The Best Budget-Friendly Hotels To Book In Reykjavk Iceland

The Northern Lights, which you’ll have a good chance of seeing, the iconic Hallgrímskirkja and geothermal pools, all set against a mountainous backdrop across the fjord, are just some of the attractions awaiting you in the Icelandic capital. Thanks to these top budget hotels – bookable on Culture Trip – a weekend trip to Reykjavík doesn’t have to break the bank.

With its black volcanic beaches, bubbling geysers and thundering waterfalls, Iceland is a wonderland for nature lovers. You can easily visit all of these sights from your base in Reykjavík, the largest city in the country. While experiences such as Northern Lights tours and trips to the Blue Lagoon aren’t cheap, you can save money by staying in one of these cosy cheap hotels in Reykjavík. Here’s our list of the best.

1. Hótel Óðinsvé, for excellent service

Hotel

Tables set for dining in the restaurant at Hótel Óðinsvé, with lots of potted plants, windows and exposed bulb lighting

If you’re looking for a warm welcome upon arrival, look no further than Hótel Óðinsvé. Here, you’ll feel like you’re staying with long-lost friends. The 50 rooms range from singles to family suites, and apartments are 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. Also, you’re steps from Laugavegur, the main shopping street and pedestrian boulevard in Reykjavík.

2. Reykjavik Lights by Keahotels, for an emphasis on Icelandic culture

Hotel

Connect with Icelandic heritage and culture at this cheap Reykjavík hotel, where each room is linked to a specific day in the ancient calendar. Minimalist, Scandi-style rooms make for a homely stay, with breakfast and private parking included in the price. On the outskirts of the city in the leafy suburb of Laugardalur, the hotel is a 15-minute walk from Laugardalslaug – a geothermal public swimming pool that’s popular with both locals and travellers.

4. Hótel Frón, for superb shopping

Budget Hotel

A simple but comfortable room at Hótel Frón, with a brown sofa, a patterned armchair, two beds and a TV

At Hótel Frón, elegantly styled rooms overlook Laugavegur, the main shopping street in the city, placing you right in the middle of the 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 breakfast buffet is served at Scandinavian, the restaurant next door, where you can also dine on Nordic dishes for your evening meal.

5. Skuggi Hotel by Keahotels, for a literary-themed stay

Budget Hotel

A sleek, soft grey guest room at Skuggi Hotel by Keahotels, with a quote on the wall

Hip boutiques, towering landmarks and a bustling cafe scene are all within easy reach at Skuggi Hotel, thanks to its proximity to the city centre. Chic, compact rooms range from singles to superior doubles, each decorated with a quote from Icelandic photographer Ragnar Axelsson’s book Behind the Mountains (2013). Freebies during your stay include a breakfast buffet and off-street parking.

6. Hótel Smári, for its proximity to a large shopping mall

Budget Hotel

The blue-and-white, three-level Hótel Smári, with a parking lot in front

Despite being a 15-minute drive from downtown Reykjavík, Hótel Smári is within easy walking distance of Smáralind, among the largest shopping malls 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. Hótel Smári is also well-placed for visiting the Blue Lagoon, just a 30-minute drive away.

7. ODDSSON Hotel, for a lively on-site bar

Budget Hotel

The warm lounge at ODDSSON Hotel, with brown cushy seating, a slate-blue chair and rug, and a bronze palm-tree sculpture

ODDSSON Hotel is 10 minutes from downtown Reykjavík. 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 the Skeifan shopping district, home to a yoga studio that welcomes walk-ins, a 24-hour supermarket, a gourmet bakery and a handful of cafes and restaurants.

8. 201 Hotel, for plenty of on-site amenities

Budget Hotel

A light-filled lounge area at 201 Hotel, with soft seating and ottomans in jewel tones and contemporary lighting

The 201 Hotel is in Kópavogur, the second-largest city in Iceland, yet it’s still close to the Icelandic capital. Just a 10-minute drive from downtown Reykjavík, this modern boutique hotel has a gym, a lounge area and a bar equipped with TVs. The bright rooms feature a black-and-white colour palette and wooden furnishings, giving them a minimalist feel. Nearby in the Smáralind shopping centre, you’ll find high-end fashion stores, restaurants and cafes, and a large cinema.

9. Fosshotel Baron, for views of the fjord and mountains

Budget Hotel

The sleek bar at Fosshotel Baron, with orange tufted banquette seating and black bar stools

Facing the seafront, this cheap hotel in Reykjavík is within easy walking distance of many popular bars and shops downtown and minutes away from Hlemmur Square and the bus station. With scenic views of the mountains across the water, the large rooms have a contemporary feel and come equipped with satellite TV. Head downstairs to the restaurant in the morning for a breakfast buffet, or stop by at lunchtime, when you can opt for the soup of the day with fresh bread.

10. 22 Hill Hotel, for award-winning Icelandic design

Budget Hotel

A minimalist budget room at 22 Hill Hotel, with black and purple accents and black-and-white artwork

Cool, contemporary and snazzy, 22 Hill Hotel is outside the city centre in the up-and-coming 105 neighbourhood. This Reykjavík budget hotel celebrates Nordic design throughout its interiors, partly thanks to the efforts of local architect Rut Káradóttir. The cosy rooms have open areas with carefully curated designer pieces that add to the hotel’s pared-back aesthetic. 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.

11. Fosshotel Rauðará, for its proximity to downtown Reykjavík

Budget Hotel

The colourful lounge at Fosshotel Rauðará, with purple, pink and yellow seating and a bar with purple-blue lighting

Fosshotel Rauðará, a contemporary hotel suitable for large groups, lies a short stroll away from the Hlemmur Food Hall and all the fun in downtown Reykjavík. Centrally located, the hotel has large and elegant rooms equipped with satellite TV. The colourful restaurant on-site offers a breakfast buffet in the morning and drinks in the evening.

For more accommodation options, check into one of the best hotels in Reykjavík – bookable on Culture Trip.

James Taylor contributed additional reporting to this article.

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