Here’s what you need to know about the best hotels in downtown Reykjavik — from standout amenities to the nearby attractions that make a stay in the capital worth every króna.
Reykjavik is Iceland’s main gateway, and for good reason — most visitors pass through the capital before fanning out to the South Coast or making the trip to Jokulsarlon glacier lagoon. Plenty of them choose to base themselves here for the whole trip, and it’s hard to argue with that decision.
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Choosing the right hotel takes some thought. There’s a wide spread of options out there — budget guesthouses, mid-range boutiques, full-service luxury properties — and the sheer number of listings can make it hard to know where to start.
Starting your search in downtown Reykjavik makes a lot of sense. The central location puts you within reach of almost everything: budget rooms, family-friendly hotels, quiet guesthouses, options for solo travellers and couples, business stays and leisure breaks. It really does cover the full range.
Is Downtown Reykjavik a Good Place to Stay?
Reykjavik punches well above its weight for a capital city. It’s compact, yes, but that works in your favour — nature, culture, history, and good food are all close together rather than scattered across a sprawling metropolis.
The downtown district, known as 101 Reykjavik, is where most of the action is. The city’s best restaurants, shops, cultural sites, and hotels are concentrated here. Staying in this area puts you walking distance from Hallgrimskirkja church and the Harpa Concert Hall, among many other landmarks.
Laugavegur street runs through the heart of it all — local boutiques, souvenir shops, and plenty of places to eat Icelandic food, all reachable on foot from most downtown hotels. That convenience is hard to overstate when you’re working through a packed itinerary.
Downtown hotels also tend to sit near the bus stops used by organised tour operators. Whether you’re heading out on a Golden Circle day trip or taking a transfer to the Blue Lagoon, there’s a good chance the pickup point is a short walk from your front door.
Are Hotels in Reykjavik City Center More Expensive?
Reykjavik has a reputation for being expensive, and the downtown area isn’t immune to that. City centre hotels do cost more — but the gap isn’t always as dramatic as people expect.
Prices shift depending on the season and what’s included. Mid-range hotels average around $250 per night. Budget properties start from roughly $150, and high-end options can push past $500.
That said, staying centrally often pays for itself. Many hotels include on-site restaurants, gyms, and spas, so you spend less time — and money — commuting to amenities.
The city’s compact layout also means you can walk most places or hop on public transport cheaply, which offsets some of the accommodation cost over the course of a stay.
The Best Hotels in Downtown Reykjavik
Whether you’re travelling on a tight budget or looking to splash out, the top-rated hotels in downtown Reykjavik will make your time in Iceland memorable. We’ve ranked these picks using their average ratings on Google Reviews.
8. Black Pearl Hotel
The Black Pearl Hotel is a four-star apartment hotel in the heart of Reykjavik, close to the city harbor. It works well for travellers who want city-centre convenience but with the breathing room of a proper suite rather than a standard hotel room.
It’s rated 4.5/5 across more than 100 reviews. Rooms sleep between two and six guests — the Economy Suite suits couples, while the Penthouse and Deluxe Suites work well for families, with extra beds available on request.
Each suite comes with a fully-equipped kitchen and modern appliances, which is genuinely useful if you’d rather self-cater than eat out every meal.
Amenities include private bathrooms, bathrobes, satellite TV, and complimentary Wi-Fi. The award-winning Harpa Concert Hall is less than a mile away.
Address: Tryggvagata 18, 101 Reykjavik, Iceland
7. Kvosin Downtown Hotel
Kvosin Downtown Hotel is a boutique property that suits families and groups particularly well. Rooms accommodate up to six people, so it’s a practical option if you’re travelling with kids or hosting clients in the city.
Rated 4.5/5 by over 160 guests, Kvosin balances spacious rooms with a homey feel, and it manages to do so at prices that won’t leave you wincing.
Room types run from Cozy Rooms up to expansive Top Floor Suites. Most have kitchenettes, flat-screen TVs, and daily housekeeping, and breakfast is served every morning.
The location is central enough that Icelandic Street Food and 101 Bistro are within easy reach. Tjornin lake and the historic Althing — one of the oldest parliaments in the world — are a short stroll away.
Address: Kirkjutorg, 101 Reykjavik, Iceland
6. CenterHotel Laugavegur
CenterHotel Laugavegur is a reliable four-star choice for couples and budget-conscious groups. It holds a 4.6/5 rating from over 300 guests, which speaks to consistent quality at a competitive price.
