Where to Stay in Reykjavik: Best Hotels From Downtown to the Old Harbour

Deciding where to stay in Reykjavik is easier than in a lot of European cities because almost anywhere central works well as a base, which takes a lot of the usual “which neighborhood” anxiety out of planning this trip. The bigger decision is really about what you're doing with your days. If you're renting a car and spending most of your time on the Golden Circle, the south coast or a glacier tour, you want easy parking and an easy exit out of the city more than you want to be in the middle of the nightlife. If you're spending more time in Reykjavik itself, walking to Old Harbour, Laugavegur and Hallgrimskirkja matters more. This guide covers both, plus a few honest notes on cost, since Iceland does not do budget accommodations the way a lot of Europe does.

When we went to Iceland in 2016, we stayed in an Airbnb in central Reykjavik with two big bedrooms, a full kitchen and dining room, and parking so easy we never walked more than a block from the front door. It cost around $250 a night, which felt like a splurge at the time, but having the kitchen and extra space worked really well for us.

We have been trying to plan a return trip ever since, so Reykjavik hotels are something we have researched more than once. The problem is that most of our travel now involves driving with our dog, and Iceland is not exactly an easy add-on to one of our European road trips. Some of the hotels below have also been recommended by close friends who have visited more recently, so this list combines what we learned from our own stay with the places we are seriously considering for the next one.

Quick Picks: Best Hotels in Reykjavik

These are the hotels that keep coming to the top of our list when we plan a return trip, based on location, parking, price, recent reviews and recommendations from friends who have stayed in Reykjavik more recently.

1. The Reykjavik EDITION, best for a splurge with an Old Harbour location.
2. Hotel Borg, best for classic, historic downtown.
3. 101 Hotel, best for design-forward and walkable to everything.
4. ION City Hotel, best for a sleek, modern base on Laugavegur.
5. Exeter Hotel, best for the Old Harbour and easy access to the waterfront.

Best Neighborhoods to Stay in Reykjavik

For us, the decision is less about finding the “right” neighborhood and more about whether you want to be able to walk everywhere or would rather have easier parking and quicker access out of the city.

Midborg / 101 Reykjavik (Downtown)

The city center and the postal code locals use as shorthand for “downtown.” This is Hallgrimskirkja, Laugavegur's shops and restaurants, and most of the nightlife, all within walking distance of each other.

Best for: First-time visitors, anyone without a rental car for at least part of the trip, and travelers who want to walk to dinner.

Old Harbour (Grandi)

The Old Harbour has galleries, shops, restaurants and easy access to the puffin and whale-watching boats.

Best for: Travelers who want to stay near the water and close to the boat tours without being right in the middle of downtown.

Vesturbær

A residential, tree-lined neighborhood just west of downtown with local swimming pools and a slower pace, still an easy walk into the center.

Best for: Families or anyone who wants a quieter street to come back to at night without giving up walkability.

Best Luxury and Historic Hotels in Reykjavik

For a splurge, or if this is a once-in-a-while trip and you want to feel that.

1. The Reykjavik EDITION ($$$$): Set right in the Old Harbour, this is one of Reykjavik's higher-end hotel options, with modern rooms and several restaurants and bars on site. If we decide to splurge on our next trip, this is the hotel we keep coming back to.
2. Hotel Borg ($$$): An Art Deco landmark that's been open since 1930, right downtown near the Parliament building. It has a very different look from Reykjavik's newer hotels, with Art Deco interiors and a much more traditional feel, plus a spa. Good for travelers who want history and location over the newest design trends.

Best Boutique and Design Hotels in Reykjavik

Reykjavik has quite a few smaller hotels downtown, which makes this a useful category if you want something more individual than a large chain hotel.

