The Best Budget-Friendly Hotels in Reykjavik

If you’re looking for a warm welcome upon arrival, look no further than Hotel Odinsve. Here you’ll feel like you’re staying with long lost friends. Its 50 rooms range from singles to family suites, plus there are apartments available for extended stays. The friendly staff will help you book day trips to geysers, or hire a rental car to explore the island on your own; whatever you’ve set your sights on, this hotel acts as a great base.

Connect with Icelandic heritage and culture at Reykjavik Lights, where each room is linked to a specific day in the ancient calendar. Minimalist rooms combine with Scandinavian design for a homely stay — with breakfast, WiFi and private parking all thrown in for the price. Located on the outskirts of the city in Laugardalur, the hotel is within a 15-minute walk of Laugardalslaug – a geothermal public swimming pool that’s popular with both locals and travellers.

The modern Hotel Klettur is decorated to reflect the country’s geysers, volcanoes and waterfalls with washes of deep blues and striking oranges. It also happens to be an excellent springboard for visiting these sights in person. Self-drive travellers looking to explore beyond the capital can make use of the private garage, while your room’s refrigerator will prove perfect for storing snacks ahead of an exciting Icelandic adventure.

Elegantly-styled rooms overlook Reykjavik’s main Laugavegur shopping street at Hotel Fron, placing you right in the middle of Iceland’s thriving capital. Here, you’ll experience warm Icelandic hospitality, with a 24-hour reception available to advise on must-visit cafes, restaurants and shops in the local area. A buffet breakfast is served in the next door Scandinavian Restaurant, where you can also dine on Nordic dishes for your evening meal.

Watch the sun rise across Reykjavik at this Townhouse Hotel, a chic, modern accommodation boasting city views from its sun terrace, just two kilometres (1.25 miles) from downtown. The hotel offers all the conveniences you need for a fuss-free stay in Iceland, including in-room tea and coffee facilities plus a free parking garage. Families will appreciate the Deluxe room with its extra-large double bed and bunks for kids.

Hip boutiques, towering landmarks and a bustling cafe scene are all within easy reach at Skuggi Hotel, thanks to its close proximity to the city centre. Chic, compact rooms range from singles to superior doubles, each decorated with a quote from Icelandic author Ragnar Axelsson’s book Behind the Mountains. Freebies during your stay include a breakfast buffet and off-street parking.

Despite being a 15-minute drive from Reykjavik’s downtown, Hotel Smari is within easy walking distance of Smaralind, the largest shopping mall in Iceland. Wake up in a comfortable, simply furnished room and enjoy a complimentary continental breakfast each morning. There are even quads available for those travelling as a group. Hotel Smari is also well-placed for visiting Iceland’s Blue Lagoon, just a 30-minute drive away.

ODDSSON hotel opened in 2019 and is situated 10 minutes from downtown Reykjavik. Featuring an industrial design aesthetic set off by a blue colour scheme, the sleek rooms in this high-rise hotel offer all the comforts of the more expensive downtown hotels. The restaurant serves up a large continental breakfast in the morning, and the area turns into a bar with a festive atmosphere in the evenings. Nearby, you’ll find Skeifan shopping district, home to a yoga studio that welcomes walk-ins, a 24-hour supermarket, a gourmet bakery and a handful of cafés and restaurants.

Located in the Skipholt area east of downtown Reykjavik, the simple and modest rooms at the Brim Hotel are perfect if you’re looking for an affordable accommodation option close to the city centre. With easy access to the popular Hallgrímskirkja church and a shopping centre located just a short walk away, the hotel is home to spacious rooms suitable for both solo travellers and families. The large shared lounge gives it a convivial atmosphere and the kitchen makes it an ideal option for those looking to save money.

First Hotel Reykjavik is located in Kópavogur, Iceland’s second-largest city, yet is still in close proximity to the Icelandic capital. Just 10 minutes away from downtown Reykjavik, the modern boutique hotel has a gym, a lounge area and a bar equipped with a pool table, TVs and books. The bright rooms are painted in black and white and decorated with wooden furnishings and minimalist decor, giving them a Scandinavian feel. Nearby in the Smáralind shopping centre you’ll find high-end fashion stores, restaurants and cafés and a large cinema.

Facing the seafront, Fosshotel Baron is within walking distance of many popular bars and shops in downtown Reykjavik. Offering scenic views of the mountains, the large rooms have a contemporary feel and come equipped with a safe and satellite TV. Head downstairs to the hotel’s restaurant in the morning and you’ll find a breakfast buffet, or stop by at lunchtime, when you can opt for the soup of the day with fresh bread.

Tucked away in the quiet neighbourhood of Fossvogur, the Grímur Hotel prides itself on a family-friendly atmosphere that makes it feel more like a second home than a hotel. Just a five-minute drive from downtown Reykjavik, the hotel is situated on top of Grímsbær shopping centre, giving you easy access to shops and restaurants. Step inside the hotel and you’ll find a shared lounge that comes equipped with a TV and board games, and spacious, stately rooms painted in a dark green colour to fit the hotel’s natural design aesthetic.

Right across from the Hlemmur bus station and food hall, at the eastern end of Laugavegur, lies Hlemmur Square Hotel. Situated on the fifth floor of a 1930s art deco building, it has the feel of a luxury hotel and rooms overlooking the beautiful mountains. Chic and modern, the establishment is a good choice if you’re looking to stay central without blowing your budget. When you get hungry, head down to Pylsa/Pulsa Bistro, the hotel’s artisanal dining venue showcasing German and South African flavours. If drinks are more your thing, the downstairs bar features award-winning cocktails, happy hours and live music.

You guessed it – the 4th Floor Hotel sits on the fourth floor of a building, on the corner of Snorrabraut and Laugavegur, Reykjavik’s main shopping street. Mere minutes from restaurants, bars, museums and popular attractions such as the Hallgrímskirkja church, this impressive hotel offers aerial views of the city and overlooks the mountains and the marina. The art deco-styled rooms are small but apartment-like and have a homely feel. A basement parking garage is available for guests, as is the hotel’s restaurant Studio 29, serving hamburgers and sandwiches for lunch and dinner and a popular brunch at weekends.

Set in the middle of Reykjavik, OK Hotel is a colourful accommodation option with spacious rooms and a playful interior. The walls are covered with newspaper clippings, and the rooms are filled with custom-made pieces of furniture from the 1970s and zany pieces of art. Rooms come equipped with a small kitchenette, but if cooking isn’t your thing, the attached Staff Kitchen & Bar (entry to the hotel is through this restaurant) serves tasty dishes such as traditional Icelandic stew, salmon and duck sandwiches.

Cool, contemporary and snazzy, the 22 Hill Hotel is located outside the city centre in the up-and-coming 105 neighbourhood. Opened in 2015, the hotel was recently refurbished and now celebrates Nordic design throughout its interiors, partly thanks to local architect Rut Káradóttir. The cosy rooms have open areas dotted with clean designer pieces that add to the hotel’s minimalist theme. The next-door restaurant, Potturinn og Pannan, is an authentic Icelandic venue that serves dishes such as creamy lobster soup, grilled lobster tails and pepper beefsteak.

A short stroll away from the Hlemmur Mathöll food hall and all the fun of downtown Reykjavik lies Fosshotel Rauðará, a contemporary hotel suitable for large groups. Centrally located, the hotel is often praised for its large and elegant rooms that come with satellite TV and radio. The hotel’s colourful restaurant offers a breakfast buffet in the morning and drinks in the evening.