The Best Boutique Hotels in Iceland

The 12 Best Boutique Hotels in Iceland

Glaciers? Check. Active volcanoes? Check. Waterfalls? Triple check. The list of great things to do in Iceland goes on and on, and you’re guaranteed to have an experience like nowhere else in the world when you explore the Land of Fire and Ice!

This truly is an otherworldly destination. Iceland is a place where geothermal activity bubbles under the surface, a place where you can bathe in natural hot springs, snorkel between tectonic plates, and marvel at ancient lava fields. 

This is a destination that’s as beautiful as it is unusual, and you’ll be mesmerized by tumbling waterfalls, frozen glacial lakes, and exploding geysers as you journey across Iceland. But there’s more to this Nordic nation than serene landscapes.

You’ll quickly discover that the oceans teem with whales while puffins fly along the rugged coastlines. You can explore the Arctic-like tundra, snowmobile across ice sheets, or climb through icy, volcanic lava tubes, among much, much more. Then there’s unique cuisine to try, too, and don’t forget the Norse history and vibrant contemporary culture that’s waiting to be discovered in the capital city of Reykjavik

There’s a lot to do in Iceland, but you’ll be happy to know that there is always a luxurious and unique hotel to head back to in the evenings. If you’re planning a trip to the Land of Fire and Ice, keep reading to learn more about where to stay in Iceland. 

  • Short on time and don’t want to read the whole article? Here are our top 3 picks!
  1. The Retreat at Blue Lagoon
  2. Tower Suites Reykjavik
  3. Hotel Magma

Don’t forget to check out our web story: The 12 Best Boutique Hotels in Iceland

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Where to stay in Iceland

Where to Stay in Iceland: Best Boutique Hotels

If you love boutique hotels, you’ve landed in the right country! Icelanders love to be unique, and you’ll find that this national character trait is reflected in the abundance of eclectic hotels across the nation. 

In Reykjavik, you’ll find refined luxury, astounding contemporary architecture, and a lovely mix of culture and heritage that’s far removed from the surrounding ice caps and volcanoes that Iceland is most famous for. 

If you’re in Iceland for a quick stopover on your way across the Atlantic, then Reykjavik is the place to stay. If you want to be even closer to Keflavik International Airport, though, then you’ll be pleased to discover that one of the best hotels in Iceland is found at the famous Blue Lagoon, where you can step out of your suite and directly into vibrant blue geothermal hot springs! 

Iceland also does remote luxury like nowhere else in the world. You’ll find that even in the most isolated, hard-to-reach locations, there’s a five-star hotel or a beautiful boutique awaiting your arrival. 

You’ll find eco-friendly cabins overlooking glaciers, traditional hotels with views of volcanoes and the Northern Lights, and sustainably designed, outdoor-oriented resorts that revel in sending their guests on ice climbing, hiking, or off-road adventures. And, of course, almost every hotel in Iceland comes with outdoor hot tubs or natural geothermal bathing areas as standard!

If you’re planning a vacation to the Land of Fire and Ice, here are our picks for the 12 best boutique hotels in Iceland!

The 12 Best Boutique Hotels in Iceland

1. The Retreat at Blue Lagoon

Unique Hotels Iceland: The Retreat at Blue Lagoon
Photos: The Retreat at Blue Lagoon

The Blue Lagoon is one of Iceland’s most famous (and relaxing!) tourist attractions, but did you know that you can stay in a beautiful boutique hotel overlooking the famous geothermal waters?

The Retreat at Blue Lagoon offers you a once-in-a-lifetime opportunity to stay in absolute luxury in the unique surroundings of Iceland’s most beautiful spa. The 62 boutique rooms are surrounded by bright blue geothermal water, and if you’re lucky enough to book the upmarket Lagoon Suite, you’ll even have direct access from the suite and into the water itself! 

Whichever luxury suite you stay in, you’ll have a supreme Blue Lagoon experience like no other, as you’ll have access to quiet, private areas of the Retreat Spa that day-trippers just can’t reach. 

Spend your day soaking in mineral-rich geothermal waters, or just enjoy the volcanic view from your suite’s floor-to-ceiling glass windows and private terrace before opting for a massage, floating therapy session, or the full Blue Lagoon Ritual. 

