Accommodation Options in Iceland

There are plenty of accommodation options in Iceland, so we wanted to make it simpler for you, here's all you need to know!

Accomodation in Iceland

blog authorBy Johanna Sigurðardóttir shield verificationVerified Expert

When planning a trip and before diving into all the accommodation options in Iceland, one always faces pre-warnings of astronomical prices. The types of prices that might require you to sell a kidney at the end of your trip to settle credit card debt. But the island’s reputation as to how expensive things are has been a bit unfair. The island certainly is expensive for visitors, but not for the locals, as Iceland offers such a high quality of life to its residents.

It also has a lot to do with which season you choose to visit the island. And, of course, which accommodation options in Iceland you end up going with. Obviously, staying in the Tower Suites in Reykjavík will be much more expensive than a cottage in the countryside.

But whatever your preferences, Iceland will have the right fit that suits your budget. In this article, we discuss all the accommodation options in Iceland in detail along with each of their pros and cons for you to make an informed decision.

The Different Types of Accommodation Options in Iceland

As we’ve already touched on, the island offers a wide variety of accommodation ranging in price for visitors to our fair island. We have compiled all the most important info for you to be able to see which accommodation will suit you best. Also, keep in mind that you can opt for a combination of various accommodation options.

Accommodation in Iceland

Iceland Guesthouses

Guesthouses have a little bit of a more personal touch, with visitors usually paying for a room within a house belonging to the host. These stays often also include breakfast. Picking the right guesthouse for your stay will depend on its location and the amenities/facilities it has to offer.

For example, does it have Wi-Fi? And what about parking? You’ll also need to take note of check-in and check-out times. These may vary between Iceland guesthouses (remember, these are usually privately owned).

Average Cost: Ranges between $60 - $140 depending on the area.

Pros of Staying at Iceland Guesthouses

  • Guesthouses have a bit more of a personal feel. You’re more likely to have a comfortable conversation with your host than a hotel concierge.
  • Since most offer breakfast, it’s definitely one less responsibility on your plate (no pun intended).
  • As you’re essentially just renting a room in a house, there’s definitely an affordability factor here.

Cons of Staying at Iceland Guesthouses

  • As it has a bit more of a personal touch, it can feel a little invasive to some who prefer to just do things by themselves in their own space.
  • You’re renting a room, so in certain cases, you might have to share a bathroom and kitchen facilities.

A Few Options

If you’d like to give one of the Iceland guesthouses a try, here are a few options to consider:

Iceland cottages

Iceland Farm Stays

Iceland farm stays are very similar to the guesthouse experience. Except that it’s on a farm and, in most cases, you’ll be allowed to take part in some of the farm activities. So, instead of just looking at location, amenities, and facilities, you’ll need to take the available activities into account too if you truly want an authentic Iceland farm stay experience.

Average Cost: Ranges between $120 - $170

Pros of Staying at Iceland Farm Stays

  • Many of the pros are similar to that of the guesthouses in terms of a personal touch, amenities, and added extras like breakfast included.
  • The added benefit here is that you get to experience what staying on a real Icelandic farm is like. You can take part in some of these farm activities like riding on a legendary Icelandic horse.
  • Since farm stays are more remote and away from the bright lights of the city, you also have a better chance of spotting the Northern Lights there.
  • Even though you may be paying a little extra for the unique experience, it’s still more affordable than a few other accommodation options in Iceland.
  • It’s a great option when you are traveling with kids. The entertainment value alone pays itself!

Cons of Staying at Iceland Farm Stays

  • Again, many of the cons are similar to that of a guesthouse in terms of space, sharing facilities, etc.
  • It is a bit more remote, so you need to ensure that you have all essentials. You really don’t want to take a night drive into town when you realize you need more diapers.
  • Check the Iceland road conditions and double-check which car to rent. When things are in the more remote areas of Iceland, roads can get challenging. You don’t want to get stuck somewhere just because your rental vehicle is no match for this bumpy ride.

Farm stays in Iceland

A Few Options

If a farm stay sounds like fun, here are a few you can look into:

Iceland Cottages

If you’re looking for a cozy Iceland stay, then cottages might be just the thing for you. Some can be found in Iceland resort-type of settings where you’ll find a grouping of cottages, whilst others are lone ranger accommodation types in more remote regions of the island. 

Amenities and facilities can range from fairly primitive (almost glamping levels) to extremely luxurious. So, don’t just assume that it’s generally one of the cheaper accommodation options in Iceland. These stays are way more autonomous than the guesthouses and the farm stays, with most cottages being self-catering.

Average Cost: Anything from $140 - $400 depending on amenities & facilities

Pros of Staying at Iceland Cottages

  • The biggest benefit is the independence and personal space.
  • Although prices may vary quite a lot due to amenities and facilities, you can still get pretty comfortable accommodation at an affordable price when choosing a cottage to stay in.
  • Most cottages are still fairly remote, so you still get the outdoors feeling without having to really rough it.

Iceland cottage accomodation

Cons of Staying at Iceland Cottages

  • To some, the autonomy might actually be a drawback. You can’t call room service when you want to “order in”.
  • Yet again, being remote also means that you need to be prepped in terms of essentials. There’s no “quickly popping into the store”.

