Finding cheap hotels in Iceland where and when you want can be a daunting task. A task that becomes especially complicated if you go in the height of high season and turns into an impossible mission if you also do it with short notice. But it can be even more difficult in my case, of traveling to Iceland with children and needing a bit more space than a simple double room with a shared bathroom and kitchen.
The most common way to plan this adventure is to conceive it as a road trip to visit, if not the entire island by driving along the famous Ring Road, at least to travel through the south, for example. This involves searching for hotels in Iceland in different locations, as you will be changing accommodation almost daily.
If you already have your itinerary clear and have decided on the places to see in Iceland, it will be easier for you to narrow down the search, but, on the other hand, you will also be more limited to a few options. Depending on the days you have, and as far as possible, I suggest trying to be flexible when choosing where to sleep in Iceland in order to find more economical options to save money.
My advice is not to stress out about not finding cheap hotels in Iceland exactly in the location you want. This country is full of beautiful places, so perhaps it is a good idea to expand the search range and stay overnight a few kilometers further away for less money.
Here are the hotels in Iceland where I stayed during my two-week trip from late May to early June 2022 and, in addition, I give you a couple more options in each destination so you can compare and choose the one that suits you best.
2-week itinerary through Iceland:
My route through Iceland was circular, following a clockwise direction along the Ring Road:
- 1 night in Akranes (West)
- 3 nights in Akureyri (North) Home exchange
- 1 night in Seydisfjordur (East Fjords)
- 1 night in Djúpivogur (East Fjords)
- 2 nights in Borgarhöfn (Southeast)
- 1 night in Hörgsland (South)
- 1 night in Hella (South)
- 6 nights in Reykjavik (South) Home exchange
To a large extent, it was marked by the slower pace involved in traveling with three small children aged 5, 3, and 1. Usually, if you travel without children or if they are older, you will be able to see more things by spending only one night at each destination.
However, in my particular case, we were conditioned by not wanting to cover long distances in a single day by car because the baby doesn’t handle it very well. In addition, we were influenced by finding two home exchanges with HomeExchange that saved us a lot of money on hotels in Iceland and caused us to adapt the itinerary to use them as a ‘base camp’. This way, we took advantage of those days to go on day trips from Reykjavik such as the Golden Circle and the Snaefellsnes Peninsula or day trips from Akureyri such as Husavik, Godafoss, and Myvtan.
Hotels in Iceland
Here are the hotels in Iceland where I stayed and also some other options that caught my attention during the trip planning, but which had no availability at that time.
Keep in mind that these prices are for a family of five, two adults and three children, and in spring.
Where to sleep in Akranes
Hotel Laxarbakki, highly recommended!
Of all the hotels in Iceland where I stayed, this is the one I recommend the most without a doubt in terms of value for money. The hotel Laxarbakki is located in an idyllic setting in front of a river where you can breathe peace, but right next to the Ring Road.
It was our first night in Iceland after arriving late at the airport and as a technical stop to gain kilometers and drive less the next day on the way north.
- Price: €142
- Type of accommodation: Wooden cabin with kitchen, bathroom, one bedroom, and living room with sofa bed. They also have rooms.
- Location: In the West next to the Ring Road. 15 minutes from Akranes and 20 from Borgarnes.
- The best: Spacious, new, nice decoration and views.
- The worst: The shower cabin was somewhat uncomfortable.
- Extra point: Communal sauna and jacuzzi. Possibility of seeing northern lights.
- Restaurant: Yes, they offer dinners and breakfasts.
Other recommended hotels near Akranes:
-The spectacular lake house where I wanted to sleep: Iceland Lake House
-Budget hostel with breakfast: Akra Guesthouse
Where to sleep in the East Fjords
In total, I spent two nights in the East Fjords, one in Seydisfjordur and another in Djupivogur to enjoy this area at a leisurely pace where you can see different landscapes, bathe in a lake at the Vok thermal baths, admire waterfalls like Gufufoss, which appears in the movie ‘The Secret Life of Walter Mitty’, and drive along Route 93, one of Iceland’s most beautiful scenic roads.
