and moisturise using algae, silica and mineral salt – all sourced from the surrounding waters.

Plonked in southern Iceland, just off the Ring Road and near Stjórnarfoss waterfall, Hotel Laki is an excellent base for exploring the beauty of the south. There are endless activities – fishing for Arctic char in the adjacent Lake Víkurflód, exploring the Fjádrargljúfur canyon and visiting the 11 dwellings right behind the hotel. When it’s time for some shut-eye, rooms are cosy and well-appointed.

Nothing will give you more of a sense of place than staying in a hotel next to one of the most powerful geysers in the world. The aptly named hotel sits adjacent to the Great Geysir and the surrounding bed of geothermal activity. When you’re not marvelling at the natural wonder, dine at the hotel restaurant Geysir Glíma for a taste of hyper-local Icelandic fare.

Built by a group of Catholic sisters in the 1930s, Hotel Fransiskus is steeped in history. Only recently converted to a hotel, it overlooks Stykkishólmur harbour. Each of the 21 rooms is clad in neutral hues, but you’ll likely spend most of your time wandering past the 150-year-old colourful shop fronts in this town on a western peninsula.

A fourth-generation-run farm, Skalakot Manor Hotel specialises in breeding Icelandic horses – so, if you’re a fan of the pony-sized, long-maned animals, this is the place to be. A horse-riding tour is, obviously, a must – the stunning landscapes you cross are a bonus. The hotel itself has gorgeous, upscale rooms with beamed ceilings; some with in-room roll-top tubs. When peckish, head to the in-house restaurant for fine dining.

This gem of modern design, set in the beautiful countryside near Selfoss in southwest Iceland, is an ode to combining architecture with the landscape. Design principles use sustainable practices while encompassing the natural features of the surrounds; locally salvaged driftwood and lava rocks are woven into the earthy-yet-classy atmosphere. Enjoy the cuisine at Silfra Restaurant, the spectacular views from the Northern Lights Bar, and the relaxing experiences available at the Lava Spa. Each room has floor-to-ceiling windows so you can enjoy the views towards Nesjavellir Geothermal Power Plant and the surrounding lava fields.

In Hvalfjörður (Whale Fjord) less than an hour’s drive from Reykjavik, this remote hillside hotel offers beautiful views of the fjord. The interior is decorated with vibrant works from local artists, including carvings, ceramics and rugs. Outside, you’ll find a geothermal hot tub, a great place for viewing the Northern Lights. Explore the local waterfalls and hiking paths, before heading back to the homely hotel restaurant.

This log-built hotel sits next to the salmon-fishing river Ytri-Rangá, only an hour’s drive from Reykjavik. Warm interiors exude the relaxing comfort of an alpine lodge, while the rooms are enlivened with paintings of Icelandic nature and wildlife by local artists. There’s an excellent hotel restaurant next to the river, a stargazing observatory and a bar, plus outdoor geothermal hot tubs where (on the right night) you’ll catch the Northern Lights.

This boutique hotel, sitting in a 1930s building in downtown Reykjavik, offers an intoxicating blend of contemporary design and minimalist couture. There’s stark furniture and a monochromatic colour scheme throughout, emboldened by a gallery-worthy collection of modern pieces from Icelandic artists. In the basement, you’ll find a hot tub and geothermally heated steam room, or you can order an in-room massage.

This iconic hotel sits in one of the oldest buildings in Reykjavík, the work of renowned Icelandic architect Guðjón Samúelsson who also has the National Theater and Akureyrarkirkja church in his portfolio. The five-storey building, which once housed an apothecary (hence the name), is located downtown in Austurvöllur square diagonal to the Icelandic parliament. Enjoy the excellent Apotek restaurant and the hotel bar on the ground floor, before returning to your sleek room or suite.

Hotel Borg is in downtown Reykjavík overlooking Austurvöllur square. The building was built by Jóhannes Jósefsson, who, after competing in the 1908 Olympics and travelling as a strongman in America with Barnum and Bailey circus, returned to Iceland in 1927 with the dream of building a luxury hotel – the first in Reykjavik. The current hotel maintains original art deco stylings, especially in the lounge area. Enjoy excellent cocktails at the bar, and dine at the vintage – yet modern – Borg restaurant operated by award-winning local chef, Volundur Volundarson.

The fishing village of Siglufjörður in northern Iceland, dubbed the herring capital of the world, was once an isolated place only accessible by boat. It’s now more easily reached, thanks to a mountain pass opened in 1967, but retains that small fishing village vibe. A get-away-from-it-all experience can be enjoyed at Sigló Hotel, which sits right on the marina. The rooms are modern yet homely, with a window seat offering views over the surrounding mountains and the harbour. Head to the restaurant, Sunna, at the right time and you might glimpse the house chef perusing the daily catch at the marina.

Kvosin Downtown Hotel is situated next to Reykjavik landmarks including the Icelandic Parliament, Dómkirkja Church and City Hall. The 1900s building in which it sits features contemporary decor with minimalist features. And you can enjoy breakfast in an adjacent restaurant, Bergsson Mathús, before your day exploring the Icelandic capital. In the evening, hit the ground-floor Aldamót bar for experimental cocktails.

This adorable hotel, on the island of Flatey off the west coast of Iceland, is only open (approximately) from June to August – and it’s the only hotel on the island. It has simple rooms inspired by the best of Nordic design. And the restaurant serves delicious freshly caught seafood. To get to the island, which sits in Breiðafjörður bay, take the ferry from Stykkishólmur.

On the Snæfellsnes peninsula in west Iceland, about two hours’ drive from Reykjavik, this remote luxury hotel offers relaxed elegance in a stunning landscape. Each room has a view: you might wake to vistas over the ocean, Snaefellsjokull glacier, mountains, a lava field, or a renowned black church in a field nearby. Even better, the remote location – with little light pollution – allows for a dramatic Northern Lights display. The restaurant is one of the best in the country, with ingredients sourced from local farms and fishermen.

Next to the harbour in the fishing village of Stykkishólmur, on the Snæfellsnes peninsula in west Iceland, sits this red building built in 1867. Conveniently located next to three small museums, plus restaurants and galleries, this distinctive hotel is also a great base from which to explore the beautiful islands that dot the surrounding bay. There’s a small library in the lounge where you’re encouraged to write stories for future guests.