Where to Stay in Reykjavik, Iceland: 4 Best Areas & Hotels

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Ready to explore Reykjavík but not sure where to stay? Start right here!

Iceland’s capital may be small, but choosing the right neighborhood makes all the difference. Whether you want to be steps from the city’s famous church and concert hall or prefer a quiet spot near hot pools and leafy parks, each area offers a different side of Reykjavík.

We’ve stayed all over the city to get a real feel for what each neighborhood has to offer, and we’re here to help you do the same. This guide breaks down the best areas to stay in Reykjavík and our favorite hotels in each. Let’s get started!

Where to Stay in Reykjavik Map

Overview of the Best Areas To Stay in Reykjavik

One of the best things about Reykjavík is how compact and easy to navigate it is. Some neighborhoods, like Laugardalur, are a bit further from the action, while others, such as Miðborg and Hlíðar, put you right in the heart of it all. 

The city’s public bus system, Strætó, makes it simple to get around, and during the warmer months, walking or biking is a great way to explore. Whether you’re after iconic landmarks, seaside strolls, or quiet green spaces, Reykjavík has a neighborhood for you.

Here are the best areas to stay in Reykjavík:

• Miðborg – The lively heart of Reykjavík, Miðborg brims with culture, colorful streets, and iconic landmarks like Hallgrímskirkja and Harpa Concert Hall. Center Hotels Plaza puts you right on Ingólfstorg Square, with cozy, modern rooms and one of the best breakfasts we had in Iceland.

• Vesturbær – This charming residential area near the Old Harbor feels more local than touristy. Grandi by Center Hotels blends clean Scandinavian design with spa access and a stylish lobby bar—plus it’s just steps from harborside paths and cozy bakeries.

• Hlíðar – A quieter but still central neighborhood just south of downtown. ODDSSON Downtown Hotel offers self-catering studios with a minimalist touch and easy access to shops, green spaces, and Reykjavík’s main sights—all within a 10-minute walk.

• Laugardalur – A little further from the center, Laugardalur is Reykjavík’s recreational hub, home to a huge park, geothermal pool, and family-friendly attractions. Nordurey Hotel City Garden is a peaceful, modern stay near the action, perfect for those with a rental car or looking to unwind after city days.

 Where to Stay in Reykjavik

Miðborg

If you’re visiting Reykjavík for the first time, there’s really no better place to base yourself than Miðborg. We stayed here during our first trip to Iceland, and it was the perfect intro to the city’s charm—colorful streets, creative energy, and stunning views around every corner. 

Everything feels walkable here. One moment we were sipping coffee at a cozy café, the next we were standing in awe beneath the towering Hallgrímskirkja or wandering through the striking glass facade of Harpa Concert Hall. Miðborg is Reykjavík’s downtown core, and it’s where history and modern culture mix seamlessly. 

We loved how lively it felt with musicians playing in the streets, bookstores that doubled as bars, and tons of local art tucked into shopfronts. 

It’s perfect for couples (like us!) who want to explore the city on foot, or solo travelers looking to feel connected and inspired. It’s also a great spot for foodies, with Icelandic restaurants, trendy bakeries, and vegan spots galore.

If you want to roll out of bed and be steps away from iconic sights, this is the place. Just pack a pair of comfy shoes, you’ll be walking a lot, and loving every second of it!

Pros

• Walking distance to Reykjavík’s top attractions and restaurants
• Full of charm, color, and cultural energy
• Great for first-time visitors and café lovers

Cons

• Can be busy and touristy, especially in summer
• Hotel prices are typically higher due to its popularity
• Street noise at night can be a thing in some areas

Luxury – $$$

We treated ourselves to a stay at the Radisson Blu 1919 Hotel, and honestly, it was worth every krona. Set in a historic white building right in the heart of Miðborg, the location couldn’t have been better—walking distance to the harbor, Harpa Concert Hall, and more cafés than we could count. 

Our room was stylish and spacious with those cozy Icelandic touches that make you feel instantly at home (and yes, the rain shower was a dream after a cold day out!). The staff were lovely and even gave us a room upgrade—major win. We also loved the hotel’s minimalist Nordic vibe, with warm lighting and elegant common spaces. 

There’s a fitness center, onsite dining, and easy access to everything you could want downtown. Room rates range from €300–€700 (ISK 45,000–ISK 105,000) per night, depending on the room type and season. 

Treat yourself and check availability at Radisson Blu 1919 Hotel here!

