25 of the Best Luxury Boutique Hotels in Iceland

Iceland offers a variety of accommodation options. From basic and luxe Airbnbs to 5-star accommodation and amazing boutique-style hotels. There are so many unique places to stay in Iceland that it can be a little overwhelming when planning your first visit.

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How Far in Advance Should You Book Hotels in Iceland?

I booked most of the boutique hotels that we stayed in about 3 months prior to arriving in Iceland. This far out I did actually find it quite challenging to book the original dates that I wanted, so I had to rejig our itinerary a little to secure bookings.

Given Iceland’s popularity, I would recommend booking hotels well in advance. I have heard that you need to book at least 6-months in advance to secure hotels during the peak season in Iceland (June through August). I would also recommend booking at least 3 to 4-months in advance during the rest of the year.

During the winter (December to March), you can probably still find accommodation a month in advance, but options will be more limited.

Iceland has become a very popular tourist destination in recent years and availability for accommodation is very limited - even in winter!

How to Find and Book Amazing Hotels in Iceland

I’m a big fan of independent travel. I rarely book pre-organised tours or through a travel agent. I do all my own research and always book my own accommodation using either Booking.com, Agoda or Airbnb. I did quite a bit of research to find the best boutique and design hotels in Iceland before my trip. I must have checked out every. single. hotel available in Iceland!

First things first, I spent a ton of time planning our road trip itinerary before I started looking for places to stay in Iceland. This part of the process can be quite time-consuming. So, if you’re limited on time or not keen to do all the research yourself, you can follow our 7-day Iceland road trip itinerary instead. Also, check out our helpful tips for first-time visitors to Iceland and our ultimate Iceland Bucket List!

Once I had a rough itinerary and budget in mind, I began searching for the best places to stay in Iceland using Booking.com. I searched my planned dates for each location and starred at least 10-15 hotels that were within my budget. I then went through my list of favorites and narrowed down a few hotels that I liked the most.

Once I had done this for each location we planned to spend the night, I then went through and booked them all at the same time.

But the good news is, you don’t need to go to this much effort, because I’ve already done a ton of research for you!

Below is a list of all the properties that I consider to be the best boutique hotels and unique places to stay in Iceland! The list is broken down by destination, covering all the best places to stop on a 7-day Iceland road trip itinerary. And I’ve also been fortunate enough to experience most of these hotels for myself.

Best Boutique Hotels in Reykjavik

Luxe Pick - Sand Hotel

Sand Hotel in Reykjavík was possibly one of my favourite places to stay in Iceland. Located right in the centre of town, close to plenty of good restaurants and cafes.

Our room was very spacious and the modern luxe decor was absolutely beautiful. It featured a massive comfortable king-size bed, with pillows and sheets that you just sink into, along with designer lighting, USB outlets (I really hate it when hotels don’t provide enough of those), fluffy robes and blackout curtains (good for the jet lag).

The bathrooms were decked out with marble and the lobby featured comfortable lounges that you could lounge around all afternoon playing board games in front of the open fire. The staff at the front desk were really friendly and helpful, organising day tours and researching information on weather and aurora activity for our road trip and northern lights hunting expeditions. 

We didn’t actually eat breakfast in the hotel restaurant because there are so many good options around town that we wanted to try. We did, however, quite frequently eat at the bakery next door, called Sandholt (I think it may be affiliated with the hotel), which served amazing pastries, artisan bread, and great coffee.

The only negative we could find with the hotel was the noise factor. It is located right in the centre of Reykjavík and we stayed on a weekend, which is peak party time for the locals. The rooms are insulated but not completely soundproof. We couldn’t hear general street noise during the day but we did hear music coming from the nearby clubs and bars at night. I wouldn’t let this deter you from staying here though because the location of the hotel was really great. You might just want to bring a set of earplugs if you’re staying on a weekend.

Luxe Pick - Ion City Hotel

After a great experience staying at the Ion Adventure Hotel, we decided to spend our last night in Iceland at their sister property, the Ion City Hotel in Reykjavík.

We were (again) treated to a glass of sparkling wine upon arrival. We took our bags to our room then headed back down to the reception area where we sat by the window people watching and enjoying our glass of bubbly.

The staff were very friendly and helpful with making restaurant bookings and confirming our airport transfers. We actually found this kind of service to be the norm at many Iceland hotels. Tourism is a big industry in Iceland and for such a tiny island nation, they do a great job of accommodating visitors’ every need.

The rooms at Ion City Hotel were quaint and stylish with free alcoholic beverages, a Nespresso machine and good selection of herbal teas. I really loved the bath products on offer at all of the Ion group of hotels. It’s hard to find hotels that have good quality bath products that don’t dry out your skin or hair.

