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Top 5 Hotels in Reykjavik On A Budget In Iceland

Last Updated February 20, 2023 William Tang

You are here: Home » Accommodations » Top 5 Hotels in Reykjavik On A Budget In Iceland

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There's no other country that is as hot as Iceland right now.  It's a country where a symphony of elements shine incredibly bright.  It's a land of thunderous waterfalls, death-defying cliffs, sweeping glaciers, magical puffins, the friendliest locals to name a few. Before you set off on your adventures though, you'll inevitably need to visit Reykjavik and that is not a bad thing.  It's in the capital that you'll either be able to base yourself for the week or use it as a starting point.

What you'll find throughout Iceland however is that trip expenses rack up pretty quickly because everything is downright pricey.  To keep costs under control, the best way is to be smart about the accommodations that you pick.  Here are the top 5 hotels in Reykjavik that won't break the bank.

Read more about Iceland

  • Iceland 8 day road trip 
  • 12 Best Things to do in Iceland
  • The 6 Day Iceland itinerary
  • Reasons to go to Iceland
  • How to rent a car in Iceland

Our favourite stay in Iceland?

  • Of all the places we stayed, we really appreciated the ability to check-in early at the Hilton Iceland Nordica.  They totally weren't obligated to allow us to check-in early in the morning after our early flight into Iceland but they did and boy was it nice to shower and freshen up before starting our first day.

Here's what we're covering:

  • Affordable Reykjavik Hotels For Under $200
    • 1. Brim Hotel
    • 2. Gestinn Guesthouse
    • 3. Central Guesthouse Reykjavik
    • 4. Icelandair Hotel Reykjavik Natura
    • 5. Apartment K

Affordable Reykjavik Hotels For Under $200

Scanning through all the available hotels, apartments, and guesthouses in Reykjavik, I've landed on these 5 best properties to consider as you plan out your trip.  To keep the search a bit focused, what I have done is exclude shared room hostels but have included guesthouses that have shared bathrooms.

Most Popular Car Rental Company in Iceland

Blue Car Rental is who we used when we did our 8 day Iceland itinerary and would definitely rent from them again. They're one of the most well-known brands on the island and have competitive rates.

Check out Blue Car Rental

1. Brim Hotel

This hotel is located on the eastern part of town but still incredibly convenient being only a block away from the main shopping street of Laugavegur and from there pretty much everything else you'd want to see in town.  It's safe to say that if you stay here, everything will be walking distance which will be really helpful especially if you don't have a car.  Rooms will look spartan but the bathrooms are clean and beds are comfy which is totally fine because you'll be out and about for most of the day.  There's also staff on hand 24/7 so if you need any recommendations or assistance, you're covered.

Amenities:  Wifi is free and there is parking available for free as well

Price:  On average, rooms are under $120 USD per night for two

Book now

2. Gestinn Guesthouse

One thing I had to learn quite quickly during my 8 day roadtrip throughout Iceland is that a lot of the accommodations have shared bathrooms because there simply aren't that many big box hotels on the island.  The good thing is though that most of these are incredibly clean and not something you really have to worry about.

Gestinn Guesthouse is one of those places where you get clean and well-furnished room with the incredible convenience of being located minutes away from the famous Hallgrimskirkja Church.

Amenities: You get the expected free-wifi, lounge space, and free parking

Price:  Best part about this guesthouse is that on average, rooms are under $120 USD per night for two.  If you're lucky there are deals for $100 or less here as well

Book now

Read next: Want to know what Icelandic souvenirs to buy before you head home?

3. Central Guesthouse Reykjavik

If super cosy, clean, and convenient is your thing, this property should be worth your consideration.  This 1920's era guesthouse is located right outside the lake in Reykjavik where you'll find things like The National Gallery of Iceland and Reykjavik City Hall. It is also right along the bus line from the airport which is helpful if you're not renting a car.  As a guesthouse, bathrooms are shared but couples love it because they're furnished with queen beds instead of the standard 2 twin beds.

Amenities:  Free wifi, tea/coffee but note that there is no free parking

Price:  From $100-$130 USD a night for two

Book now

Planning a trip to Iceland?

Make sure to read our super guide to planning an Iceland itinerary including insider tips and things you just need to know before you go.

8 Day Iceland Itinerary

4. Icelandair Hotel Reykjavik Natura

Yes Icelandair has their own line of hotels and this one is an eco-friendly property next to Ã–skjuhlíd Hill and the regional airport in Reykjavik.  What I like about this one is that you get a full fledged hotel without the inflated prices.  This means you get a gym, tv, fridge, soundproofed rooms, and as one guest noted, a “very modern bathroom with nice L'Occitane toiletries.”  In addition, Flybus Plus coach transfers from or to Keflavik International Airport are really easy here because it is on their list of stops.

Amenities:  Room with fridge, desk, satellite TV, in-house restaurant, bar, free city bus pass, and free parking

Price:  You'll have to catch them during a sale but I've seen prices as low as $157 USD

Book now

5. Apartment K

This is one of my favourites for the reasons that it's ridiculously close to everything being on the street that eventually turns into Laugavegur, and is super spacious and trendy.  Staying here will make you feel like you're staying in an art gallery.  Think of these as beautifully furnished studios in the heart of Reykjavik with luxurious beds, private bathroom, and kitchenette.  With a modern kitchen you get the freedom of saving some money if you want to do your own breakfast or preparing other meals.

Amenities:  Kitchenette, refrigerator, free wifi and TV but beware that free parking is not included

Price:  Slightly pricier but I've seen budget studios go for around $160 USD

Book now

What you should read next

  • Where and how to rent a car in Iceland including car rental coupon codes
  • Ultimate 8 Day Iceland Itinerary – An Iceland Road Trip Guide
  • An Epic 2 Week Islands of Tahiti Itinerary | French Polynesia
  • 8 Day Iceland Road Trip Like No Other – Stories of the Road
  • Iceland 6 Day Itinerary Road Trip
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About William Tang

William is the Chief of Awesome at Going Awesome Places which is focused on off-the-beaten-path, outdoor adventure, and experiential travel. His true passion lies in telling stories, inspiring others to travel, writing detailed trip itineraries to help others plan their own trips, and providing helpful tips and tricks to guide readers to travel better. He is based in Toronto, Canada but you'll find him on the road more often than not. Make sure to learn more about William to find out his story and how Going Awesome Places started.

author will tang going awesome places profile photoHey, my name is Will and I'm here to help you travel to some awesome places around the world and my home country of Canada by providing insanely detailed itineraries, travel guides, and packing lists.

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