Welcome to the land of fire and ice! Iceland’s dramatic landscapes and warm hospitality make it one of the most memorable travel destinations in the world. Whether you’re chasing waterfalls, soaking in geothermal lagoons (like the Blue Lagoon), or hunting the northern lights, the right accommodation can elevate your experience. In this post, we explore 5 boutique hotels in Iceland that combine luxury, charm, and local character. From the heart of Reykjavik to the serene countryside, each hotel offers something unique. Plus, we’ll share 3 unforgettable and unique places to stay in Iceland, including some of the best hotels for northern lights and coolest stays on the Golden Circle.
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Boutique Hotels in Reykjavik, Iceland
1) 101 Hotel, Reykjavik
Located in the heart of Iceland’s capital city, 101 Hotel is a stylish boutique hotel in Reykjavik known for its contemporary design and luxury amenities. This smaller hotel with just 38 rooms offers an intimate atmosphere and personalized service. The hotel’s chic interiors, modern art pieces, and a trendy bar make it a popular choice for travelers looking for a unique urban experience. If you’re wondering where you should stay that is close to the city center of Reykjavik, This is a great option.
Other sought after amenities include a restaurant/bar and gym. Another great perk about 101 Hotel, is they offer airport transfer for a surcharge and luggage storage if you arrive far beyond your check in time. This is a big perk for many travelers to Iceland as many flights come in early morning or late at night, so knowing your hotel will be able to help you get to Reykjavik, make travel less stressful.
This boutique hotel is located in the heart of Reykjavik, for those looking to be in the middle of all the action.
Why stay here?
- Central location for exploring Reykjavik’s shopping, dining, and nightlife.
- Airport transfer available (surcharge).
- Luggage storage—perfect for early arrivals.
Best for: Art lovers and urban explorers who want a luxury hotel in Reykjavik.
📍Location: Reykjavik city center
💡Pro Tip: Reykjavik is a great hub for guided day tours. Don’t miss a local food tour!
Here are some great (highly rated) tours out of Reykjavik. The food tour was great! Our guide was knowledgable and interesting. We got to taste samplings from 5 different locations.
2) Ion Adventure Hotel, Thingvellir:
Situated near the famous Thingvellir National Park (on the Golden Circle), Ion Adventure Hotel offers a unique blend of luxury and rugged nature. The boutique hotel’s design is inspired by its surroundings, featuring a minimalist decor with large windows that provide breathtaking views of the rustic landscapes in Iceland. It’s a great choice hotel for travelers looking to explore Iceland’s natural beauty while exploring the Golden Circle, and there’s always a chance you could get a glimpse of the northern lights (if you’re traveling in the right season).
The northern lights make a beautiful backdrop for this country-side hotel.
Here is a map that shows Ion Adventure Hotel’s location amongst the Golden Circle sights. This is an excellent boutique hotel to take in all the Golden Circle has to offer in Iceland.
Why stay here?
- Modern design with Icelandic flair
- Outdoor pool with a view
- Close to major Golden Circle attractions
Best for: Adventure seekers and nature lovers
📍Location: Near Thingvellir National Park
💡Pro Tip: Stay here in winter for optimal northern lights viewing.
3) Hotel Budir, Snaefellsnes Peninsula
This quaint Icelandic boutique hotel is set against the gorgeous backdrop of the Snaefellsnes peninsula and the ocean. Hotel Budir has an amazingly cozy and rustic atmosphere. This makes it a popular destination for those seeking tranquility and breathtaking scenery. The hotel has an acclaimed restaurant that is known for its gourmet Nordic cuisine. The Snaefellsnes Peninsula was one of my favorite parts of our trip to Iceland.
This sea side boutique hotel in Iceland is another great country escape to capture northern lights in the winter months. A lovely breakfast is available for a surcharge. What a great way to start another day of adventuring in Iceland.
Here is a map of where Hotel Budir is in comparison to Reykjavik, Iceland.
Why stay here?
- Charming Nordic decor
- Gourmet restaurant with local cuisine
- Ideal for spotting northern lights
Best for: Couples, photographers, and foodies
📍Location: Snaefellsnes Peninsula ( one of the best parts of our 7 day Iceland itinerary tour).
💡Pro Tip: Enjoy breakfast with a view of glaciers and wildlife.
4) The Retreat at Blue Lagoon, Grindavik
Offering a luxurious spa experience, The Retreat at Blue Lagoon is located in a lava field near the iconic Blue Lagoon geothermal spa. This retreat-like hotel features a clean and modern design, with its own private lagoon section for guests. It’s an excellent boutique hotel choice for travelers who want the full experience of this unique geothermal attractions of Iceland.
Just think of waking up at this magical retreat and being steps away from this breathless lagoon.
Why stay here?