The Ion City Hotel was also located in the main entertainment district of Reykjavík so we were a little concerned about the noise, however, our room was located towards the rear of the building so we didn’t actually hear anything at all.

The food at Sumac restaurant, adjacent to the Ion City Hotel looked absolutely amazing, but unfortunately, we didn’t get a chance to eat there, as we were so tired from our road trip and had to be up at 4 am for a flight. But it is definitely on my list of restaurants to check out during my next visit.

Other Top Places to Stay in Reykjavik

Here are a few other boutique hotels in Reykjavik that made our shortlist:

• Canopy by Hilton - a beautiful boutique hotel with minimalist Icelandic design. Only 2 minutes walk from the main shopping strip. A great option if you’re a member of the Hilton Honors program.
• 101 Hotel - A modern boutique hotel in Reykjavik with contemporary design features, located right next to the Opera House.
• Exeter Hotel by Keahotels - A modern industrial-style contemporary designed boutique hotel, located near the Harpa Concert Hall in Reykjavik city.
• Room With a View Hotel - a beautiful boutique hotel that has proven very popular amongst its guests, having received many rave reviews. Conveniently located in the centre of Reykjavik city and close to all the main attractions.
• Black Pearl Apartment Hotel - One of only a handful of 5-star hotels in Iceland. These luxury apartments are great for longer stays and groups, as they feature full kitchen facilities.

Best Boutique Hotels on the Golden Circle

Top Luxe Pick - Ion Adventure Hotel

The Ion Adventure Hotel is Insta-famous, which is exactly how I found out about it. It’s also one of the best Iceland hotels located outside of Reykjavik and gets booked out quickly. We had a lot of trouble booking the dates we wanted so I would definitely recommend booking well in advance. It also seems to be popular with large tour groups. We had 2 or 3 tour groups staying at the same time as us and once they arrived in the late afternoon; the pool, sauna, and restaurant filled up very quickly.

Our stay here was very pleasant. The staff were really friendly and accommodating. We were offered a glass of sparkling wine on arrival, which was a welcome touch after a long day of driving around the Golden Circle.

The rooms were simple but comfortable with Nordic luxe styling - this style seems to be standard amongst luxury Iceland hotels. I loved some of the Icelandic style finishings, such as sheeps skins on the beds and a massive black and white photo of a gorgeous Icelandic horse on the wall.

Unfortunately, our stay here coincided with a fierce storm brewing so the normally picturesque outdoor heated pool (that you’ve no doubt seen on Instagram a thousand times) was not so beautiful and warm. But that’s just how the weather is in Iceland - unpredictable. We splashed around a little and tried to get some photos before realising that outdoor hot tubs are not much fun in gale-force wind, so we retreated to the sauna.

The food at Ion Adventure Hotel was superb. Better than any other Iceland hotel we stayed at. The menu featured authentic Icelandic style delicacies, such as Langoustine and slow-cooked lamb and there were very good vegetarian options too. Just be aware that you have to book a table early as the restaurant quite frequently books out and there are no other places to eat nearby.

The Ion Adventure Hotel is located in a remote region near Thingvallavatn on the Golden Circle. It is about 1 hours drive from Reykjavík and is one of the only boutique hotel options on the Golden Circle. The scenery around this area makes for an absolutely stunning drive.

Other Top Places to Stay on the Golden Circle

Here are a few other boutique hotels on the Golden Circle that made our shortlist:

• Hotel Grimsborgir - located in Ásborgir, within the Golden Circle Region with outdoor geothermal hot tubs. This hotel is close to Kerid Crater.
• Torfhús Retreat - an absolutely stunning wellness ranch, featuring individual cabins with grass roofs. One night simply won’t be enough to enjoy this amazing hotel in Iceland!
• INNI Boutique apartments - with beautifully designed decor, this aparthotel features kitchen facilities in each room.
• Frost and Fire Hotel - a stunning boutique hotel in Iceland with bubbling geothermal hot springs, overlooking a river. The onsite restaurant serves Icelandic-style food that is based on the slow-food concept.

Best Boutique Hotels on the South Coast

Luxe Pick - Fosshotel, Glacier Lagoon

After an eight hour drive from Ion Adventure Hotel to the Glacier Lagoon (normally five hours but we made several stops along the way to take photos, because Iceland is so photogenic), we were so relieved to arrive at the Fosshotel. The hotel is actually located about 20 minutes drive west of the Glacier Lagoon in an area that is slightly more protected from the elements. We reached the hotel around sunset and chose to continue driving to the Glacier Lagoon so we could take photos at Diamond Beach during sunset. By the time we arrived at the hotel, we literally ate and fell into bed.

