Where to Stay in Iceland when Visiting Popular Attractions

where to stay in Iceland

Where to Stay in Iceland

If you’re heading off to Iceland, you’ve no doubt heard tons about how expensive this little island can be! From food to gas and everything in between, you’ll certainly want to save up a bit before your trip. Your accommodations don’t have to break the bank though.

If you’re planning to stay in Reykjavik, tour the well known Golden Circle, or maybe even do a little exploring along the southern section of the Ring Road, you should definitely check out these three great options.

Reykjavík – Hlemmur Square Hostel

The hostel cost $74.29 per night for two beds in a 12-bed female dorm and did not include breakfast.

On our first evening in Iceland we stayed in Reykjavík to get a good night sleep before heading out early the next morning to start on the typical Iceland itinerary — the Golden Circle. We stayed at Hlemmur Square Hostel which is in an excellent location right on Laugavegur, a popular and well-trafficked street full of shopping and dining.

The hostel does not have parking so if you’re driving a rental car you’ll need to find street parking and pay the meter until 6 p.m. and then be up and gone in the morning before they start charging for parking again at 9 a.m. (On Saturday you only have to pay until 4 p.m. and on Sunday street parking is free.)

My sister and I stayed in a 12-bed female dorm for a very reasonable rate considering hostels, like everything else in Iceland, are more expensive than many other places in Europe. There are numerous things to do within walking distance —  you literally step out the door onto Hlemmur Square and you’re right in the midst of all the action. Walking in either direction you’ll find shops carrying famous Icelandic wool sweater and other trinkets, restaurants and bars, and beautiful buildings.

Not only is there a ton to do right outside the door, but the hostel also has a restaurant and bar on site. If you dine in the restaurant, you’ll get a free draft beer with any main course — kind of a big deal in Iceland as everything is expensive, including alcohol. They also have an option for a communal meal from 6 to 7 p.m. in the dining room. It’s first come, first serve and it’s only 1100 ISK which comes out to about $10 USD. At that rate, it’s a fantastic deal and a great way to meet some of the other people at the hostel.

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Restaurant on site called Pulsa.

If you’re arriving early enough you can also partake of happy hour at the bar on site. It’s a nice long one lasting from 4 to 8 p.m. with select draft beers and wines marked down to 750 ISK or about $7 USD.

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The bar inside Hlemmur Square Hostel.

There’s a lot of common space at this hostel and the downstairs spaces have an airy feel with large windows letting in a good deal of light into the lobby.

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One of the common spaces.

As far as the rest of the amenities go it was pretty standard. Our 12 bedroom dorm was nice and spacious and had good sized lockers for luggage underneath the beds.There was also a small sink and mirror in the room which was useful for brushing your teeth or putting on a quick bit of makeup.

There was a communal kitchen which was a bit cramped but would do the trick, although we didn’t use it.

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The kitchen.

The real issue was the bathroom which was quite small and didn’t really have enough space for multiple people to be in it. At one point my sister and I were in the two narrow shower stalls, while 4 other girls stood outside the flimsy curtain trying to brush their teeth, dry their hair and complete the rest of their nightly ablutions all with one sink and one outlet.

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This bathroom wasn’t nearly big enough to serve the number of girls on the floor.

With that being said, that’s hostel life sometimes and I certainly wouldn’t let that deter me from staying there again. Overall it was clean and in a great location and it did the trick, starting off our Icelandic trip on the right foot.

Eyrarbakki – Bakki Hostel and Apartments

This hostel cost $98.06 per night for two beds in a 6-bed female dorm and did not include breakfast.

We spent the next day exploring the Golden Circle, adding in stops at Faxi waterfall and Kerio Crater, which was nicely on our way to our stop for the evening, Eyrarbakki. We arrived in the evening, driving slowly through the tiny town marveling at the beautiful simplicity of the colorful and quaint buildings.

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Evening falling in Eyrarbakki, a small coastal town in Southern Iceland.

It’s important to note that when you book this hostel online you may see some outdated information. When we booked, the instructions told us to go to a restaurant a minute or so down the road to pick up the keys and then we would be escorted to the hostel. We stopped at the restaurant and went inside and they had no idea what we were talking about. We drove on down to the hostel (which was truly just a minute down the road like it said online) and checked in there.

This hostel was one of the nicest I have ever stayed in and they also have private apartments for those wanting more of a hotel experience. There were beautiful heated wood floors, a big modern kitchen, and a large bathroom with quite a few good sized shower stalls.

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Tons of spacious showers.

One small drawback was that the bathroom was outside of the bedroom area so you have to walk down the hall past the other bedrooms, through the common area next to the kitchen to get to the toilets or showers.