Hafaldan Hi Hostel Old Hospital, great if you’re going with kids
We went from wooden cabins to a hostel with its own history in the charming town of Seydisfjordur, where you will see the famous blue wooden church with a rainbow painted on the ground.
The Hafaldan Hi Hostel Old Hospital was an old hospital converted into very warm accommodation that has shared, double and family rooms, as well as a single studio with its own kitchen and bathroom which is where I stayed.
If you go with children, they have plenty of toys at the entrance, high chairs in the large shared kitchen, a playground with a giant trampoline right in front and also the staff is very friendly with the little ones.
The free sauna adds points for this place to make it onto my list of most recommended hotels in Iceland.
- Price: €132
- Type of accommodation: Apartment with kitchen, bathroom, bedroom open to the living room with sofa bed. They also have rooms.
- Location: In the heart of Seydisfjordur.
- The best: Toys for children and a huge communal kitchen.
- The worst: Nothing.
- Extra point: Free sauna. Laundry area for a fee.
- Restaurant: No, it has a small fridge with drinks for purchase during reception hours.
Other recommended hotels in Seydisfjordur:
-Full house with a very good rating: Lónsleira Apartments
-Hostel with views: Við Lónið Guesthouse
Bragdavellir Cottages, sleeping with reindeer
These wooden cabins caught my attention from the beginning and they did not disappoint. About ten minutes by car from the small village of Djupivogur, Bragdavellir farm is in an idyllic setting surrounded by mountains, near a river and not far from a waterfall.
It has a small porch and large windows from where we were able to watch a herd of wild reindeer grazing peacefully. A real treat because they are not that easy to see! If you don’t have that luck, you can book the reindeer watching tour in the Breiðdalsvík valley.
If you go during the Northern Lights season, the location of this cabin is perfect for viewing them from the porch. One of the hotels in Iceland I visited that I most highly recommend without a doubt.
- Price: 135 €
- Accommodation type: Cabin with kitchen, bathroom, bedroom, living room with sofa bed and porch.
- Location: In the heart of nature with river views.
- The best: Seeing reindeer in the wild from the cabin.
- The worst: Bathroom is a bit small.
- Bonus point: Possibility of seeing Northern Lights
- Restaurant: Yes, but currently (September 2022) it is closed.
Other recommended hotels in Djupivogur:
-Wooden house on the outskirts: Krákhamar Apartments
-Apartment in the town center: Framtid Apartments and Holiday Homes
Where to stay near Jökulsárlón
The area of the spectacular glacial lagoon of Jökulsárlón, Diamond Beach and the imposing Vestrahorn is one of the most touristy and, therefore, one of the most expensive. This is where I paid for the most expensive accommodation of all the hotels in Iceland where I stayed.
I recommend, therefore, trying to book well in advance to be able to choose the best option.
Lækjarhus Farm Holidays, among horses
It was great to sleep at Laekjarhus Farm, a farm with horse riding included surrounded by a spectacular landscape.
The surroundings were beautiful and they were also very kind in providing us with a crib in the renovated apartment, which was very clean, spacious and had everything.
You can choose between apartments with their own kitchen like this one where we stayed or save some money in the hostel rooms with a shared kitchen.
- Price: 226 €
- Accommodation type: Open-plan apartment with bathroom, kitchen, double bed and sofa bed. They also have rooms with shared kitchen.
- Location: Borgarhöfn, halfway between Vestrahorn and Jökulsárlón.
- The best part: Waking up surrounded by horses and sheep. Very complete kitchen, very large bathroom, renovated and very clean interior.
- The worst part: Not finding a reception and having a small road at the door.
- Extra point: Possibility of horseback riding.
- Restaurant: No.