We opted to stay here for two nights, as there was so much to see and do around the Glacier Lagoon. I had a few issues with my booking as I had changed the dates through my booking agent, who made an error and changed it to the wrong date. The staff at Fosshotel were so helpful in correcting the error and offered me a discount on my stay as a result. Now that is the kind of service I love to receive when I stayed at luxury hotels.

The rooms at Fosshotel were simple and comfortable. We had a room with a view towards the valley, on a clear day you can see all the way to the ocean. They also offer a Northern Lights wake-up call option. Given the remote location of the hotel, the Northern lights can be seen right from your room.

Fosshotel is one of the largest Iceland hotels we visited. Due to its location, it generally caters to tour groups stopping for one night on their way through. As a result, the restaurant gets booked out quickly so if you want an early meal, I would recommend making a booking as soon as you arrive. The food was very good but expensive. Although, everywhere is expensive in Iceland. Given the remote location, there are not many other options. The closest town is Hofn, about 40 minutes drive from the Fosshotel.

Be careful not to confuse the Fosshotel Glacier Lagoon with the other Fosshotel’s located around this area. The brand appears to have several accommodation options within reach of the Glacier Lagoon. I cannot speak for the others, but the Fosshotel Glacier Lagoon was definitely a good option in terms of luxury hotels in Iceland and I would definitely stay here again if I ever return.

Other Top Places to Stay on the South Coast

Here are a few other boutique hotels on the south coast in Iceland that made our shortlist:

• Hotel Ranga - this is a top pick on the list of my favourite boutique hotels in Iceland. If you plan your road trip to start on the Golden Circle and then continue down Iceland’s south coast, then Hotel Ranga is perfectly located in between both routes, near the town of Hella and Eyjafjallajökull volcano.
• Black Beach Suites - beautiful rooms offering views over the sea and black beaches near Vik town.
• Fosshótel Vatnajökull - Featuring views of Europe’s largest glacier, Vatnajökull, this is a great place to base yourself while exploring the Glacier Lagoon

Best Boutique Hotels near the Blue Lagoon

Luxe Pick - Silica Hotel, Blue Lagoon

Planning a visit to the Blue Lagoon? Then this is one Iceland hotel you don’t want to miss! Yes, it’s pricey (after all we’re talking upmarket hotels here, not budget ones). But after visiting the actual Blue Lagoon and seeing how packed it was with tourists, we were so relieved to have booked a night at the Silica Hotel.

The hotel features its own milky-blue lagoon that wraps around the lobby area. The experience of being able to change into my swimsuit and robe in my hotel room and hopping straight into the hotel’s very own private lagoon with virtually no other people in it was priceless!

In fact, staying at the Silica Hotel was such a highlight, we created an entire blog post and video to showcase our experience at the Silica Hotel. And if that’s not enough to convince you that this is one of the best places to stay in Iceland, then check out our article that was recently featured on WeAreTravelGirls.com; 9 Reasons Why You Must Stay at The Silica Hotel on Your Next Trip To Iceland.

Other Top Places to Stay near the Blue Lagoon

Here are a few other boutique hotels near the Blue Lagoon that made our shortlist:

• The Retreat at the Blue Lagoon - the ultimate luxury experience in all of Iceland is located at the Blue Lagoon! Each of the 62 suites features a private geothermal blue lagoon.
• Northern Light Inn - this family-owned boutique hotel is located near the main international airport in Iceland. It features a wellness spa, fitness centre, and free shuttle bus to and from the airport and the Blue Lagoon.

Best Boutique Hotels in North Iceland

Here are a few of our top picks for places to stay in Northern Iceland:

• Siglo Hotel - a beautifully appointed boutique hotel located right on the harbour in Siglufjörður.
• Nordic Natura - a beautiful little farm lodge on the edge of Ásbyrgi National Park
• Icelandair Hotel Myvatn - ideally located near the iconic Myvatn Nature Baths, near Grjótagjá Cave.

Best Boutique Hotels on the West Coast of Iceland

Here are a few of our top picks for places to stay on the West Coast of Iceland:

• Hótel Fransiskus Stykkishólmi - a well-appointed boutique hotel in Stykkishólmur, one of the few good accommodation options on the Snæfellsnes Peninsula.
• Hótel Húsafell - a large modern hotel in Húsafell featuring a golf course and some of the best outdoor geothermal pools in Iceland.
• Hotel Búdir - a beautiful hotel in a heritage building approximately 23 km east of Snæfellsnes National Park.

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Can you recommend any other great boutique hotels in Iceland that we’ve missed? We’d love to hear about them in the comment section below.

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