Mid-range – $$

Center Hotels Plaza was such a pleasant surprise and one of our favorite stays in Reykjavík for its unbeatable value and location. It’s right on Ingólfstorg Square in the Old Town, which meant we could step outside and be instantly immersed in the city’s vibrant downtown vibe. 

The rooms are simple but super comfortable, with clean design and everything we needed for a cozy night in after long days of exploring. Breakfast was a total standout—one of the best buffets we had during our Iceland trip, hands down! 

We also loved how easy it was to get picked up for tours here, with Bus Stop 1 just a couple of minutes away. Room rates range from €210–€340 (ISK 32,000–ISK 50,000) per night, and honestly, you get so much for what you pay. 

Check rates and availability here—you’ll see why it’s so popular!

Budget – $

We loved our stay at Freyja Guesthouse & Suites! It felt like staying with friends who just happened to have the best location in Reykjavík! Tucked on a quiet street just a couple of minutes from Hallgrímskirkja, this cozy guesthouse is perfect if you’re looking for comfort, character, and a touch of local life without the hefty price tag.

Our room was simple but thoughtfully decorated, and we had access to a shared kitchen stocked with tea, coffee, and even fresh smoothies in the fridge—how sweet is that? We really appreciated the peaceful vibe after busy days out. 

There’s even a sunny upstairs lounge with views of the church tower, and the staff were so warm and helpful (they even held our bags when we arrived way too early from our flight). Room rates typically start at about €120 (ISK 18,000) per night, depending on the season. 

For a cozy, central stay with local charm, book Freyja Guesthouse here!

Related Read: Looking for some activities to fill your itinerary? Here are our 10 favorite things to do in Reykjavik!

Vesturbær

Vesturbær was our little slice of calm in Reykjavík. Just west of downtown, this residential neighborhood felt like a total breath of fresh air after the buzz of Miðborg. We stayed here for a few nights to slow things down, and we loved every minute of it. 

It’s the kind of place where locals are walking their dogs along the water, bakeries know your name by day two, and everything just feels a little more peaceful. It’s perfect for couples or families who want to be close to the action but prefer a more local, authentic vibe.

The highlight? Taking a dip in Vesturbæjarlaug, the neighborhood’s beloved geothermal pool. We started every morning there with a soak and a coffee from the attached café, and I swear it set the tone for the whole day. The neighborhood also has lovely seaside walking paths with views across the bay. And if you plan on doing any whale watching, this is also a great area since all of the tours launch from the docks here!

There’s something really grounding about Vesturbær. It’s where Reykjavík slows down just enough to breathe but still keeps you close to everything. We’d happily stay here again, especially for longer trips where we want to settle in a bit more.

Pros

• Local, peaceful vibe with fewer tourists
• Close to seaside walking paths and thermal pools
• Still walkable to downtown Reykjavík

Cons

• Fewer hotel and dining options than downtown
• Not ideal if you want nightlife on your doorstep
• Some parts can feel very residential or quiet in the evening

Luxury – $$$

We adored staying at Reykjavik Marina – Berjaya. It felt like we’d stumbled upon Reykjavík’s coolest hidden corner. Tucked right by the harbor in Vesturbær, this hotel had a fun, artsy vibe that immediately made us feel at home. 

The design is bold and playful, the lobby is full of eclectic art, and the marina views from our window made our mornings feel like something out of a postcard. We loved being just steps from the water and a 2-minute walk from our puffin and whale-watching tours—no rushing around! 

The breakfast was delicious (I’m still thinking about that fresh fish), and the staff went above and beyond to help us plan our days. It’s a great pick if you want something stylish, social, and walkable to both nature and downtown. Rooms here typically range from €260–€600 (ISK 39,000–ISK 90,000) per night. 

Book your harbor-view stay at Reykjavik Marina here!

Mid-range – $$

We were immediately drawn to the chic, boutique vibe of Grandi by Center Hotels. It’s got this clean, modern energy that feels both fresh and super cozy. The rooms are thoughtfully designed with soft lighting and sleek decor; some even come with balconies or spa access (yes, please!). 

After long sightseeing days, having a hot soak in the spa or a moment in the sauna was just the recharge we needed. Breakfast was generous and fresh, and we also loved grabbing drinks in the stylish lobby bar before heading out. 