1. 101 Hotel ($$$): Reykjavik's original boutique hotel, in a 1930s concrete building near the harbor with minimalist, monochrome interiors. Still one of the most photographed hotel interiors in the city.
2. ION City Hotel ($$$): A sleek, modern hotel on Laugavegur designed by a local studio around Icelandic design principles. Central without being loud.
3. Apotek Hotel ($$$): Once the city's main pharmacy, now a hotel that kept a lot of the original period details and paired them with a monochrome, contemporary look. Right in the heart of downtown.
4. Kvosin Downtown Hotel ($$$): A 19th-century building turned into 24 apartment-style rooms with a Scandinavian look, useful if you want more space or a kitchenette without giving up a central downtown address.
5. Eyja Hotel ($$): Eclectic, maximalist decor with hand-carved wood details, near the Laugavegur shopping strip. Good for travelers who want personality over minimalism.

Best Hotels in the Old Harbour

If you want to be close to the puffin and whale-watching boats, the Old Harbour is a convenient place to stay and is still within walking distance of central Reykjavik.

1. Exeter Hotel ($$$): Housed in a 1904 storage building that later became a residence and trade house, now a modern hotel with rooms that keep some of the building's industrial details. A short walk from downtown proper.
2. Grandi by Center Hotels ($$): A converted steel house in the Grandi creative quarter, blending industrial bones with a modern interior, plus an on-site restaurant. Good value for the Old Harbour location.

Booking Tips for Reykjavik

Book earlier than you think you need to. Reykjavik has a limited hotel supply compared with the number of visitors it gets, especially in summer and during Northern Lights season, and prices rise as rooms fill.

Confirm what's included before you compare prices. Breakfast, parking and even basic wifi aren't always bundled in Icelandic hotel rates the way they are elsewhere in Europe, so compare the total cost rather than just the nightly room rate.

Weigh a rental car against your hotel's parking situation. If you're doing the Golden Circle, the south coast or any glacier tour, you'll want a car, and free, easy parking (like we lucked into with our old Airbnb) is worth factoring into where you book.

Don't assume “downtown” means far from nature. Reykjavik is small enough that even a central hotel puts you within a reasonable drive of the Blue Lagoon, the airport and the start of most day tours.

Pack for the light, not just the cold. If you're visiting in summer like we did, ask about blackout curtains specifically. It genuinely does not get dark, and not every hotel handles that as well as you'd expect.

FAQ About Hotels in Reykjavik

Weigh a rental car against your hotel's parking situation. If you're planning to drive the Golden Circle or South Coast, free, easy parking like we had with our Airbnb is worth factoring into where you book. If you're taking organized day tours instead, staying central may matter more.

Is the Old Harbour or downtown a better base? Both work. Downtown puts you closer to restaurants and nightlife, while the Old Harbour puts you closer to boat tours and the waterfront and is still an easy walk to downtown.

Are Reykjavik hotels expensive? Yes, across the board, in line with how expensive Iceland is generally. Budget more than you would for a comparably sized European city.

Is an Airbnb or apartment rental worth it over a hotel? We'd say yes if you want a kitchen (groceries are cheaper than restaurants here) and easy parking, which is exactly what worked for us. Just book early, since good listings move fast.

How many nights do I need in Reykjavik? We stayed four or five nights and used the city as a base for day trips rather than spending much unstructured time downtown. That's about right if you want to fit in the Golden Circle, a glacier tour and the Blue Lagoon without rushing.

Our Reykjavik Hotel Takeaway

Where we stay next time will probably come down to whether we rent a car. If we do, easy parking and getting out of Reykjavik for early day trips will matter more to us than being directly in the middle of downtown. If we go without one, we would stay as central as possible and walk.

If we decide to splurge, The Reykjavik EDITION is the one that keeps coming up. For something central without that price tag, 101 Hotel and ION City Hotel are higher on our list. If we want a kitchen again, we would probably look seriously at an apartment-style property because that worked so well for us the first time.

More from The GetAwayZ on Iceland

• Iceland Travel Guide
• Where to Eat in Reykjavik
• One Day in Reykjavik
• Best Time to Visit Iceland