Are you planning a trip to Reykjavik and unsure where to stay? Then you’ve landed in exactly the right place! Reykjavik is a fantastic city with colourful houses and a vibrant arts scene.
In this guide, I’ll tell you about the best areas to stay in, whether you’re into world-class nightlife, geothermal experiences, or cultural gems.
So let’s get started: where to stay in Reykjavik?
Best Areas in Reykjavik
Here’s a quick overview of the best areas to stay in Reykjavik:
- Midborg – The heart of the city with everything within walking distance ⭐️
- Vesturbær – Quiet harbour area with maritime charm 🏖️
- Laugardalur – Green natural paradise with thermal baths 🌳
- Hlíðar – Artists’ quarter with creative atmosphere 🏛️
Click on the area’s name to see the best hotels in that area.
The guide to where you should stay in Reykjavik continues below, where I delve deeper into the areas and recommend good hotels.
1. Midborg – Best Area for First-Time Visitors ⭐️
Midborg is the perfect starting point for your first Reykjavik experience. Here you’ll get the city’s best shopping, easy access to public transport, and a wealth of dining options right outside your door.
Midborg is simply THE best place to stay if you want the authentic Reykjavik experience.
Here you’ll find Hallgrimskirkja (the iconic church that towers over the city like a modern cathedral) and the beautiful Harpa concert hall by the harbour, which looks like a gigantic crystal in the sunlight.
You’ll love wandering through the small streets around Austurvöllur square, where parliament is located, and where you often see politicians walking to work like ordinary people.
See the best hotels in Midborg here.
Laugavegur, the city’s main street, is a complete universe in itself. Trust me when I say you can spend hours just strolling between the small shops, coffee bars, and galleries.
It reminds me a bit of Shoreditch in London, with the same alternative atmosphere, just in miniature format. In the evening, the area becomes Reykjavik’s nightlife epicentre, where small bars and clubs open their doors for a party that can last until sunrise (which in the summer months technically never comes).
The area is perfect in terms of transport. You can walk to most things in under 15 minutes, and the buses run right outside your door.
The prices are… well, it’s Iceland, so don’t expect to find budget options here. But in return, you get the world’s best location and the opportunity to be in the middle of everything that makes Reykjavik special.
In winter, it’s also brilliant to stay here because you avoid long walks in cold and snow.
Quick Info: Midborg
📍 Distance to centre: 0 km (you ARE in the centre!)
🚇 Nearest bus stop: Lækjartorg Square
✈️ Time to airport: 45 minutes
🏪 Supermarket: Within 200 metres
💰 Price level: €€€€ (4/5)
👮 Safety: ⭐⭐⭐⭐⭐ (5/5)
Places to stay in Midborg
The Reykjavik EDITION ⭐️⭐️⭐️⭐️⭐️
The ultimate luxury hotel by the old harbour with spectacular views over the fjord and mountains. The hotel offers a Michelin-recommended restaurant, rooftop bar, and Nordic-inspired spa that defines modern Icelandic luxury.
Previous guests particularly highlight: “The enormous windows and view over the fjord are simply magical.. Felt like staying in a palace!”
See more photos and book here.
Hotel Borg by Keahotels ⭐️⭐️⭐️⭐️
This historic art deco hotel from 1930 is a true icon in central Reykjavik. With elegant décor, fantastic breakfast, and a location just steps from all major attractions.
A guest recently wrote: “Perfect blend of history and modern comfort. The staff were incredibly helpful and the breakfast was world-class.”
See more photos and book here.
Kex Hostel ⭐️⭐️⭐️
The hippest hostel in town, housed in an old biscuit factory with industrial charm. Fantastic bar, lively atmosphere, and perfect for young travellers who want to meet like-minded people.
Guests particularly love: “The atmosphere is completely unique. It feels more like a cool club than a hostel, and the bar is a must!”
See more photos and book here.
2. Vesturbær – Perfect for Peace and Maritime Experiences 🏖️
Vesturbær is the harbour’s quiet big brother, where you can enjoy the maritime atmosphere without the city’s hectic pace. Here you’ll find some of Iceland’s best museums and a fantastic swimming pool.
The old harbour, Grandi, has been transformed into a cultural epicentre with maritime museums, restaurants, and shops.
Here you’ll find Aurora Reykjavik, where you can experience the northern lights indoors (perfect if the weather doesn’t play ball), and the fascinating Saga Museum, which tells Iceland’s history through wax museum figures.
Vesturbæjarlaug swimming pool is a local mecca. Picture yourself lying in 40-degree thermal water whilst looking out over the Atlantic Ocean. It’s pure therapy!
See the best hotels in Vesturbær here.
The area is considerably quieter than Midborg, especially in the evening, which makes it perfect for families or those who want a relaxed base. You still have easy access to the centre, which is just a 15-20 minute walk along the waterfront, which is an experience in itself.
The prices are also more favourable than in Midborg, and you get more space for your money.
The area attracts an interesting mix of local artists, young families, and travellers who seek authenticity over tourist traps.
