Where to Stay in Reykjavik: 4 Best Areas & Hotels For Every Traveller

If you're visiting Reykjavik for the first time, I would generally recommend staying in the city centre. Most of the main attractions are within short walking distance, there are plenty of restaurants and cafés nearby, and you'll have easy access to the tour pick-up points for popular excursions such as the Golden Circle, South Coast and Northern Lights tours if you’re not renting your own car.

However, staying right in the centre isn't necessarily the best choice for everyone. If you're renting a car and planning to explore Iceland on a road trip, you might prefer a hotel with parking and easier access to the main roads.

In this guide, I'll walk you through the best areas to stay in Reykjavik, what makes each neighbourhood different and which hotels I would recommend in each area. Whether you're looking for a luxury hotel, a charming boutique stay, a budget-friendly option or somewhere with a little more space, you'll find plenty of accommodation options to help you plan your stay.

Quick Answer: Where to Stay in Reykjavik

If you don’t have time to read the full article and just want to know which neighbourhood to choose, here is my quick recommendation.

• Miðborg (Downtown Reykjavik / 101) – Best area to stay in Reykjavik for first-time visitors, sightseeing, restaurants and nightlife.
• Hallgrímskirkja and the upper city centre – Best for boutique hotels, couples and a central location with slightly quieter streets.
• Old Harbour and Grandi – Best for waterfront hotels, restaurants, harbour views and a more relaxed atmosphere.
• Laugardalur and Borgartún – Best for families, travellers with a rental car, parking and more affordable accommodation.

For most visitors, I would choose Miðborg or the Old Harbour. Reykjavik is a very walkable city, and staying somewhere central means you can spend less time getting around and more time enjoying the city.

Below you’ll see my three favourite hotels that I recommend checking out first. This is my personal favourite, and I highly recommend staying there if you want a relaxing, but practical stay in Reykjavik.

The Reykjavik EDITION

If you're looking for a luxury hotel in Reykjavik, this is one of the most impressive options in the city. Located right beside Harpa Concert Hall and the Old Harbour, it combines contemporary design with high-end facilities, including a spa, several dining options and a rooftop bar.

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Hilton Reykjavik

This is a larger hotel option outside the main downtown area. It offers modern rooms, a restaurant, fitness facilities and additional wellness options, making it a good choice if you prefer a hotel with more amenities. The location is particularly convenient for travellers arriving with a rental car.

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Center Hotels Laugavegur

If you want to stay directly on Reykjavik's main shopping street, this is worth considering. The hotel has a modern and relaxed atmosphere, with comfortable rooms and an on-site restaurant and bar. You'll have shops, cafés and restaurants right outside, and it's a convenient base for exploring the city.

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Map of the Best Hotels in Reykjavik

Below you'll find a map where I've pinned my favourite hotels in Reykjavik to make it easier for you to navigate when you're looking for where you want to base yourself.

Miðborg (Downtown Reykjavik) – Best Area for First-Time Visitors

If you're visiting Reykjavik for the first time, I personally think Miðborg is the best area to stay. This is the historic heart of the city and where you'll find the largest number of restaurants, cafés, shops, bars and sights.

This is the neighbourhood you’ve probably seen pictures of with colourful buildings lining the streets, independent boutiques, coffee shops and restaurants.

Laugavegur is the main shopping street and one of the best places to spend an afternoon exploring. You'll find everything from Icelandic design stores and outdoor clothing shops to souvenir stores, bakeries and cosy cafés. The street also has plenty of restaurants and bars, so it’s a convenient place to stay if you enjoy going out for dinner or having a drink without needing to worry about transport afterwards.

Some of Reykjavik's most famous attractions are also within easy walking distance. Hallgrímskirkja, the impressive church overlooking the city, is just a short walk uphill, while the Sun Voyager sculpture sits along the waterfront. You can also visit Harpa Concert Hall, Austurvöllur Square, the Icelandic Parliament and Tjörnin pond without needing a car.

The main disadvantage is that this is one of the more expensive areas to stay in Reykjavik. Hotels can be quite pricey, particularly during the summer months, and some streets can get noisy on Friday and Saturday nights. If you're a light sleeper, I would look for accommodation on a quieter side street rather than directly above the busiest bars.