Its location made it easy to walk to the Old Harbor or down to Harpa and the waterfront. Plus, having a bakery next door for a midday cinnamon bun was a total dream. Rooms usually fall between €220–€320 (ISK 33,000–ISK 48,000) per night. 

Check room rates and availability at Grandi by Center Hotels here!

Budget – $

Apartments Reykjavik offers private rooms in shared apartments, tucked into the quiet, residential neighborhood of Vesturbær. Guests have their own cozy room while sharing common spaces, including a fully equipped kitchen, outdoor seating area, and barbecue facilities.

Everything’s set up for a relaxed, self-catered stay, with shared apartments offering extras like a washing machine, walk-in shower, and a patio perfect for morning coffee. It’s a thoughtful setup that offers a nice mix of privacy in your own room and a bit of friendly interaction in the shared spaces.

The location is a standout—just a short walk from the harbor, downtown shops, Hallgrímskirkja, and Harpa, with supermarkets and cafés nearby. With rates starting at €115 (ISK 17,500) per night, Apartments Reykjavik offers excellent value for travelers wanting a homey, communal base in the heart of the city.

Browse room options and secure this budget-friendly stay here!

Hlíðar

Just east of Reykjavík’s core, Hlíðar is a peaceful, residential neighborhood that offers a quiet retreat within easy reach of the city’s energy. It’s a great pick for travelers who want to stay somewhere calm without sacrificing walkability. 

The streets here are lined with apartment buildings, trees, and the occasional quirky café, giving the area a relaxed, local vibe. You’ll often see locals walking dogs, kids biking home from school, and neighbors chatting outside corner shops.

Hlíðar is ideal for families, solo travelers, or couples looking for a quieter base. You’ll find plenty of green space nearby. Klambratún Park is a local favorite for jogs and picnics, and Perlan, Reykjavik’s famous interactive nature museum, is just around the corner. You also have the Reykjavik Art Museum here as well for those of you who want to see some cool Icelandic sculptures and paintings.

Plus, it’s only a 10-minute walk to Hallgrímskirkja or Laugavegur, so you’re never far from shops, restaurants, and city sights.

While nightlife is limited within Hlíðar itself, the central location means downtown’s bar scene is only a short stroll or bus ride away. Grocery stores and public transit are abundant, making it a practical choice for longer stays or self-catering setups.

Pros

• Quieter, local feel with green space nearby
• Walking distance to Hallgrímskirkja and the city center
• Great for self-catering stays

Cons

• Limited dining and nightlife within the neighborhood
• Fewer boutique hotels
• Less charm and character than more historic districts

Luxury – $$$

Eyja Guldsmeden Hotel blends cozy elegance with sustainable style in Reykjavík’s peaceful Hlíðar neighborhood. Inside, Balinese-inspired decor and four-poster canopy beds set a romantic, retreat-like tone. Rooms are thoughtfully designed with organic toiletries, plush linens, and views of the sea, mountains, or city skyline. 

The onsite restaurant and bar specialize in local and organic fare, making it easy to enjoy a relaxed dinner after exploring all day. We loved starting our mornings with the generous breakfast spread and ending the day with tea by the lobby fireplace. 

The hotel is tucked just off Laugavegur, Reykjavík’s main shopping street, so downtown’s energy is steps away, without the noise. Rates range from €200–€500 (ISK 29,500–73,500) per night with free parking, bike rentals, and a fitness center to round out the offerings.

Book this elegant stay at Eyja Guldsmeden before rooms fill up!

Mid-range – $$

ODDSSON Downtown Hotel offers the perfect mix of comfort, convenience, and style for mid-range travelers who want to stay close to Reykjavík’s top attractions without the downtown noise. Each modern studio includes a kitchenette, dining space, and private bathroom—ideal for self-catering or longer stays. 

We especially appreciated the clean, minimalist design and thoughtful amenities like coffee makers and dishwashers in each unit. The location is just far enough from the center to be peaceful, but still only a 10-minute walk from Hallgrímskirkja, Laugavegur shopping, and the Sun Voyager. 

With a bakery and grocery store nearby, it’s easy to stock up or grab a pastry before heading out. Rates range from €200–€350 (ISK 29,500–51,600) per night, with free private parking included.

Book this stylish stay just steps from Reykjavík’s top sights here!

Budget – $

Hotel Orkin is a practical and friendly budget option just a short walk from Laugavegur and the city center. Rooms are simple but spotless, with private bathrooms and enough space for families or groups—some can sleep up to five guests. The vibe here is low-key and welcoming, with a helpful front desk, cozy shared lounges, and thoughtful perks like free coffee and cake in the afternoon.