- Private access to Blue Lagoon
- Award-winning spa and wellness center
- Restaurant with seasonal Icelandic tasting menus
Best for: Spa seekers and honeymooners
📍Location: Grindavik, southwest Iceland
💡Pro Tip: Bring a waterproof phone pouch to capture memories in the lagoon.
Helpful hint for the lagoons of Iceland: Use a waterproof phone pouch to keep your phone dry, all while being able to capture precious moments soaking in the lagoon. This phone pouch is on my Iceland packing list. Check it out and download a FREE packing list pdf to Iceland.
5) Eleven Deplar Farm, Troll Peninsula
If you’re traveling on the northern side of Iceland, Deplar Farm is a converted sheep farm turned into a luxury retreat. This boutique hotel is located on the rugged Troll Peninsula in Iceland. It offers a range of outdoor activities such as heli-skiing, horseback riding, and fishing. Deplar Farm has a small number of rooms so guests can enjoy a personalized stay in a breathtaking natural setting.
All around stunning views. Another great hotel to spot northern lights at in Iceland.
Why stay here?
- Ultimate privacy and luxury
- All-inclusive with gourmet meals
- Fantastic northern lights views
Best for: Luxury travelers and adventurers
📍Location: Troll Peninsula, northern Iceland
💡Pro Tip: Visit from April to September for whale watching tours nearby.
The northern side of Iceland is the best place to go for whale watching. Whale watching is best during the months of April to September.
Bonus: 3 Unique Stays in Iceland
People are drawn to Iceland for its rugged landscapes and rustic scenery. One way to make your stay as memorable as possible is to stay in some of Iceland’s most unique places. Here are 5 unique stays in Iceland to add onto some of Iceland’s best hotels.
Unique Hotel in Iceland #1: Hotel Ranga
Located between Selfoss and Vik, Hotel Rangá offers a luxury experience with its gourmet dining and incredible hospitality. If you’re looking for a place to stay while touring the south coast, this could be the perfect fit. Hotel Rangá is a great hotel to spot northern lights in Iceland. Read here why Hotel Rangá is a perfect pick for northern lights. One thing that stands out is, they do northern light wake up calls! Northern lights can happen at any point in the night. If you choose, staff will call you if they are spotted during the night. Now that is service!
The boutique style rooms at Hotel Ranga make this place a top retreat in Iceland. If you’re touring the south coast of Iceland, this location is great.
Why stay here?
- Wake-up calls for aurora sightings
- Themed rooms inspired by continents
- Stargazing observatory
Best for: Northern lights chasers and stargazers
📍Location: Between Selfoss and Vik. A great location when touring the south coast of Iceland.
Unique Hotel in Iceland #2: Bubble Hotel – The 5 Million Star Hotel
Are you hoping to sleep under the stars? Catch a glimpse of the northern lights from the comfort of your bed? Sleeping in a bubble might be for you. Bubble Hotel is one of Iceland’s most unique stays. The company offers tours that include a full day adventure and a nights stay in a bubble, overlooking the stars.
These are a hot commodity, for obvious reasons, so be sure to book in advance. Especially as tourism picks up in the summer months.
Why stay here?
- Unique and romantic
- Incredible sky views
- Full-day tour packages included
Best for: Couples and adventurers
📍 Location: Secret countryside locations near Golden Circle
Unique Hotel in Iceland #3: Torfhus Retreat
Torfhus Retreat in Iceland is a unique accommodation nestled in the picturesque landscapes of the Golden Circle. It offers a cozy and traditional Icelandic experience with its turf houses, providing guests with a taste of local architecture and culture. The retreat is known for its serene surroundings, allowing visitors to immerse themselves in the tranquility of Iceland’s natural beauty.
After a full day of exploring, wind down with a gourmet meal and a soak in your own basalt stone hot pool. Located in the countryside, this is a great hotel for spotting northern lights. Guests can also take guided horseback tours on their beautiful Icelandic horses.
Why stay here?
- Unique Icelandic architecture
- Horseback riding and gourmet dining
- Ideal for northern lights
Best for: Families, honeymooners, and culture seekers
📍 Location: Golden Circle area
If you’re looking for a hotel along the Golden Circle, Torfhus Retreat is an excellent option
In conclusion, Iceland’s boutique hotels and unique stays offer far more than just a place to rest your head—they provide an unforgettable experience that perfectly complements the country’s breathtaking landscapes and natural wonders. Whether you’re indulging in the urban sophistication of Reykjavik, soaking in the serenity of the countryside, or chasing the northern lights from your cozy retreat, these accommodations promise to make your trip truly magical. From luxury stays along the Golden Circle to quirky gems like the Bubble Hotel, there’s a hotel for every traveler seeking comfort, charm, and adventure even outside of Reykjavik. So, pack your bags and get ready to experience Iceland like never before—where extraordinary accommodations meet extraordinary landscapes!
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