Best Hotels in Miðborg (Downtown Reykjavik)

Alda Hotel Reykjavík

This is a stylish boutique hotel right on Laugavegur, making it an excellent choice if you want to be close to Reykjavik's restaurants, cafés and shopping. The rooms have a contemporary Scandinavian design, and the hotel also offers a restaurant, bar and wellness facilities including a sauna and hot tub.

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Canopy by Hilton Reykjavik City Centre

This is an excellent choice if you want to stay in the heart of Reykjavik while enjoying a more design-focused hotel. The property is spread across several connected historic buildings, with interiors that combine local artwork, Scandinavian design and modern comforts.

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Center Hotels Laugavegur

If you want to stay directly on Reykjavik's main shopping street, this is worth considering. The hotel has a modern and relaxed atmosphere, with comfortable rooms and an on-site restaurant and bar. You'll have shops, cafés and restaurants right outside, and it's a convenient base for exploring the city.

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Hallgrímskirkja and the Upper City Centre – Best for Boutique Hotels

Another excellent area to stay in Reykjavik is around Hallgrímskirkja and the quieter streets just above the main downtown shopping area.

This neighbourhood is technically still part of central Reykjavik, but it has a slightly different atmosphere from the busier streets around Laugavegur. Instead of being surrounded by bars and restaurants, you'll find residential streets, colourful houses, small independent shops and some lovely cafés.

The main landmark here is Hallgrímskirkja, one of Iceland's most recognisable buildings. Its unique architecture makes it stand out against the surrounding houses, and you can take an elevator to the top of the tower for fantastic views across Reykjavik and the surrounding mountains.

Skólavörðustígur, often called Rainbow Street, connects the church with the lower city centre. It's one of the most photographed streets in Reykjavik, with its colourful painted road, independent shops, galleries and restaurants. You can easily walk downhill towards Laugavegur and the Old Harbour, so you're never far from the main attractions.

I particularly like this part of Reykjavik for those who want a central location but would rather stay somewhere a little quieter. It's also a good choice for couples looking for smaller boutique hotels with more character.

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Best Hotels Around Hallgrímskirkja and The Upper City Centre

Hotel Leifur Eiriksson

If location is your main priority, this is hard to beat. The hotel sits directly opposite Hallgrímskirkja, so you'll have one of Reykjavik's most famous landmarks right outside your door. The rooms are relatively simple rather than luxurious, but the location makes it an excellent option.

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Hotel Holt - The Art Hotel

This is a lovely boutique hotel with a more traditional atmosphere and a interesting connection to Icelandic art. The hotel houses an impressive private art collection, with paintings displayed throughout the property. Rooms have a classic, elegant feel, making it a nice alternative to the more modern hotels.

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Hotel Ódinsvé

This is a charming boutique hotel located on a quieter street within walking distance of both Hallgrímskirkja and Laugavegur. The hotel offers comfortable rooms with a contemporary Nordic feel, and there is also a restaurant on-site.

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Old Harbour and Grandi – Best for Waterfront Views and a Relaxed Atmosphere

If you prefer staying close to the water, I would consider the Old Harbour and the neighbouring Grandi district.

Located just west of the historic city centre, this area has a completely different feel from the main shopping streets. The Old Harbour is still an active harbour, with fishing boats, whale-watching vessels and tour boats coming and going throughout the day. There are also several restaurants, cafés and museums in the area, so it’s a lovely place to explore.

One of the biggest attractions here is Harpa Concert Hall, a beautiful glass building along the waterfront. Even if you don't attend a performance, it's worth visiting to admire the architecture and enjoy the views across the harbour towards Mount Esja.

Further to the west you’ll find Grandi, a former industrial area that has developed into one of Reykjavik's most interesting neighbourhoods. Old warehouses have been transformed into restaurants, galleries, shops and creative spaces. The area is also home to the Reykjavik Maritime Museum and Whales of Iceland, So it’s particularly interesting if you enjoy museums and learning more about Iceland's maritime history.

The Old Harbour and Grandi are still within walking distance of downtown, although you'll need to walk a little further to reach Laugavegur and Hallgrímskirkja. For me, that's a small trade-off for being closer to the water and having a more relaxed neighbourhood around your hotel.

