Where to Stay in Reykjavik, Iceland in 2026: Best Neighborhoods + Recommended Hotels
Where to base yourself in Reykjavik, neighbourhood by neighbourhood, with the hotels I'd actually book in each.
After the (whisper it) pandemic ended, Reykjavik was the first place I visited and I've been back three more times since. I know people are critical of Icelandair in Saga Class, but I arrived happy, grabbed a bus from the airport into Reykjavik and immediately understood why choosing the right neighbourhood to stay matters. The city might be compact, but it's spread out enough that some districts are not walkable.
Reykjavik hotels occupy everything from converted fish processing warehouses to sleek glass towers, though the majority are refreshingly modest four-to-six storey buildings that blend into the cityscape rather than dominating it. I've tried quirky and traditional, but location trumps luxury every time in what should be a very walkable city.
Where to Stay in Reykjavik
Here's a quick overview of the best areas to stay in Reykjavik:
City Centre (101 District) - for those wanting to be in the absolute heart of everything, within stumbling distance of Laugavegur shopping street, Parliament House, and the weekend party scene.
Old Harbour - for maritime atmosphere with easy cruise port access, plus you're still walking distance to downtown attractions whilst avoiding the busiest tourist chaos.
Business District - for modern amenities and (sometimes) better value, though you'll sacrifice some Reykjavik character.
Keflavik Airport Area - for any early morning departures that plague most European flights from KEF.
Staying in City Centre (Heart of Everything)
If you want to wake up where Reykjavik feels busy and on-the-go, the city centre is your only choice. You're within a hop, skip and a stumble of weekend partying, the iconic church spire, and virtually every restaurant that matters. The trade-off? Premium pricing and the occasional bout of Nordic nightlife noise.
The 101 postal district puts you right where the action happens - this is where narrow streets are lined with colourful corrugated iron houses and every corner promises either excellent coffee or a piece of local artwork. Have a look at:
Hotel Borg by Keahotels - this Art Deco landmark has been Reykjavik's most celebrated hotel since 1930, think elegant rooms with heated marble bathroom floors and an unbeatable location directly across from Parliament House.
Center Hotel Plaza - I stayed here on my first trip and, if you get your dates right, this spot offers excellent value for such a prime location, right downtown with good soundproofing despite the busy street.
Apotek Hotel - a historic boutique option with chic interiors and spa access, close to nightlife.
Where to eat nearby: For traditional atmosphere, Dill offers recognisable Nordic cuisine with a Michelin star, whilst Sægreifinn (Sea Baron) serves legendary lobster soup at the harbour.
Staying in Old Harbour (Maritime Character)
The Old Harbour has a completely different Reykjavik vibe: it's quieter, is a real harbour, but it's still walkable to major attractions. You'll often find better value here, plus genuine working harbour atmosphere that many visitors never discover. Top options:
The Reykjavik EDITION - Iceland's most stylish and luxurious hotel, featuring 253 rooms with panoramic harbour views, the city's only rooftop bar, and a Michelin-recommended restaurant led by Iceland's first Michelin-star chef.
Reykjavik Marina - a fun, quirky hotel with harbour-themed decor and cool views, perfectly positioned for whale watching tours that depart steps from the front door.
Canopy by Hilton Reykjavik City Centre - a modern Hilton with local Icelandic design touches and a walkable location.
Where to eat nearby: The harbour area has excellent seafood restaurants. Messinn offers exceptional fish dishes in a cosy setting, whilst Forréttabarinn serves innovative small plates with harbour views.
Staying in Business District (Practical Comfort)
If you want a solid hotel without bang-in-the-centre price premium, the business district is still not far from downtown and has practical smart hotels, while the airport bus stop is right outside. I've stayed in the Fosshotel and Storm Hotel on two of my trips, and both were excellent (particularly for the included breakfast buffets). Check these out:
Storm Hotel by Keahotels - a Nordic-inspired hotel offering peaceful accommodation between the business district and Laugavegur shopping street, with free parking and excellent value happy hour from 16:00-19:00 daily.
Fosshotel Reykjavik - a reliable mid-range option with modern amenities and good transport connections, ideal for travellers who prioritise comfort and convenience over central location.
Hotel Reykjavik Grand - an environmentally friendly four-star hotel with great city views.
Where to eat nearby: The business district puts you within walking distance of Laugavegur's restaurant scene. Snaps offers French bistro classics in an intimate setting, whilst Laundromat Cafe provides all-day dining with a quirky bookshop atmosphere.
Staying Near Keflavik Airport (Early Departure Sanity)
If you're flying east from KEF, you've probably discovered the brutally early departure times that seem designed to ruin your final night's sleep. It's literally the worst. After testing the dawn rush more than once (and missing an airport bus), I've learned that staying near the airport transforms departure day from chaos into efficiency.
The airport area completely lacks Reykjavik's charm, but you'll thank yourself when you're rolling out of bed fifteen minutes before check-in instead of enduring a pre-dawn bus journey.
Airport Hotel Aurora Star - practically IN THE terminal. You could stumble out of it early morning 5 minutes before check-in shuts (please don't). It's always very expensive, to my mind, but would be the best option.
Courtyard by Marriott Reykjavik Keflavik Airport - this is where I stayed for my last early departure, and it's nice and practical. The restaurant is really good for a final night treat. No shuttle and you can't walk!! Uber it is.
Hotel Berg - while this place is new to me, I spotted that it has an airport shuttle and is highly reviewed. I'll be booking this one for the next visit!
Where to eat nearby: The Courtyard restaurant exceeded expectations, there's an Asian restaurant in downtown Keflavik, and KEF airport has some nice breakfast options if you leave enough time for it.
PREFER TO FEEL AT HOME, AWAY FROM HOME?
While there are lots of cool hotels in Reykjavik, if you prefer a nice holiday home or apartment on your vacation, including in restored Icelandic buildings, VRBO has a great selection.
For Cruise Passengers
I loved arriving into Reykjavik on my NCL Norwegian cruise, the views are stunning! Some people do walk to/from the ship from/to their hotel and it is doable if the weather is kind and you're fit. But a taxi would be easier. All the Harbour or City Centre hotels that I recommend above will work for you. I was with friends who were staying at Hotel Borg, and the hotel allowed them to store their bags securely, even though we were off the ship at 10am.
Practical Considerations
- Pricing Reality: Expect €200-400+ per night in high season (June-August). Northern Lights season (October-March) sees dramatic price increases, so book early or prepare for sticker shock.
- Rental Reality: Vacation rentals in Reykjavik rarely offer better value than hotels, given the city's compact size and they are a good idea only if you prefer to self-cater.
- Booking Strategy: Weekend rates can spike dramatically, particularly during summer festivals. If your dates are flexible, midweek arrivals will deliver significant savings.
Planning your Reykjavik stay? Once you've sorted your accommodation, my guides will help you make the most of your time in Reykjavik:
- Icelandair Saga Premium Flight Review
- How to Get from Keflavik Airport to Reykjavik - practical transport options for arrival
Choosing where to stay in Reykjavik really does make a difference to your experience. Here's my attempt to sum up each area: City Centre - energy and convenience, Old Harbour - maritime character, Business District - close enough, clean/corporate. Enjoy your visit to Reykjavik!