A Few Options

If a cozy cottage in the countryside sounds enticing, then check out these options:

Iceland Campsites

This one can become a bit tricky depending on which season you intend to visit. Not many want to Bear Grylls it in an Iceland campsite during winter. Not even the locals.

So, quite a few of the campsites actually close during the winter. But whether you brave the cold or decide to stop by during the summer, camping is probably one of your most affordable accommodation options in Iceland, a short stride ahead of a backpackers or an Iceland hostel.

If you’re smart, you’ll also get yourself a Camping Card. The card costs only €159 and will grant a family of 2 adults and up to 4 children access to numerous campsites around the island for up to 28 nights.

If you’re someone who wants the budget benefit but is not quite as willing to give up on certain luxuries, there are some glamping options available in Iceland. For obvious reasons, that will not be our main focus here, though.

Iceland campsites accomodation

Average Cost: Roughly $12-$20 per person per night (hence the benefits of having the Camping Card)

Pros of Staying at Iceland Campsites

  • Hands-down one of the most affordable accommodation options in Iceland.
  • You get a front-row seat to the majestic Iceland landscape.
  • As the campsites are remote, you are almost guaranteed to see the Northern Lights if you visit during the right season.

Cons of Staying at Iceland Campsites

  • It’s probably not the best choice during the colder months if you’re not really geared for it.
  • It can become tedious to set up and pack up at each campsite (especially if you’re traveling around the country and not just staying in one spot).

A Few Options

If you’ve decided that camping is the best budget-friendly option for you, here’s a list of some of the best campsites:

Iceland Campervans & Motorhomes

By renting a campervan or motorhome in Iceland, you might be doing your budget as well as your comfort levels a favor since this might be the easiest way to take advantage of camping without actually, you know, camping.

Accommodation options in Iceland

And although some areas in Iceland are only accessible via 4x4, this shouldn’t be putting you off, since many campervans and motorhomes come with this feature. Just discuss your planned routes with your campervan rental agency in Iceland so they can properly advise you on which vehicle will suit you and your needs best.

Average Cost: From $100 per day, but then you still need to add the price of gas depending on your usage

Pros of Staying in Iceland Campervans & Motorhomes

  • Not only is your transport around the island sorted, but also your accommodation.
  • Very affordable option compared to other accommodation options in Iceland.
  • You get all the benefits of the great outdoors, but without having to go fully primitive or deal with the hassles of setting up and packing up a campsite.

Cons of Staying in Iceland Campervans & Motorhomes

  • You’ll need to park in dedicated campervan & motorhome parking spots.
  • If you’re doing a quick day outing, it might feel a bit redundant having to take your “entire home” along with you.

Iceland Apartments/Houses

This is your typical Airbnb variety. Here we would like to caution visitors since the last couple of years there have been a fair amount of complaints regarding this platform. Rather, find another reputable platform or contact a local rental agency and ask if there are any short-term rentals available.

Average Cost: Prices are vastly different depending on the location, type of accommodation, amenities, and facilities, but you can expect to pay anything from $250 to $1000+ per night.

Iceland accommodation

Pros of Staying in Iceland Apartments/Houses

  • This is the ultimate in independent living and having your own space.
  • It is often the most comfortable as you literally pick and choose the apartment/house that has all the amenities or facilities you want.
  • It’s probably the easiest way of feeling like a real local by living amongst them. Visitors can often feel a little removed when staying in more “touristy” accommodation options in Iceland.

Cons of Staying in Iceland Apartments/Houses

  • It is definitely one of the most expensive accommodation options in Iceland, especially when you start to add deposits, booking, and all sorts of admin fees to it.
  • These are private rentals, so if you arrive and it’s not quite what you expected, it can be a real mission and stressful time to fix the situation (not a good start to your holiday).

A Few Options

If you prefer to go the private rental route, then here are a few platforms you can visit:

Iceland Hotels

This is truly the option for those who don’t have many budget constraints and prefer a fairly all-inclusive holiday. Plus, if they ever need anything, it’s an elevator trip downstairs or a room service call away. For those who consider themselves to be fairly “green”, there are also plenty of eco-hotels in Iceland.

Iceland guesthouses

Average Cost: Prices range between $250-$500+ per room per night for 2 adults

Pros of Staying at an Iceland Hotel

  • You’ll have everything you need close by.
  • You have the bare minimum of responsibilities in terms of cleaning, making food, etc.
  • If you’re planning on staying in and around the city, it’s a good option if you don’t have your own transport.

Cons of Staying at an Iceland Hotel

  • Definitely one of the most expensive accommodation options in Iceland. It becomes pretty clear simply by comparing the price of having just one room in a hotel to the cost of renting your own apartment or house and having all that space.
  • Having no responsibilities is all fine and well, but it can become a problem the day you actually want to cook something.

A Few Options

If you’re looking for the ultimate in rest and relaxation, these are a few options to consider:

Iceland guesthouses

You’ve Got This!

As you can see, that old adage of how expensive Iceland is might have some truth to it. Now, if you truly delve into the accommodation options in Iceland, you soon realize that there are plenty of affordable solutions out there and that you are ultimately the captain (or, in this case, Viking) of your own ship.

Make the right decisions and there’s no reason why you can’t have a budget-friendly trip and the absolute time of your life!

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