The 10 Best Cheap Hotels in Reykjavik

There's plenty of affordable accommodation in Reykjavik if you know where to look
There's plenty of affordable accommodation in Reykjavik if you know where to look | © Brett JT / Alamy Stock Photo
A visit to Reykjavik doesn’t have to cost an arm and a leg. Scattered throughout Iceland’s buzzing capital are some great bargain stays for those looking to save some money on accommodation while exploring this volcanic island.


Budget Hotel
ODDSSON Hotel, Reykjavik
ODDSSON Hotel, Reykjavik | Courtesy of ODDSSON Hotel /

ODDSSON hotel, just opened in 2019, 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.

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Brim Hotel

Budget Hotel
Double room at Brim Hotel, Reykjavik
Double room at Brim Hotel, Reykjavik | Courtesy of Brim Hotel /

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.

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First Hotel Reykjavik

Budget Hotel
Suite at First Hotel Reykjavik
Suite at First Hotel Reykjavik | Courtesy of First Hotel Reykjavik /

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, Iceland’s largest mall, you’ll find high-end fashion stores, restaurants and cafés and a large cinema.

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Fosshotel Baron

Budget Hotel
Deluxe room at Fosshotel Baron, Reykjavik
Deluxe room at Fosshotel Baron, Reykjavik | Courtesy of Fosshotel Baron /

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.

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Grímur Hotel

Budget Hotel
Double room at Grímur Hotel, Reykjavik
Double room at Grímur Hotel, Reykjavik | Courtesy of Grímur Hotel /

Tucked away in the quiet neighbourhood of Fossvogur, the Grímur Hotel prides itself on the 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.

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Hlemmur Square Hotel

Budget Hotel, Boutique Hotel
Deluxe room at Hlemmur Square Hotel, Reykjavik
Deluxe room at Hlemmur Square Hotel, Reykjavik | Courtesy of Hlemmur Square Hotel /

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 at 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.

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4th Floor Hotel

Budget Hotel
Junior suite at 4th Floor Hotel, Reykjavik
Junior suite at 4th Floor Hotel, Reykjavik | Courtesy of 4th Floor Hotel /

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.

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OK Hotel

Budget Hotel
OK Studios
OK Studios | Courtesy of OK Studios /

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 like traditional Icelandic stew, salmon and duck sandwiches.

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22 Hill Hotel

Budget Hotel
Triple room at 22 Hill Hotel
Triple room at 22 Hill Hotel | Courtesy of 22 Hill Hotel /

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.

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Fosshotel Rauðará

Budget Hotel
Design room at Fosshotel Raudara
Design room at Fosshotel Raudara | Courtesy of Fosshotel Raudara /

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.

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These recommendations were updated on September 25, 2019 to keep your travel plans fresh.