You can enjoy the culinary delights of the Blue Lagoon’s restaurants for breakfast, lunch, and dinner during your stay. Dine inside an 800-year-old lava cliff when you book a table at the Lava Restaurant, where cod, langoustines, and Arctic char are served with a view over the Blue Lagoon. 

The Michelin-recommended Moss Restaurant is just as atmospheric. You’ll love taking in the rocky, moss-strewn views of the volcanic landscapes as you gorge on a delectable tasting menu that changes with the seasons. 

The Retreat at Blue Lagoon is located just a short journey from Reykjavik, and it’s even closer to Keflavik International Airport. That makes this one of the best hotels in Iceland if you’re looking for a convenient luxury stopover on your way across the Atlantic! 

2. Hotel Borg

Unique Iceland Hotels: Hotel Borg
Photos: Hotel Borg

One of the best hotels in Iceland is Hotel Borg, where you’ll quickly fall in love with the distinctive art-deco designs that are found both inside and outside this Reykjavik favorite. 

Hotel Borg is an Icelandic landmark, and it dates back to 1930 when it first opened its doors to luxury-loving travelers. Indeed, Hotel Borg can claim to be Iceland’s oldest luxury hotel, and that means you’re going to be guaranteed quality service for the duration of your stay in the capital. 

There are 99 rooms at Hotel Borg, all of which are decidedly modern in their comforts and amenities, but each of which retains the unique art-deco style that the hotel has nurtured for over 90 years. You’ll appreciate the stylish comforts of the art-deco furnishings, the sleek minimalism of the wooden floors, and the pure luxury of the Philippe Starck fittings. 

You couldn’t ask for a more central location, and you’ll find Hotel Borg overlooking the Icelandic parliament building and cathedral in Austurvollur Square, right in the center of Reykjavik. After a day of sightseeing in the capital, you can retire to the comfort of your boutique Hotel Borg room with ease. Or, you can step up the relaxation with an evening of saunas, steam baths, and hot tubs at the Borg Spa! 

3. Tower Suites Reykjavik

Cool Hotels Iceland: Tower Suites Reykjavik
Photos: Tower Suites Reykjavik

Do you love a spectacular panorama? Then Tower Suites Reykjavik is the boutique hotel for you. Book a luxury suite in this stylish tower block, and you’ll be staying in one of the tallest buildings in Iceland’s capital, which means you’ll have beautiful views of Reykjavik’s skyline and the harbor. 

There are eight suites located on the 20th floor of this stunning, glass-faced tower. Each of those suites features expansive floor-to-ceiling windows that are guaranteed to invoke awe the moment you walk into the room. You can even take a closer look at the skyline or the night sky with the help of the in-room telescope!

Each of the eight suites has its own unique style, design, and character, with sleek, open-plan layouts and smooth wood floors giving Tower Suites a seriously modern feel. Each of the suites even has its own unique view, depending on its location on the 20th floor. The Keilir Suite offers views of Mount Keilir in the distance, while the Snaefellsjokull Suite offers distant views of the Snaefellsjokull Volcano.

4. Hotel Geysir

Iceland Boutique Hotels: Hotel Geysir
Photos: Hotel Geysir

Hotel Geysir is one of the coolest hotels in Iceland because this unique boutique hotel is located right in the heart of the famed Golden Circle. You’ll love the fact that Hotel Geysir overlooks the Haukadalur Geothermal area. Plus, you’ll be mere meters away from the Great Geysir, which is one of Iceland’s most enduring tourist attractions. 

The hotel’s sleek and contemporary design merges almost seamlessly with the surrounding landscapes of the Golden Circle. The exterior is gorgeously refined, and you’ll love how the 77 rooms and six suites offer countryside views through expansive glass windows. The luxury rooms feature natural, earthy tones and plush furnishings, perfect for inducing a relaxing sleep after an adventurous day out in the Golden Circle. 

The Geysir Restaurant serves up traditional Icelandic cuisine, with slow-cooked lamb, hearty stews, and fresh seafood featuring on the seasonal menu. Best of all though, is the geothermally baked bread, which you can’t find anywhere else in the world!