Other recommended hotels near Jökulsárlón
-Can you imagine sleeping floating on a glacier lake? Fjallsarlon – Overnight adventure
-A very well-located hostel: Skyrhúsid Guest House
Hörgsland Cottages, a stop along the way
South of Jökulsárlón, after passing the Skaftafell waterfall and just before the Fjadrargljufur canyon, we stayed in the Hörgsland Cottages, the most spacious of all the hotels in Iceland we stayed at, as it had two levels and three bedrooms. However, the bathroom was very small and the downstairs rooms with bunk beds were also very tight.
- Price: 195 €
- Type of accommodation: Two-story cabin with three bedrooms, kitchen, and bathroom.
- Location: 15 minutes from Fjadrargljufur canyon
- The best part: Breakfast included.
- The worst part: Small and uncomfortable bathroom. Abandoned playground.
- Extra point: Communal hot tub.
- Restaurant: Yes, but now (September 2022) only for breakfast.
Where to sleep in Vik
During the preparation of my trip to Iceland with children, the only place that resisted me in terms of accommodation was Vik. Finding a hotel that was not even cheap, but just affordable, turned out to be an impossible task, as it seems Vik is the most expensive area on the island when it comes to accommodation.
After much searching, I finally opted to skip staying overnight here and see the Reynisfjara black sand beach and the Dyrholaey cliffs along the way. But here is the best accommodation option in Vik that I found and even managed to book, but, when changing the itinerary and moving the check-in date forward one night, I had to cancel because they no longer had availability: Mid Hvoll Cottages.
These wooden cabins seemed beautiful to me and, furthermore, because of their isolated location on the outskirts of Vik, they are perfect for seeing the Northern Lights. If you find them available, because they are in high demand, do not hesitate and book.
Where to sleep in Hella
Ending up staying overnight in Hella was the result of not finding accommodation in Vik. A stroke of luck in the trip preparation that was a success! I highly recommend sleeping in this town because the range of hotels in Hella is very wide, the prices are more affordable, it is close to essential places like the Skogafoss and Seljalandsfoss waterfalls, and it is a good starting point for the excursion to Landmannalaugar.
Hekla Cabin, cabin with views of a volcano
The cabins at Hekla Cabin Volcano Glacier View are another of the hotels in Iceland that I keep recommending for their good value for money, the friendliness of the owners, their huge window with stunning views of the Hekla volcano and a warm wooden interior with plenty of details such as books and movies.
Watching the midnight sun in Iceland with the volcano in the background while the children played outside among horses and sheep is one of the best memories of the family trip to Iceland.
It was the only cabin of the trip where we found a kitchen with all the necessary condiments like oil, salt and a lot of food items like pasta, rice, legumes, cereals or coffee left by other guests. They also provided a crib for the baby.
- Price: 166 €
- Type of accommodation: Wooden cabins with one bedroom, sofa bed, kitchen, bathroom, and porch.
- Location: A farm on the outskirts of Hella.
- The best: The views of the Hekla volcano and the friendliness of the owners.
- The worst: A bit tight on space.
- Extra point: Possibility of seeing auroras.
- Restaurant: No.
Other recommended hotels in Hella
-Hostel with a very high rating at a good price: Loa’s Nest
-Apartments with jacuzzi: Hellatun Guesthouse
How much it costs to stay in hotels in Iceland
Out of the 16 nights of travel, we did 9 practically for free with a home exchange and seven paying for accommodation. The total cost of those seven nights of hotels in Iceland was €1,223, which makes an average of €174 per night for 5 people in cabins or apartments with their own kitchen and bathroom.
Keep in mind that being two adults and three children we needed space, so we always chose cabins or accommodations with their own kitchen and bathroom and, as far as possible, with two bedrooms or at least two separate rooms, since the baby woke up very often at night. The kitchen was also an indispensable requirement in our case to save on food. Obviously, this type of accommodation is more expensive.
Also consider that this price was for late May and early June. In summer prices go up and in winter they go down.
Tips for saving money on hotels in Iceland
Although the budget for staying in hotels in Iceland is high, you can always follow these tips to try and reduce the cost:
- There is a wide range of guesthouses or hostels with rooms with shared bathrooms. Almost all of them usually also have a communal kitchen that you can use to prepare dinners and food to go. Depending on who you are traveling with, you can choose a dormitory, a double, or a family room.