We loved the quiet atmosphere and appreciated extras like the children’s playroom, ping-pong table, and elevator access. Breakfast is included and served daily in a bright lounge, and there’s free parking for those with a car. For early flights, the express check-out is especially convenient.

Rates range from €135–€195 (ISK 19,900–28,700) per night, making Hotel Orkin a great-value stay for families, small groups, or budget-minded travelers who want space, comfort, and a central location without breaking the bank.

Reserve this cozy, budget-friendly Hlíðar stay here!

Related Read: For help planning an epic trip to Reykjavik, check out our detailed 3-day itinerary full of the highlights, hidden gems, and best places to eat!

Laugardalur

Tucked just east of downtown, Laugardalur is Reykjavík’s green playground—a peaceful, spacious neighborhood centered around the city’s largest park. It’s the perfect base for travelers who want to unwind in nature without straying too far from the city’s core. 

Families, joggers, and spa-lovers will especially appreciate this area’s laid-back pace and outdoorsy appeal. The park itself is packed with attractions: Laugardalslaug, Reykjavík’s most popular geothermal swimming complex, offers hot tubs, waterslides, and steam rooms, while the nearby Reykjavík Botanic Garden is great for a stroll. 

Families will love the small but charming zoo and petting farm. There’s also a sports stadium, ice skating rink, and walking paths that weave through grassy fields and sculpture gardens.

Laugardalur sits about 30 minutes from downtown on foot or 10 minutes by bus. While it doesn’t have the density of shops and bars found in central neighborhoods, you’ll find bakeries, grocery stores, and casual restaurants nearby, plus plenty of space to relax.

Pros

• Green and quiet
• Ideal for families
• Excellent recreational facilities

Cons

• Further from downtown
• Fewer cafes and nightlife spots nearby

Luxury – $$$

For a luxe stay just outside Reykjavík’s center, Hotel Reykjavík Grand delivers space, style, and sweeping views. Rooms are modern, spotless, and generously sized—many with floor-to-ceiling windows overlooking the city or mountains. The interiors are sleek and polished, but still warm, with parquet floors, plush beds, and deep soaking tubs.

This hotel shines in amenities, too. There’s an excellent on-site restaurant and bar, a full gym, and even in-room coffee and tea setups for a slow morning start. We also appreciated the high sustainability standards and thoughtful extras like complimentary private taxi service (on select bookings).

Though a bit removed from downtown, it’s still walkable, or a quick bus ride, to Harpa, Hallgrímskirkja, and the waterfront. And with prices from €200–€520 (ISK 29,500–76,600) per night, you’re getting upscale comfort in a quieter, more spacious corner of the city.

Book Hotel Reykjavík Grand here for upscale comfort near the city center!

Mid-range – $$

Nordurey Hotel City Garden is a peaceful pick with a crisp, modern style and a great location in leafy Laugardalur. We liked how easy it was to park the car and settle in—check-in is contactless, and everything from the lobby to the rooms is streamlined and spotless. 

The rooms are simple but thoughtfully designed, with flat-screen TVs, mini-fridges, and clean, bright bathrooms. This spot works well for travelers who want a quiet retreat just outside the city buzz. You’re only a 20-minute walk or quick drive from Hallgrímskirkja and Harpa, and even closer to the Laugardalslaug swimming pool and Reykjavík Botanical Gardens. 

A generous buffet breakfast is included in the stay, and there are cafes and supermarkets nearby for other meals. Rates range from €160–€260 (ISK 23,600–38,400) per night—a solid value in a calm, residential corner of the city.

Book your stay for quiet comfort near Reykjavík’s top green spaces!

Budget – $

Hotel Cabin is one of Reykjavík’s most affordable options for travelers who want comfort without the high price tag. Located just steps from the waterfront Sculpture and Shore Walk, and only a 10-minute stroll to the Laugardalslaug geothermal pool, it’s a smart base for exploring the quieter, family-friendly side of the city.

Rooms are compact but come with private bathrooms, flat-screen TVs, and free Wi-Fi. Some offer scenic sea or city views, while others are no-frills “budget” rooms—ideal for short stays. There’s a casual buffet restaurant on site, and the lobby bar serves up daily happy hour deals.

With free parking and easy access to public transport, getting around is hassle-free. Rates start around €100 (ISK 14,750) per night, depending on room type and season.