It wasn’t a big deal because we only saw one other guy in the hostel all evening but if there had been full occupancy it would have been a little more awkward to come and go.

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One of the common spaces.

As it was we ended up having a 6-bed female dorm to ourselves.

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View out the window in our 6-bed dorm.

It just wasn’t a busy week for the hostel guest-wise. There were a bunch of guys staying there but they worked in the area in one of the local industries, basically living at the hostel full time while they were in season for work. Most were already in bed when we got there, though some came in later after we were in bed. We only ever saw the one who was there when we arrived so it felt like having the place to ourselves.

The girl at the counter was super friendly and welcoming — we hit it off instantly because she’d previously lived in Las Vegas (my home at the time of this writing) and was a former substitute teacher (I used to teach also) so we chatted with her about life in Iceland. She answered tons of our questions about what it was like living in a small town, how people live with the high prices for everything, and perhaps most importantly: how did people afford to drink? She was very sweet and helpful and one of the friendliest check-in experiences I’ve ever had anywhere in the world.

Later when we were making dinner in the modern kitchen, we realized that we didn’t have any milk to add to our macaroni but she let us use some of hers and also helped us with converting our measurements from cups to the metric system.

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The kitchen at Bakki Hostel.

The town around the hostel was quite small and quaint and there certainly wasn’t a ton to do, although that’s perfect because if you’re exploring Iceland properly during the day you likely won’t have the time and energy to go out in the evening.

Within a short distance, there was the restaurant we had initially gone to for check-in although we opted to stay in and cook to save money. There’s also a museum in town but as we had arrived later in the day, most things were closed. We were right by the water so we walked down the street to the coastline to watch the sunset before heading back for an early night to set us up for our next day of exploring.

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Sunset in Eyrarbakki.

Vik Area – Sólheimahjáleiga Guesthouse

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The peaceful countryside vibe at this property was amazing!

The hostel cost $124.27 per night for a private guestroom with two twin beds and did include breakfast.

On the last night of our road trip we stayed in a guest house near the little town of Vik. We’d originally wanted to stay in Vik itself but this beautiful guest house was located in the peaceful countryside and was a good bargain at the time we booked (and there were few other options available).

This turned out to be the perfect option, a peaceful relaxing stay after all the traveling and sightseeing we’d been doing. It was the end of day three and we were completely wiped out as we’d just done the 4-mile-ish trek out and back to the Sólheimasandur plane wreck. This guesthouse is a perfect location for that outing as it’s only 2 minutes drive away!

We stayed in a two-bed private room with a beautiful view out over the countryside beyond.

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Our private guestroom.

Horses and sheep wandered along in the evening light grazing along the hillsides, a tractor rolled by from time to time, and chickens scratched and pecked their way around the property. It felt a million miles away from the city life of Reykjavík or even more so, the glittery lights of Las Vegas.

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One of many beautiful country views.

Our room was just off a big, bright and well-equipped kitchen.

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The kitchen was huge with tons of seating.

There were numerous bedrooms upstairs and down as well as several pretty common rooms throughout.

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One of the common spaces.

The property also had multiple full baths with modern showers so it felt a lot more like staying in someone’s home than in a hostel. On top of all that the piping hot water was just incredible after the three long days we’d spent hiking.

We met others from France while cooking our evening meal in the dining area but quite a few people didn’t come in until later when we were already in bed. It was a little noisy as our room was right next to the kitchen but there were literally just two German guys talking outside to each other. They just happened to be a couple of over 6-foot big guys with deep voices. It wasn’t like they were trying to be loud, that’s just how they talked. Still, they wrapped up after decently early and we were able to fall asleep quite quickly.

The next morning before we got up to go explore Vik we enjoyed the complimentary breakfast. This is not the norm in Iceland, virtually no one includes breakfast so this was a big extra that sort of made up for the price difference in that this place was more expensive than any of the other places that we stayed.

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Buffet-style breakfast spread.

We abandoned our normal breakfast of Pop-Tarts and headed over to their breakfast room to enjoy the spread. They had a buffet-style spread of oatmeal, meats and cheeses, breads and jams, cookies, crackers, hard boiled eggs, juices and (hallelujah) coffee!

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My first Icelandic breakfast.

Out of the three places we stayed, this was my favorite. I’d certainly like to come back one day and use it as a base for several days of exploration and relaxation rather than only staying the one night.

My name is Gareth Leonard, a Marketing Director turned World Traveler with a passion for slow, meaningful travel. I have been traveling the world full-time for the past 9+ years and document it all on Instagram and YouTube. Come join me!

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