You’re just a short journey away from Reykjavik when you stay at Hotel Geysir, but you’re deep within Iceland’s remote countryside. As well as being just a short walk from exploding geysers, you’re within easy reach of Gullfoss Waterfall, Thingvellir National Park, and endless volcanic and glacial landscapes. 

5. Hotel Budir

Unique Hotels Iceland: Hotel Budir
Photos: Hotel Budir

Iceland does luxury even in the most remote of locations, and if you’re looking for an isolated boutique hotel, one of our all-time favorites is Hotel Budir. This beautiful hotel overlooks the quiet southern shores of Snaefellsnes National Park, and you’ll love the volcano and sea views from your cozy room!

Rooms are charming, minimalist, and traditional in character, but don’t expect to find the same luxuries you might find in a five-star hotel in Reykjavik. Hotel Budir is all about getting away from it all, and what you will find is supreme comfort and friendly service in one of the most remote destinations in the country. 

In the winter, you’ll be guaranteed to spot the Northern Lights from your hotel room. And, in the summer, you can make the most of the endless days by hiking through lava fields and exploring glaciers. 

Despite Hotel Budir’s isolation, you’ll be pleasantly surprised to discover just how gourmet the dinner menu is. The hotel’s chefs serve up a five-course tasting menu that’s packed with seasonal Icelandic ingredients, including Arctic char and reindeer pate. Wine lovers can indulge in expert pairings from the in-house sommeliers, while the hotel bar serves up one of the most extensive selections of liquor in Iceland. 

6. Hotel Husafell

Where to stay in Iceland: Hotel Husafell
Photos: Hotel Husafell

You’ll find Hotel Husafell hidden away in Iceland’s Highlands, and you’ll love how this remote boutique stay combines luxury with nature. 

There are just 48 boutique rooms available at Hotel Husafell, all of which offer serene views of the surrounding countryside alongside natural hues, minimalist decor, and unique artwork from Icelandic artist Páll Guðmundsson.

Hotel Husafell is surrounded by otherworldly landscapes, and in the winter, you’ll be in the perfect position to spot the Northern Lights in the dark skies. In the summer, you’ll be transfixed by the Midnight Sun. Plus, you’ll find yourself within easy reach of natural hot springs, glaciers, and crashing Icelandic waterfalls!

Hotel Husafell might be remote, but you can still stock up on hiking supplies at the on-site mini-market or refuel after a day of adventuring at the Bistro. For a more refined dinner, book a table at the Husafell Restaurant, where you can dine on gourmet Icelandic cuisine while enjoying a panoramic view of the Highlands.

7. ION Adventure Hotel

Unique Hotels Iceland: ION Adventure Hotel
Photos: ION Adventure Hotel

One of the coolest Iceland hotels is the ION Adventure Hotel, where you’ll find boutique luxury surrounded by outrageously spectacular landscapes. 

The ION Adventure Hotel is located within the Golden Circle. You’ll love how the stylish rooms overlook Lake Thingvallavatn from the hotel’s striking position on top of Mount Hengill. In the winter, the surrounding mountains are clad in snow, and you can gaze in awe at the Northern Lights from the heated outdoor swimming pool!

The hotel is powered by geothermal energy from the surrounding volcanoes. Plus, the bulk of materials that went into the unique design and construction are recycled and sustainably sourced. Much of the wood is driftwood, for example, and even lava rocks have found their way into the hotel’s unusual decor. 

You’ll find that the hotel rooms have all been designed with sustainability in mind, too. You’ll appreciate the minimalist furnishings alongside natural herbal toiletries and epic views of the lake. 

The hotel staff can organize equally epic adventures into the wilderness, and you can quickly reach Thingvellir National Park and the nearby ice caps and volcanoes. If you’re here for a bit of relaxation, then the hotel’s spa is the perfect place to unwind. 

Ion Adventure Hotel’s gourmet restaurant specializes in “New Nordic Cuisine.” Your taste buds will tingle with delight as you gorge on updated yet decidedly traditional dishes, including Arctic char with rye bread and wasabi and lamb sirloin with rhubarb butter. 