The only downside? You need to be prepared to walk or take the bus if you want to go into town late at night.
Quick Info: Vesturbær
📍 Distance to centre: 1.5 km
🚇 Nearest bus stop: Grandagarður
✈️ Time to airport: 50 minutes
🏪 Supermarket: Within 400 metres
💰 Price level: €€€ (3/5)
👮 Safety: ⭐⭐⭐⭐⭐ (5/5)
Places to stay in Vesturbær
Sand Hotel by Keahotels ⭐️⭐️⭐️⭐️⭐️
This stylish boutique hotel is perfectly located on Reykjavik’s lively shopping street Laugavegur and offers guests an authentic Icelandic experience in the heart of the capital.
Sand Hotel combines modern Nordic design with warm Icelandic hospitality and creates an atmosphere that feels both sophisticated and inviting.
The hotel’s greatest treasure is undoubtedly the legendary Sandholt Bakery on the ground floor, which has served Reykjavik’s finest artisan bread and cakes since 1920.
This is a genuine Icelandic institution, where locals queue alongside hotel guests to get the freshly baked sourdough bread, traditional rye bread, and exceptional coffee that’s roasted in-house.
Previous guests particularly highlight: “The bakery alone is worth the trip. Their rye bread and coffee beans are simply fantastic! We ended up buying their cookbook, just so we could recreate the magic at home.”
See more photos and book here.
Loft – HI Eco Hostel ⭐️⭐️⭐️
Eco-friendly hostel with rooftop terrace and fantastic views over the city.
Fine, modern rooms make it perfect for budget travellers who don’t compromise on comfort.
The common areas are absolutely the hostel’s highlight with large, modern kitchen facilities where guests can prepare their own meals and meet other travellers from around the world.
The spacious lounge with panoramic windows offers a perfect base for planning the day’s adventures or just relaxing with a book and a cup of coffee.
Guests particularly love: “The terrace is worth its weight in gold in summer, and the location is perfect for exploring both harbour and centre.”
See more photos and book here.
3. Laugardalur – Nature Lovers’ Green Oasis 🌳
Laugardalur is your choice if you love nature, sport, and authentic Icelandic experiences. Here you’ll find the city’s largest thermal bath, botanical garden, and a completely different pace than in the centre.
Laugardalur is Reykjavik’s best-kept secret. The area feels like a small village within the city, surrounded by green areas, walking trails, and the most authentic Icelandic atmosphere you can find.
See the best hotels in Laugardalur here.
Laugardalslaug isn’t just an outdoor swimming pool, it’s an institution! With eight different hot pots at different temperatures (from 36 to 42 degrees), steam baths, and an Olympic swimming pool, it’s the place where locals spend their weekends.
The botanical garden is surprisingly beautiful and completely free to visit. Perfect for a morning walk or picnic.
Reykjavik Zoo & Park, right next door, is a hit with families, although “zoo” might be a big word for what mostly resembles a farm with Icelandic horses, sheep, and seals.
The area is also home to Iceland’s national stadium, so if you’re into football, you can experience the local atmosphere.
Many young families and students live here, which creates a relaxed, non-touristy atmosphere. The prices are significantly lower than in the centre, and you get more space and facilities for your money.
The only challenge is transport, as you depend on bus or car to get to the centre, but the buses run regularly, and the journey takes only 15-20 minutes.
Quick Info: Laugardalur
📍 Distance to centre: 3 km
🚇 Nearest bus stop: Laugardalshöll
✈️ Time to airport: 55 minutes
🏪 Supermarket: Within 500 metres
💰 Price level: €€ (2/5)
👮 Safety: ⭐⭐⭐⭐⭐ (5/5)
Places to stay in Laugardalur
Grand Hotel Reykjavik ⭐️⭐️⭐️⭐️⭐️
Modern business hotel with comprehensive facilities and quiet location in a residential area.
The hotel offers spa, fitness, and restaurant with Nordic specialities, perfect for those who want luxury away from the tourist crowds.
Previous guests particularly highlight: “Fantastic breakfast buffet and super quiet location, it felt like a wellness retreat in the middle of the city.”
See more photos and book here.
Fosshotel Reykjavik ⭐️⭐️⭐️⭐️
Solid mid-range hotel with cosy atmosphere and good value for money. Close to the Laugardalur area with easy access to thermal baths and green areas, plus free parking.
A guest recently wrote: “Perfect balance between comfort and price. The breakfast was particularly impressive, and the staff were incredibly friendly.”
See more photos and book here.
Reykjavik Dalur HI Eco-Hostel ⭐️⭐️⭐️
Family-friendly hostel close to Laugardalslaug swimming pool with cosy café and green surroundings.
Perfect for backpackers, but also families who want peace and access to nature experiences without spending a fortune on accommodation in the city.
Guests particularly love: “So close to the fantastic swimming pool and botanical garden. It feels like staying in a nature area, but still close to the city.”
See more photos and book here.
