Best Hotels in Iceland: Top Luxury, Boutique & Northern Lights Stays

Waking up in Iceland is an experience in itself; the hush of distant waterfalls, the sight of moss-coated lava fields, and the crisp Arctic air create a feeling unlike anywhere else. Choosing the best hotels in Iceland can elevate your trip from memorable to truly extraordinary. Iceland hotels are not just places to stay; they are anchors to the landscape, blending design, adventure, wellness, and local culture. Whether you’re seeking luxury hotels in Iceland, a boutique hideaway, or the best hotels for Northern Lights sightings, this guide highlights the top options across the country.

Best Luxury Hotels in Iceland

If you want your stay to be a destination in itself, these top luxury hotels in Iceland deliver world-class design, fine dining, and unforgettable experiences.

The Retreat at Blue Lagoon Iceland – Best Spa & Wellness Hotel in Iceland

Carved into an 800-year-old lava field, The Retreat is one of the best hotels in Iceland for luxury travellers. Guests enjoy private access to the iconic geothermal lagoon and a subterranean spa using natural silica, minerals, and algae.

Why stay here

• Private lagoon access
• Award-winning spa
• Minimalist suites with volcanic views

Typical price: From ₹129,757 per night.

Diamond Suites Luxury Boutique Hotel – Best Private Luxury Stay

Sitting atop Hotel Keflavik, this exclusive hotel-within-a-hotel offers seven individually styled suites. Guests booking the entire penthouse enjoy a personal driver and Range Rover — ideal for VIP Iceland travellers.

Why stay here

• Iceland’s only true five-star private suite collection
• Tailored luxury and airport proximity

Typical price: From ₹48,794 per night.

Read more: Iceland travel guide

Best Hotels in Reykjavik for Design & Urban Comfort

Reykjavik blends creativity, culture, and Nordic minimalism, and its hotels reflect this beautifully.

101 Hotel – Best Design Hotel in Reykjavik

A monochrome palette, sharp architecture, and a curated art collection make 101 Hotel a favourite among design lovers. Its location in downtown Reykjavik keeps you close to galleries, restaurants, and nightlife.

Why stay here

• Chic, modern interiors
• Geothermal spa facilities
• Central location

Typical price: From ₹36,599 per night.

Best Hotels in Iceland for Northern Lights & Adventure

These stays sit deep in nature and are perfect for travellers wanting the best Northern Lights hotels in Iceland.

Ion Adventure Hotel – Best Adventure Hotel in Iceland

Perched on volcanic slopes near the Golden Circle, Ion blends contemporary architecture with panoramic wilderness views. It’s the famous Northern Lights Bar and outdoor geothermal pool offer front-row seats to the aurora.

Why stay here

• Ideal Northern Lights viewing
• Unique modern architecture
• Close to Golden Circle attractions

Typical price: From ₹23,198 per night.

Hotel Rangá — Best Hotel in Iceland for Stargazing & Aurora

This cosy log-style luxury stay is one of the most famous Northern Lights hotels in Iceland. Its on-site observatory, complete with telescopes and astronomer sessions, makes it magical for stargazers.

Why stay here

• Aurora’s wake-up call
• Observatory with telescopes
• Riverside fine dining

Typical price: From ₹36,340 per night.

Geysir Hotel – Best Hotel Near Iceland’s Geothermal Wonders

Located directly opposite the erupting Strokkur geyser, this hotel lets you enjoy Iceland’s geothermal spectacle without the crowds. Its interiors echo Icelandic nature with warm, earthy design tones.

Why stay here

• Steps away from the Geysir geothermal field
• Eco-inspired architecture
• Excellent local cuisine

Typical price: ₹28,000–₹42,000 per night, depending on season and room type.

Best Boutique & Countryside Hotels in Iceland

These serene retreats bring travellers closer to authentic Icelandic landscapes and culture.

Skálakot Manor Hotel – Best Countryside Boutique Hotel

A fourth-generation family farm turned boutique manor, Skálakot offers classic luxury with Icelandic charm. Horse-riding across black sand beaches is a signature experience here.

Why stay here

• Boutique estate setting
• Icelandic horse-riding tours
• Beautiful, elegant rooms

Typical price: Around ₹ 26,798 per night 

Hotel Laki – Best Affordable Boutique Stay in South Iceland

Set just off the Ring Road, this hotel is ideal for exploring Iceland’s southern attractions — including Fjadrárgljúfur canyon and Stjórnarfoss waterfall. Rooms are simple, warm, and highly comfortable.

Why stay here

• Convenient base for South Iceland
• Cosy rooms and great countryside views
• Good value for money

Conclusion: Where to Stay in Iceland for the Best Experience

In Iceland, the hotel you choose becomes part of your journey, whether you’re soaking in geothermal waters, watching the Northern Lights from your room, or waking to views of volcanoes and waterfalls. These best hotels in Iceland stand out for their design, service, natural surroundings, and unique connection to the land. Whether you crave adventure, luxury, or cultural immersion, Iceland has a stay that turns your trip into a story worth telling. Plan your dream getaway with our curated Iceland tour packages.

Frequently Asked Questions

What makes a hotel one of the “best hotels in Iceland”?

Top Iceland hotels typically combine design, exceptional service, and proximity to natural attractions. Many also offer geothermal spas, Northern Lights viewing facilities, or unique architecture.

Which area has the best hotels in Iceland?

• Reykjavik: Best for design hotels and city stays.
• South Coast & Golden Circle: Best for adventure hotels and Northern Lights lodges.
• Blue Lagoon area: Best for spa and wellness hotels.

How much do luxury hotels in Iceland cost?

• High-end stays like The Retreat at Blue Lagoon: ₹1,00,000+ per night
• Popular Northern Lights hotels (Ion, Hotel Rangá): ₹25,000–₹40,000 per night
• Boutique countryside hotels: ₹15,000–₹25,000 per night

Is it better to stay in Reykjavik or the countryside?

For a balanced trip, spend 1–2 nights in Reykjavik and the rest near the South Coast or Golden Circle for nature and aurora viewing.

When is the best time to visit Iceland for the Northern Lights?

From late September to late March, with better visibility at remote boutique hotels away from light pollution.