8. Hotel Akureyri Dynheimar

Best Iceland Hotels: Hotel Akureyri Dynheimar
Photos: Hotel Akureyri Dynheimar

Are you hoping to explore the frozen northern coastline of Iceland? Then make your trip a super comfortable (and warm!) adventure with a stay at Hotel Akureyri Dynheimar. This colorful and cozy boutique hotel is one of the best hotels in Akureyri, the largest settlement in northern Iceland, and your gateway to this distant world of ice and fire. 

Hotel Akureyri Dynheimar overlooks the great fjord that heads north toward the Arctic, and you’ll be surprised to learn that this was, for many decades, a movie theater! In fact, the hotel was one of the first cinemas in Iceland. This unique heritage and history are preserved in the decor and design, so don’t be surprised to find movie posters and memorabilia throughout the hotel.

We described Hotel Akureyri Dynheimar as “cozy,” but officially, the hotel describes itself as a “Microhotel.” The Micro Suites range from 11 to 18 square meters in size, but they still come outfitted with plasma screen televisions, marble interiors, luxury beds, and personal record collections for your listening pleasure. 

9. Hotel Grimsborgir

Unique Hotels Iceland: Hotel Grimsborgir
Photos: Hotel Grimsborgir

If you’re hoping to find five-star luxury miles away from the rest of civilization, then you’ve come to the right place. One of the best hotels in Iceland to escape it all is Hotel Grimsborgir, where every guest has access to either a private or shared outdoor geothermal hot tub!

There are 29 hot tubs in total, all of which are supremely located for soaking up mineral-rich waters while watching the Northern Lights in the dark skies above. Of course, you can’t spend all of your time in the hot tub, which is why all of the boutique rooms, suites, and apartments come with a private terrace or balcony as standard. 

The view from your boutique balcony is guaranteed to be astounding because Hotel Grimsborgir is found in the midst of Iceland’s Golden Circle. You’re just a short hike or drive away from the famous Kerid Crater, Gullfoss, the Great Geysir, Thingvellir National Park, and so much more. But despite being so close to Iceland’s most popular outdoor tourist attractions, you’ll find that Hotel Grimsborgir is still remote, isolated, and far away from the rest of the world. 

Start every day with a buffet breakfast of cured meats, cheeses, and a bowl of skyr, the local, protein-rich Icelandic yogurt that you’ll come to love during your stay in the Nordic nation. 

The hotel’s restaurant serves up an ever-changing lunch and dinner menu based on seasonal, locally sourced ingredients, and they can even provide a takeaway packed lunch for your vacation adventures. Menu highlights include the Icelandic meat soup, the fully stacked “Grimsburger,” and the vegan Wellington. 

10. Magma Hotel

Cool Iceland Hotels: Magma Hotel
Photos: Magma Hotel

You can expect Hotel Magma to live up to its intriguing name because this unique boutique hotel overlooks lava fields, black sand beaches, and volcanic peaks from its location off the Ring Road in southeastern Iceland.

Magma Hotel is one of the coolest hotels in Iceland – for all of the above reasons and more! The hotel’s eco-friendly cabins have moss-covered roofs, and inside, you’ll find refined Nordic luxury that achieves maximum coziness with an abundance of functionality. 

The best cabins have outdoor terraces leading directly to the lake below. Plus, you’ll be able to spot the looming presence of Vatnajokull – Iceland’s largest ice cap – in the distance from anywhere on the grounds of Magma Hotel. 

You can enjoy stunning views of Vatnajokull while dining on home-cooked food at Bistro 1783, too. The restaurant is named for the year in which Lakagigar Volcano erupted, showering the region with lava and creating the vast lava field that Magma Hotel is now built upon. There’s Icelandic skyr, eggs, bacon, and fresh fruit for breakfast, while dinner options vary depending on the season and the available produce. 

11. UMI Hotel

Unique Hotels Iceland: UMI Hotel
Photos: UMI Hotel

Stay in the shadow of one of the world’s most infamous volcanoes when you book a boutique getaway at UMI Hotel. This is one of the best places to stay in Iceland, and not only because you can see the striking silhouette of the unpronounceable Eyjafjallajokull volcano from the hotel’s decadent and fully stocked bar!