4. Hlíðar – Creative Area for Culture Enthusiasts 🏛️
Hlíðar is the artists’ quarter, where galleries, sculptures, and creative energy characterise the street scene. Here you’ll find some of the city’s best art museums and a special bohemian atmosphere, like you know from certain quarters of Paris, Prague, and Budapest.
Hlíðar is an area in constant change, characterised by artists, creative souls, and young professionals.
It’s here you’ll find Ásmundarsafn sculpture museum with its fantastic sculptures both indoors and in the surrounding park.
The streets here are less polished than in Midborg, but in return you’ll find some of the city’s best coffee bars and small galleries.
See the best hotels in the area here.
It’s perfect if you’re the type who loves discovering hidden gems and feeling like a local rather than a tourist. Many of the houses are colourful and decorated with street art, which creates a lively and inspiring atmosphere.
The area particularly attracts art-interested travellers and those seeking the “real” Reykjavik.
You’re still only a 15-20 minute walk from the centre, but the prices are more reasonable, and you avoid the tourist masses.
The only minus is that the area can seem a bit deserted in the evening, and the restaurant selection is more limited than in the central areas.
Quick Info: Hlíðar
📍 Distance to centre: 2 km
🚇 Nearest bus stop: Skulagata
✈️ Time to airport: 50 minutes
🏪 Supermarket: Within 300 metres
💰 Price level: €€€ (3/5)
👮 Safety: ⭐⭐⭐⭐ (4/5)
Places to stay in Hlíðar
Hotel Local 101 ⭐️⭐️⭐️⭐️
Unique boutique hotel in a renovated 1930s office building with minimalist design and vintage charm.
The hotel is located in the hip 101 area (hence the name), which is Reykjavik’s creative heart with small galleries, vintage shops, and cosy cafés where locals hang out.
You’re a few minutes’ walk from Laugavegur, but still away from the tourist flow, which gives you the opportunity to experience the city like an Icelander.
The rooms are simple and functional with Nordic minimalism. Not the most luxurious, but certainly comfortable and clean with necessities like good Wi-Fi, decent beds, and modern bathrooms. Some rooms also have fine views over the city’s colourful roofs.
Previous guests particularly highlight: “Very friendly staff, good breakfast. Lovely bar and restaurant with good food.”
See more photos and book here.
Hlemmur Suites ⭐️⭐️⭐️
This hostel is located in a converted old bus depot and has retained much of the raw, industrial charm from the building’s past. The place appeals to backpackers and budget travellers who want to stay centrally without paying hotel prices.
The location at the old Hlemmur bus terminal is actually quite practical. You’re still within walking distance of the centre, but in an area that’s a bit more gritty and authentic than the polished tourist streets. There are also plenty of local cafés and bars nearby where prices aren’t inflated for tourists.
It’s basic backpacker standard, with clean beds, shared bathrooms, and not much space for your gear. But if you’re mainly going to sleep there and otherwise be out experiencing Iceland, then it does the job fine.
The common areas have a cool, alternative vibe with high ceilings and the old bus station atmosphere. There’s a communal kitchen where you can make your own food, which saves quite a bit of money in expensive Reykjavik. There are also common areas where people hang out and plan trips together.
Guests particularly love: “Fantastic breakfast and perfect location for exploring the city – good value for money in an expensive city.”
See more photos and book here.
Where Not To Stay in Reykjavik
Whilst Reykjavik is generally a very safe city, there are a few areas I’d recommend avoiding as a tourist, not because of safety, but more due to practical considerations.
Breiðholt and Árbær are too far from the centre to be practical base areas. You’d be dependent on buses for everything, and it can be troublesome, especially in the evening when bus frequency drops. Whilst the areas are fine enough to live in, you don’t get particularly good value for money compared to being a bit closer to the centre.
The airport area near Keflavik might be tempting due to prices, but remember it’s 45 km from Reykjavik. Unless you only need accommodation before an early departure, it’s not practical.
The outermost suburbs like Mosfellsbær and Hafnarfjörður are technically not part of Reykjavik, and whilst they have their charm, you’d miss most of what makes a Reykjavik trip special.
If you’re considering one of these areas to save money, then book in Laugardalur or Hlíðar instead, where you still get good value but with better access to the city’s experiences.
Still Unsure Where to Stay in Reykjavik?
First-time visitors should definitely choose Midborg for the complete Reykjavik experience, where everything is within walking distance.
Families will find Laugardalur perfect with its green areas and thermal baths, whilst culture enthusiasts will love Hlíðar’s artistic atmosphere.
Luxury travellers will find the best facilities in Midborg and Vesturbær, whilst budget travellers get the most for their money in Laugardalur and Hlíðar.
In winter, it’s particularly important to choose a central area to minimise time out in the cold, whilst summer guests can allow themselves slightly longer distances to enjoy the green areas.
Remember that Reykjavik is a compact city, so regardless of where you choose to stay, you’re never far from the next adventure. The most important thing is to choose the area that suits your travel style and budget.
Enjoy your Reykjavik experience – I’m certain you’ll absolutely love this unique city!
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