Best Luxury and Boutique Hotels in Iceland

When you’re planning a trip to Iceland, it’s only natural to focus on exciting days filled with fun, adventure, natural wonders, and cultural interest.

But be warned! When you start looking through our Reykjavik walking tours and day trips and tours in Iceland, you’ll wish you were staying here longer!

But finding the perfect place to rest and get a good night’s sleep at the end of each day is just as important.

And when you’re on vacation, there’s no better time to indulge in a little luxury.

So like any good friend, we’ve used our local knowledge to put together this guide to the best luxury and boutique hotels in Iceland.

Scroll down to find our picks! And if you have any questions for our team, please get in touch.

Hote borg exterior

Enjoy a Stay at the Historic Hotel Borg, Reykjavik

Let’s start with a mainstay of Reykjavik’s hotel scene! Iceland’s tourism boom is relatively new, so it may come as a surprise to hear that Hotel Borg has been welcoming guests for almost a century!

But while this was the first luxury hotel built in Iceland, it’s far from a museum of a bygone age.

It’s kept pace with its modern competitors while retaining the Art Deco charm that makes it so unique.

And all those years of service mean it sits in one of Reykjavik’s best postcodes too!

Some of the 99 rooms here look directly over Parliament Square, and all the action of downtown is a matter of minutes away.

This includes Skólavörðustígur, the must-visit street of Reykjavík!

Hotel Borg has a dedicated spa in the basement and an impressive collection of restaurants and bars.

Location: Pósthússtræti 11, 101 Reykjavík, Iceland

Canopy hotel lobby enterior

Canopy by Hilton Reykjavik City Centre: Cool, Modern, and Eclectic

Of course, the center of our capital city has numerous luxury and boutique hotel options, and the Canopy by Hilton is another favorite with visitors.

A former music and arts venue and furniture factory, this repurposed building is now an eclectic space for guests to enjoy.

Canopy by Hilton has numerous restaurants on-site, including an exclusive spot that prepares food solely based on what the fishermen and farmers offer that day.

This hotel is chic, modern, and oozes cool. It’s right in the heart of downtown too, so you’ll be mere steps away from all the main sights and attractions.

Canopy by Hilton has such a renowned reputation that we also included it in our list of hotel recommendations in Reykjavik.

Location: Smiðjustígur 4, 101 Reykjavík, Iceland

Reykjavik Residence exterior

Source: Reykjavik Residence Hotel

Reykjavik Residence Hotel is Perfect for High-End Self-Catering

Our final choice in the capital is the Reykjavik Residence Hotel. Occupying two separate locations downtown, albeit close together, this option is a true home away from home.

As an apartment hotel, all room categories have small kitchenettes and a homely ambiance.

Of course, we strongly encourage you to dive into Reykjavik’s incredible food scene, but if you like to have the backup option of preparing basic meals and snacks, just in case, this place is ideal.

But we’re sure that when you’ve experienced our Reykjavik Food Lovers Tour and Icelandic Sweet Tooth Tour, you’ll want to eat out as much as possible!

Reykjavik Residence Hotel is light on facilities, but you’ll love the friendly, intimate service and welcoming, luxurious interiors.

Location: Hverfisgata 60, 101 Reykjavík, Iceland

ION Adventure Hotel exterior


ION Adventure Hotel: A Gateway to Þingvellir National Park

This stunning modernist structure stands on stilts in an area of remarkable beauty.

ION Adventure Hotel is nestled in the captivating lava landscapes of Þingvellir National Park.

Nature is at the heart of the design, and the location is ideal for anyone looking to get out and explore Iceland’s world-famous scenery.

Salvaged materials have a clear presence here, and the exterior design mimics the harsh conditions of an Icelandic winter.

This secluded, sustainable hotel ticks every box for those looking to get off the beaten path.

And why not pair your stay with a truly exclusive experience in the area — a private bespoke Golden Circle tour?

Location: ION Adventure Hotel, Nesjavellir, Selfoss 801, Iceland

woman in blue lagoon Iceland

Experience Exclusivity at The Retreat at the Blue Lagoon

If you’re planning to visit the Blue Lagoon, why not consider staying there for a night? That’s exactly what you can do at The Retreat at the Blue Lagoon.

Put simply, a stay here is one of the most luxurious experiences you can find in Iceland.

The Retreat has a subterranean spa, a private lagoon fed by the same healing waters as the Blue Lagoon, and Michelin-starred dining.

And, of course, there’s fantastic access to the Blue Lagoon itself when you’re ready for Iceland’s quintessential bathing experience.

Looking for more geothermal bath recommendations? Check out our tips for the best hot springs in Iceland that aren’t the Blue Lagoon.

Location: Norðurljósavegur, 241, Iceland

Fosshotel glacier lagoon exterior

Source: Islands Hotel

Fosshotel Glacier Lagoon and Fosshotel Mývatn: Secluded Luxury

The Fosshotel offers luxury accommodation in two stunning locations — near Jökulsárlón

Glacier Lagoon and on the shore of Lake Mývatn.

If your Iceland adventure takes out to the southeast or northeast of our country, luxury, and boutique hotels aren’t exactly on every corner, so we have decided to recommend both! 

Fosshotel Glacier Lagoon is located between Skaftafell and Jökulsárlón Glacier Lagoon. 

There’s a sense of peace and serenity here, aided by the huge windows looking out over the local wilderness. This included views of Hvannadalshnúkur, Iceland’s highest peak.

Further north, Fosshotel Mývatn looks out across the beautiful Lake Mývatn. You can enjoy these views from the wonderful onsite restaurant.

The popular Mývatn Nature Baths are around a 10-minute drive from this hotel, one of the best places in Iceland to relax in mineral-rich water.

And you may want to make use of the hotel bar as it’s the only one for miles around!

Fosshotel Glacier Lagoon Location: Hnappavellir, 785 Öræfi, Iceland
Fosshotel Mývatn Location: Grímsstaðir, 660 Skútustaðahreppur, Iceland

Northern Lights 360 Hotel exterior

Source: 360 Boutique Hotel

Marvel at the Stunning Views from 360 Boutique Hotel

As you may have guessed from the name, 360 Boutique Hotel provides outstanding views of the surrounding scenery.

Perched atop a hill, you can take in far-reaching panoramas in all directions. And you can enjoy some of these in your room (and the amazing restaurant) with floor-to-ceiling windows.

The hotel has its own geothermal spa and swimming pool, so you don’t have to worry about heading out for a relaxing soak.

Located in an isolated pocket of south Iceland, this hotel is also a fantastic place to stay if you want to maximize your chances of seeing the Northern Lights.

If this is you, we think you’ll love learning about the myths and legends of the Northern Lights before your visit!

Location: Mosató 3, Ring Road No. 1, 801 Selfoss, Iceland

Tourists catching the Northern Lights in Iceland

Find Your Authentic Icelandic Experiences with YFIR’s Iceland Tours 

Now that you know the best luxury and boutique hotels in Iceland, it’s time to get back to planning the rest of your vacation!

Our Reykjavik walking tours are the perfect way to find your bearings in our capital city, not to mention a fun and fascinating introduction to Icelandic culture.

And if you’re heading further afield, our range of Iceland day tours and multi-day tours in Iceland showcase the very best our spectacular country has to offer. 

Your Friend in Reykjavik is here to help you plan the trip of a lifetime, so please get in touch if you have any questions for us.

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