Best Hotels in the Old Harbour and Grandi

Exeter Hotel

This is one of the most stylish accommodation options in the Old Harbour area, with an industrial-inspired design that fits perfectly with the neighbourhood's former warehouse character. Its location is excellent for exploring the harbour, visiting the nearby museums and walking into downtown Reykjavik.

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Grandi by Center Hotels

This is a great option if you want to experience Reykjavik's creative district while staying close to the harbour. The hotel has an industrial-inspired design with comfortable modern rooms, a restaurant, bar and spa facilities. It's particularly convenient for exploring the museums, restaurants and cafés around Grandi.

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The Reykjavik EDITION

If you're looking for a luxury hotel in Reykjavik, this is one of the most impressive options in the city. Located right beside Harpa Concert Hall and the Old Harbour, it combines contemporary design with high-end facilities, including a spa, several dining options and a rooftop bar.

Check prices and availability

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Laugardalur and Borgartún – Best for Families, Parking and Better Value

If you're travelling with children, renting a car or simply looking for a little more space, Laugardalur and the Borgartún area can be good alternatives to staying directly in downtown Reykjavik.

Laugardalur is one of Reykjavik's main recreational areas and has a much greener, more residential feel than the historic city centre. It's home to the Reykjavik Botanical Garden, a large park, sports facilities and Laugardalslaug, the city's largest public geothermal swimming pool.

The swimming pool is a nice spot to visit if you're travelling with children. Iceland has a strong swimming-pool culture, and visiting a local geothermal pool is a great way to experience everyday Icelandic life rather than just ticking off the main tourist attractions.

Borgartún, located closer to the waterfront and east of downtown, is more of a business district. You'll find larger hotels, office buildings and a slightly less touristy atmosphere. Some properties here offer more convenient parking and larger facilities than the smaller boutique hotels in the historic centre.

The main disadvantage of staying in these areas is that you'll need to walk further or use a car or public transport to reach the main attractions. However, Reykjavik is not a particularly large city, and getting into the centre is relatively straightforward.

I would choose this area if you're planning to spend several nights in Reykjavik, have a rental car or want to prioritise hotel facilities and value over being right in the middle of the city.

Best Hotels in Laugardalur and Borgartún

Reykjavik Lights Hotel by Keahotels

This is a modern design hotel. The rooms have a contemporary Nordic style, and the hotel offers a comfortable base outside the busiest part of downtown. It's located close to Laugardalur, making it convenient for visiting the botanical garden, swimming pool and surrounding recreational areas.

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Hotel Reykjavík Grand

This is one of the larger hotels in Reykjavik and is a good choice if you prefer a full-service hotel with more facilities. It offers spacious accommodation, a restaurant, bar, fitness facilities and meeting spaces, making it suitable for both leisure and business travellers.

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Hilton Reykjavik

This is a larger hotel option outside the main downtown area. It offers modern rooms, a restaurant, fitness facilities and additional wellness options, making it a good choice if you prefer a hotel with more amenities. The location is particularly convenient for travellers arriving with a rental car.

Check prices and availability

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Where Should You Stay in Reykjavik Without a Car?

If you're visiting Iceland without renting a car, I would strongly recommend staying in central Reykjavik.

Miðborg is the easiest option because most of the city's main attractions are within walking distance. You'll also be close to restaurants, supermarkets, shops and the designated pick-up points used by many organised tours.

This is particularly important if you're planning to book excursions to the Golden Circle, South Coast, Blue Lagoon or Northern Lights. Many tours offer pick-up from designated bus stops around downtown Reykjavik rather than directly outside every hotel.

The Old Harbour and Grandi are also good options, although you'll have a slightly longer walk to some of the main shopping streets.

I wouldn't necessarily choose Laugardalur or the more residential neighbourhoods if you're visiting for just a couple of nights without a car. You might save a little on accommodation, but you'll spend more time getting around.

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Where Should You Stay in Reykjavik With a Rental Car?

If you're renting a car in Iceland, choosing the right hotel becomes a little different.

While staying downtown is convenient for sightseeing, parking can be more complicated. Many central hotels don't have their own private parking, meaning you'll need to use public parking spaces or nearby garages. Reykjavik also has different parking zones with varying fees and restrictions, so it's worth checking the arrangements before booking.

If you're planning a longer Iceland road trip and only plan on spending one or two nights in Reykjavik, I would look at hotels slightly outside the historic centre. Properties such as Reykjavik Lights, Hotel Reykjavík Grand and Hilton Reykjavik Nordica can be more convenient if you want easier access to the main roads.