Standard inclusions are complimentary Wi-Fi, a 24-hour service desk, and an in-house restaurant covering both Icelandic and international cuisine — with some local street food influence thrown in.
Rooms range from cozy doubles to spacious deluxe options, all with private bathrooms. The hotel sits directly on Laugavegur street, so shopping is literally on your doorstep.
The Sun Voyager sculpture — that striking Viking ship silhouette — is about half a mile from the hotel.
Address: Laugavegur 95-99, 101 Reykjavik, Iceland
5. Sand Hotel
The Sand Hotel is a stylish boutique property in a great central spot — and it happens to sit directly above one of the city’s most beloved bakeries.
Rated 4.6/5 from more than 360 guests, it has 78 rooms fitted with en-suite bathrooms, coffee-making supplies, and free Wi-Fi.
Room options include Standard Family Rooms sleeping up to four guests, and the more premium Tower Room with panoramic city views.
The ground-floor Sandholt bakery is genuinely worth a mention. Established in 1920, it’s one of Iceland’s oldest bakeries and is known for its sourdough bread and pastries. Waking up to fresh bread one floor below is a reasonable way to start any morning in Reykjavik.
Hallgrimskirkja, Iceland’s tallest church, is close by — its tower offers sweeping views over the city.
Address: Laugavegur 34, 101 Reykjavik, Iceland
4. Exeter Hotel
The Exeter Hotel has a clean, modern feel and sits near Reykjavik’s Old Harbor. Its 4.6/5 rating from nearly 400 reviews puts it firmly among the better-regarded options in downtown Reykjavik.
There are over 100 rooms featuring smart TVs, a minibar, and complimentary breakfast. The range goes from Superior Doubles through to suites with views over Faxafloi bay.
A sauna and gym are available for guests who want to wind down properly after a day out.
The Old Harbor area around the hotel has a good food scene — Kaffivagninn and Coocoo’s Nest are both nearby if you’re looking to explore beyond the hotel restaurant.
Address: 12, Tryggvagata, 101 Reykjavik, Iceland
3. Alda Hotel
The Alda Hotel is a four-star property on the upper stretch of Laugavegur street, rated 4.6/5 from over 530 reviews. It’s a strong pick for anyone who wants to be in the middle of the shopping and dining action.
Room options span standard guest rooms, family rooms, and suites — comfortable for solo travellers, couples, and families alike. Complimentary breakfast and en-suite bathrooms come as standard.
In winter, the outdoor hot tub takes on a different appeal entirely — there’s always a chance of catching the northern lights from it. A fitness center is also available for guests.
The Brass Kitchen and Bar serves European and Icelandic food, so there’s no need to go far when you’d rather just eat well at the hotel.
The shopping district is right outside, which makes picking up souvenirs and local crafts easy.
Address: Laugavegur 66-68, 101 Reykjavik, Iceland
2. Canopy Hotel by Hilton Reykjavik City Centre
The Canopy Hotel by Hilton sits in the middle of downtown Reykjavik and works equally well for leisure and business stays. It carries a 4.6/5 rating from over 800 guests — the highest review count on this list — and has an interesting backstory as a former arts hub.
The hotel has 112 rooms spread across six interconnected buildings. Rooms lean into Scandinavian design and include private bathrooms and complimentary Wi-Fi, with options from standard singles up to junior suites.
A fitness center, meeting rooms, and a café round out the amenities — the café is particularly handy for an early-morning coffee before heading out.
Laugavegur shopping street and Arnarholl Hill are both within walking distance.
Address: Smidjustigur 4, 101 Reykjavik, Iceland
1. Hotel Reykjavik Saga
Hotel Reykjavik Saga opened in 2022 and has already earned a 4.8/5 rating — the top score on this list. It sits beside Tjornin lake and caters to a wide range of guests, from families to solo travellers.
Room types include standard doubles, superior rooms, and suites, all fitted with private bathrooms and free Wi-Fi. There’s something here for most budgets within the four-star bracket.
The hotel lounge is a relaxed spot to unwind, and the roof terrace offers views over Reykjavik’s streets that are worth making time for.
Tjornin lake is right on the doorstep, and the historic Domkirkjan cathedral is nearby — two very different but equally worthwhile stops for anyone interested in the city’s character.
Address: Laekjargata 12, 101 Reykjavik, Iceland
Hopefully this guide gives you a clearer picture of where to stay in downtown Reykjavik. If you’ve visited any of these hotels or have a recommendation of your own, leave a comment below — we’d love to hear from you.