Book a stay at Hotel Cabin for a no-fuss, budget-friendly Reykjavík base!

Other Activities to do While in Reykjavik

Now that you’ve found the ideal place to stay, you can start planning your Reykjavik itinerary! There is so much to do in the city, and epic day trips are accessible from here, too. So to help you plan, here are a few of my favorite activities:

• Go on a food tour – The best way to get to know a city is through its stomach, so we were eager to join this top-rated food tour! Not only did we eat some amazing and unique delights, but our local guide took us all over Reykjavik, showing us hot spots and hidden culinary gems.

• Snorkel between tectonic plates – Throw on a wetsuit and jump in the water because you don’t want to miss this experience! This epic snorkeling tour takes you underwater and between tectonic plates in the frigid Icelandic waters. This is truly a bucket-list experience, and super easy to do while in Reykjavik!

• See wildlife on a whale watching excursion – Iceland is known for its vast landscape and wildlife, so join this whale watching tour out of Reykjavik for a memorable experience. You can see humpbacks, dolphins, seabirds, and more. The best part is that it departs right from the Old Harbour, making it incredibly convenient!

• Day trip to the South Coast – If you have limited time in Iceland, this South Coast day trip is a must! This is where the most iconic waterfalls and black sand beaches are located, which are essential sights while in the country. You can see it all in one day from Reykjavik and have all the planning done for you!

• Explore Reykjavik with a local – There are a lot of unique sights within the city, so we joined this walking tour to learn all about it! Our local guide took us through colorful streets, past top landmarks, and filled us in on all the interesting history and culture here. It was the best way to get to know Reykjavik!

Renting a Car in Europe

Exploring Europe by car is a fantastic way to uncover hidden gems—think charming villages, scenic countryside, and off-the-beaten-path spots that trains and buses might miss. Driving here is generally straightforward, but it’s good to be prepared for some regional quirks.

We always use Discover Cars to book our rentals and can’t recommend them enough. It’s super easy to compare prices, check company ratings, find automatic cars (which can be tricky in Europe!), and add affordable full coverage insurance. If you want a full breakdown, check out our Discover Cars review here.

Tips for Renting a Car in Europe

• Know the local rules: Most countries drive on the right, except the UK, Ireland, Cyprus, and Malta. Road signs and driving laws can vary, so do a quick check before you go.
• Practice defensive driving: In parts of Europe, especially in the south, driving can feel fast-paced and a little unpredictable. Make sure you stay alert and keep a safe following distance.
• Insurance is essential: I highly recommend adding full coverage insurance to your rental. Whether it’s a parking lot ding or a chipped windshield on a mountain road, full protection gives you peace of mind. Plus, it’s super affordable through Discover Cars!
• Pick the right vehicle: Most rentals in Europe are manual, and automatic cars are limited, so book early if that’s what you need. A compact car is also ideal for narrow roads and tight parking. On Discover Cars, you can easily filter for everything you need.
• Watch for restricted zones: Many cities have low-emission or restricted traffic zones. Driving into these without a permit can result in fines, so always check local rules if you’re heading into a city center.
• Be prepared for border crossings: While crossing borders is usually easy within the Schengen Zone, some rental companies require you to declare your travel plans in advance. Always check with Discover Cars if you’re planning to drive into another country.

What You Need to Rent a Car in Europe

• A valid driver’s license from your home country.
• If you’re from outside the EU, an International Driving Permit (IDP) is recommended—and in some countries, it’s legally required.
• A credit card in the driver’s name is typically needed for the security deposit.
• Most rental companies require drivers to be at least 21 years old. If you’re under 25, expect a young driver surcharge—and in some countries, the minimum age may be higher.

Ready to hit the road? Book your car with Discover Cars here and discover the freedom of exploring Europe on your own terms!

Thanks for reading!

Reykjavik blew my expectations out of the water! With so much to explore, we were on the go every day and exhausted by evening. So having the right place to stay in an ideal area is essential! If these hotels are still available when you are booking, I know you will have a comfortable stay.

Before you go, check out our other Europe blogs. We love sharing our favorite places and travel experiences with fellow adventurers, and we have lots of resources to help you plan an epic trip. Here are a few related blogs to get you started:

10 Best Things to do in Reykjavik, Iceland

How to Spend THREE DAYS in Reykjavik, Iceland: 3-Day Itinerary

8 Best Things to do in Oslo, Norway