- Summer is high season and the price skyrockets to exorbitant levels. If you can travel in May, early June, or September, the cost of hotels in Iceland is more manageable.
- Save even more on accommodation by traveling in the middle of winter. If you don’t mind the extreme cold and the few hours of light, sleeping in Iceland will cost you much less, and you will see northern lights and snowy landscapes.
- Flexibility. If you don’t mind varying the itinerary a bit, you can save quite a bit of money by avoiding the most expensive areas and staying a few kilometers before or after. An example is Vik, where it was very hard to find cheap hotels.
- Without a doubt, the cheapest option is to use a tent and camping.
- Book well in advance because the hotels with the best value for money are the first to sell out. The closer the date, the fewer budget options you will find. A trip to Iceland is usually prepared well in advance.
How to stay for free in Iceland: Home exchange
If I tell you it is possible to sleep for free in Iceland and also do it in luxury homes, you might not believe me. Here I prove it to you.
Out of the 16 nights of the trip, I only stayed in hotels in Iceland for 7 nights. The other nine nights I slept practically for free thanks to home exchange with HomeExchange. Based on the average of €174 per night for 5 people that I paid during the rest of the trip, that means I saved more than €1,500.
This collaborative accommodation formula between individuals allowed me to save a lot of money, go on excursions, and be able to stay in cabins with kitchens.
First, we spent three nights in a beautiful three-bedroom apartment with an outdoor hot tub in the garden in the north, in the city of Akureyri. From there, I did the whale watching excursion in Husavik, visited Godafoss waterfall, enjoyed the volcanic landscapes of Lake Myvtan, and looked out at the Dettifoss and Selfoss waterfalls on the way to the East Fjords.
At the end of the trip, Reykjavik became the best base camp to see the city calmly, go to the Golden Circle and escape for a day to the spectacular Snaefellsnes Peninsula. Six days in the capital of Iceland where we literally felt at home and rested from the hustle and bustle of carrying suitcases daily. The last exchange house we stayed in was a modern luxury villa with a hot tub in the garden and a playroom that delighted my children.
Also, thanks to the kindness of our HomeExchange hosts, we discovered great places in Reykjavik. One of the best things about home exchange, besides the financial savings, is being able to count on the help of a local person when organizing the trip.
If you don’t know what it consists of, I recommend you read this article where I explain in detail how home exchange works. If you feel like trying it and traveling the world staying in houses of people like you for just an annual fee of €149, register through this link to receive extra points to make your first exchange.
The importance of traveling safely to Iceland
If you are preparing your trip to Iceland, I recommend, without any doubt, taking out good travel insurance that covers medical care, loss of luggage, and, of course, a possible cancellation that would make you lose a lot of money on, for example, hotels in Iceland and activities that you already had booked.
Based on my experience, I suggest hiring Mondo insurance, with which you can have up to €5,000,000 in medical expenses. I have had to use it twice due to illness and the management on both occasions was perfect without having to advance any money.
Also, one of the things I like most about this insurance is being able to have a medical professional advise you through the app. This application has a 24-hour medical chat that gives a lot of peace of mind, especially in a place like Iceland where the nearest medical center could be many kilometers away.
Some people dismiss insurance because they think it’s a very expensive service or because they already have the European Health Insurance Card. How much is your peace of mind worth? What is the price of someone helping you manage a difficult moment in an unknown country with a different language?
Less than you imagine. From just €17 per person, you will be insured during a one-week trip to Iceland with the ‘Viaje Tranquilidad’ policy. And if you take advantage of the 15% discount for being a reader of this blog, it will be even cheaper, but watch out, only until November 28th, after which it drops to 5%. Do you still think it’s not necessary?
Más artículos sobre Islandia: -100 lugares que ver en Islandia -Vestrahorn, la belleza dramática de Islandia -20 planes en Islandia con niños -Perlan Islandia, el museo que necesitas visitar
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