However, you don't necessarily need to sacrifice a central location just because you're travelling by car. Some downtown hotels have nearby parking arrangements, and being able to walk everywhere once you've parked can be a big advantage.

My advice is to check the hotel's parking information before booking and confirm whether parking is included, paid or located at a separate facility.

How Many Nights Should You Stay in Reykjavik?

How long you should stay in Reykjavik depends on whether you're using the city as a base for day trips or simply visiting before starting a road trip around Iceland.

If you're travelling around the country by rental car, I would usually recommend one or two nights in Reykjavik at the beginning or end of your trip. This gives you enough time to explore the main attractions, enjoy the restaurants and experience a little of Icelandic city life.

If you aren't renting a car and plan to join organised excursions, I would allow three to five nights. This gives you time to explore Reykjavik itself while also visiting some of Iceland's most famous attractions on guided day trips.

If you're visiting in winter, I would consider adding an extra night or two if your schedule allows. Weather conditions can affect excursions and road access, so having some flexibility is always a good idea.

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Frequently Asked Questions About Where to Stay in Reykjavik

What is the best area to stay in Reykjavik?

The best area to stay in Reykjavik for most visitors is Miðborg, also known as downtown Reykjavik or 101 Reykjavik. This neighbourhood has the largest selection of hotels, restaurants, cafés and shops, and most of the main attractions are within walking distance. The Old Harbour and Grandi are also excellent alternatives if you prefer staying closer to the waterfront.

Is it better to stay in downtown Reykjavik?

Yes, particularly if it's your first visit or you're not renting a car. Downtown Reykjavik is the most convenient base for sightseeing, dining and joining organised tours around Iceland. You'll be able to explore most of the city on foot and won't need to worry about finding transport every time you want to go out for dinner.

Is Reykjavik a walkable city?

Yes, Reykjavik is a very walkable city, particularly around the historic centre. Most of the main attractions, including Hallgrímskirkja, Laugavegur, Harpa Concert Hall, the Old Harbour and Tjörnin pond, can be reached on foot. However, the weather can make walking more challenging during winter, so good footwear is important.

Should I stay near the airport or in Reykjavik?

Keflavík International Airport is approximately 50 kilometres from Reykjavik, and the journey usually takes around 45–50 minutes by car. Unless you have a very early flight or arrive late at night, I would generally recommend staying in Reykjavik rather than near the airport. You'll have a much better selection of restaurants, shops and things to do, and the airport transfer is relatively straightforward.

How far in advance should I book a hotel in Reykjavik?

I would recommend booking as early as possible, particularly if you're visiting between June and August. Summer is the busiest travel season in Iceland, and the best-located hotels can sell out well in advance. Winter can also be busy around popular Northern Lights travel periods and Christmas, so it's worth comparing options early rather than leaving accommodation until the last minute.

Is it expensive to stay in Reykjavik?

Yes, Reykjavik is generally an expensive city when it comes to accommodation, especially during the summer months. Luxury hotels and centrally located boutique properties can be particularly pricey, but there are also hostels, guesthouses and more affordable hotels outside the main city centre. Booking early and travelling during the shoulder seasons can help you find better deals.

Final Thoughts: Where Should You Stay in Reykjavik?

For most travellers, I would recommend staying in Miðborg, the historic city centre. It's the most convenient area for first-time visitors, with restaurants, cafés, shops and the main attractions all within walking distance.

If you prefer something a little quieter, the Old Harbour and Grandi are excellent alternatives, particularly if you enjoy waterfront locations and interesting restaurants. Couples looking for boutique accommodation might also like the streets around Hallgrímskirkja, while families and travellers with rental cars may find better value in Laugardalur and Borgartún.

Ultimately, Reykjavik is a relatively compact city, so you don't need to spend a fortune to be within reach of everything. Choose the neighbourhood that suits your travel style and budget, and you'll have a great base for exploring Iceland's capital before heading out to discover the rest of the country.

Plan Your Trip to Iceland

Hopefully this guide has given you everything you need to plan where to stay in Iceland. To make planning the rest of your trip even easier, I've included all the resources I personally use when I travel.

Find the best hotels and compare prices on Booking.com

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