You’ll remember Eyjafjallajokull as the volcano that abruptly exploded back in 2010, causing almost all air traffic in Europe to close down for weeks as the skies filled with giant clouds of ash. UMI Hotel sits in the shadow of Eyjafjallajokull, and it’s conveniently located just a mile off the popular Route 1 highway on the south coast of Iceland. 

As breathtaking as the local scenery is, this sleek hotel’s dark, moody, yet elegantly contemporary exterior is just as likely to awe as its surroundings. UMI Hotel is family-run, and you might be lucky enough to encounter the hotel’s dog, Breki, who loves to greet the guests upon their arrival! 

There are just 28 boutique rooms at UMI Hotel, each of which is designed to emulate the brooding colors of Iceland’s volcanic landscapes. Plus, they all offer superb views of either the mountains or the ocean. The hotel’s excellent restaurant is guaranteed to impress, with a unique mix of Nordic, Icelandic, and Japanese cuisine on offer throughout the year.

12. Hotel Ranga

Best Iceland Hotels: Hotel Ranga
Photos: Hotel Ranga

If you love the idea of staying in an Icelandic log cabin but still desire an outrageously luxurious stay, then Hotel Ranga is the place to book. This four-star luxury retreat is styled in the fashion of a Nordic winter cabin with rustic logs on the outside and smooth timbers on the inside. 

Each of the boutique rooms has its own unique design, with colorful murals and furnishings giving every room a sense of place and character that we know you’re going to enjoy. From your hotel room, you’ll have glorious views of the Icelandic countryside, including the Ranga River and Mount Hekla. 

The views are even better from the outdoor hot tubs, where you can sit back in geothermally heated water and wait for the Northern Lights to appear in the night sky. The skies here, in this most remote of locations, are incredibly dark, and you can make the most of this by spending your evenings stargazing at the hotel’s on-site observatory! 

That completes our list of the 12 best Iceland hotels! Did we miss any cool boutique hotels in Iceland? Comment below so we can add them to the list!

Frequently Asked Questions

What hotel in Reykjavik offers a panoramic view of the skyline?

Tower Suites Reykjavik is the boutique hotel for you! Book a luxury suite in this stylish tower block, and you’ll be staying in one of the tallest buildings in Iceland’s capital, which means you’ll have beautiful views of Reykjavik’s skyline and the harbor.

What hotel is near the Golden Circle?

Hotel Geysir is one of the coolest hotels in Iceland because this unique boutique hotel is located right in the heart of the famed Golden Circle. You’ll love the fact that Hotel Geysir overlooks the Haukadalur Geothermal area.

Which Reykjavik hotel is near the airport?

The Retreat at Blue Lagoon is located just a short journey from Reykjavik, and it’s even closer to Keflavik International Airport. That makes this one of the best hotels in Iceland if you’re looking for a convenient luxury stopover on your way across the Atlantic!

Where is the best hotel to see the Northern Lights in Reykjavik?

Surrounded by otherworldly landscapes, book a stay in Hotel Husafell during winter, and you’ll be in the perfect position to spot the Northern Lights in the dark skies.

What hotel in Reykjavik offers the best Nordic Cuisine?

Ion Adventure Hotel’s gourmet restaurant specializes in “New Nordic Cuisine.” Your taste buds will tingle with delight as you gorge on updated yet decidedly traditional dishes, including Arctic char with rye bread and wasabi and lamb sirloin with rhubarb butter.



  • Richard Collett

    Richard is an award-winning travel writer based in Southwest England who’s addicted to traveling off the beaten track. He’s traveled to 75 countries and counting in search of intriguing stories, unusual destinations, and cultural curiosities.

    Richard loves traveling the long way round over land and sea, and you’ll find him visiting quirky micronations and breakaway territories as often as he’s found lounging on a beach (which is a lot).

    When he’s not writing for BBC Travel, National Geographic, or Lonely Planet, you can find Richard writing for the Wandering Wheatleys or updating his off-beat travel blog, Travel Tramp.

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