Icelandic Hostels vs Hotels | Which Is Better?

Like just about everything else in Iceland, hotels and hostels might differ from what you expect.

Yes, there are dorm rooms and shared bathrooms in hostels, just like anywhere else in the world. But some are higher end too, offering chic décor and some extra attractions (like their own bar and restaurant).

And the hotels vary too. While some are also what you’d expect (especially if they’re part of an international chain), there are also hotels with their own unique sense of quirkiness and selection of exciting social events.

We’ve decided to address the question in the headline directly; looking at what distinguishes them as well as what they have in common. These are not inherent advantages or disadvantages. It’s probably more helpful to think of them as quirks or qualities. One person’s rowdy dorm is another person’s perfect party venue!

Every traveller is different, of course, so we hope this guide will nudge you towards the accommodation that’s right for you.

Many consider hostels to be a cheap and communal experience, while hotels are often considered expensive, luxurious and isolated.

In Iceland, however, the line is a little bit blurrier.

There is a cost scale in hostels, ranging from the relatively affordable (in which case you’ll likely be sharing a dorm) to the higher-end (which will give you your own private room or family room). This range goes from as little as €12 (US$13.55) per night to €100 (US$113) per night.

Unsurprisingly, you will be paying more for a hotel, but the price range is similarly broad; going from about €65 (US$75) per night to over €1,200 (US$1,355).

In both cases (just like in any country) size of the room, seasonality and location play a big part in how much you’ll pay for your bed. But it’s worth noting that there is a crossover area, where low-cost hotels and high-end hostels cost roughly the same amount.

One reason for hostels’ continued popularity is their friendliness. For travellers exploring Iceland on their own, a shared dorm, kitchen or TV room is a godsend; a place to meet likeminded people from around the world and make new (maybe lifelong) friends.

If the hostel has its own bar or restaurant, that’s even better, especially if they offer social and cultural events, like live music and movie nights.

If you’re travelling with friends or family, this kind of thing might not be a priority, but a built-in social ecosystem is a great gift for the lone traveller.

Don’t get us wrong – the standard of comfort in Icelandic hostels is pretty high. You can get a very comfortable bed in many affordable places.

But if your budget allows it, you can really see the benefits in high-end Icelandic hotels. Some are part of elaborate and gorgeous spas, taking advantage of the natural, rejuvenating springs and baths that can be found throughout the country (don’t forget your pool etiquette in such places!).

A 4 or 5-star resort might offer stunning views, hot tubs, penthouses, mountain or lake views, high-end food, comfort, space and impeccable service. And the 4-star prices can be as low as €145 (US$163) per night.

As the tourism boom in Iceland continues, more and more high-end hotels are becoming available. Many of these hotels – and especially their spas – are world class.

While the stereotype of hostels states that they are made up entirely of dormitories, they also offer private rooms for couples or families. In fact, some provide sleeping pods, which is like a compromise of both – rows of self-contained booths within a bigger room.

One perceived downside of staying in a hotel is that they’re considered generic or sterile. However, many places throughout Iceland offer both luxury and personality. Iceland's hotels are far from generic, offering a unique experience reflecting the country's diverse landscapes and cultural heritage.

For instance, Hotel Hellissandur combines comfort with affordability and is ideally situated by the Snæfellsjökull National Park. Guests can explore the park's famous black sand beaches, intriguing rock formations, and the glacier-capped Snæfellsjökull volcano. The hotel's location makes it a perfect choice for those looking to experience some of Iceland's most iconic and dramatic natural wonders.

Located near the majestic Vatnajökull, Iceland's second-largest glacier, Hotel Hof is just a stone's throw away are the ancient Hofskirkja church, the breathtaking Glacier Lagoon, and the stunning landscapes of Skaftafell. This hotel is an ideal base for exploring these remarkable sights, offering a mix of comfort and proximity to some of Iceland's most awe-inspiring attractions.

Situated conveniently on the Ring Road, Hotel Geirland is a gateway to various unique sights. Within walking distance or a short drive, guests can explore the natural mosaic of the Kirkjugólf “church” floor, the charming village of Kirkjubæjarklaustur, the picturesque Systrastapi hill, the cascading Stjórnarfoss and Systrafoss waterfalls, and the dramatic Fjarðárgljúfur canyon. This hotel is perfect for those who want to immerse themselves in Iceland's diverse landscapes and cultural sites.

These examples are just the tip of the iceberg when it comes to the diversity and uniqueness of Icelandic hotels. From Viking-themed accommodations to hotels with Northern Lights views, there's truly something for everyone. 

Even in Reykjavik, many hotels feature quirky decorative flourishes in their dining areas and rooms, further illustrating the variety and personal touch that Icelandic hotels offer to their guests.

While hotels can usually offer more luxury and privacy, they are sometimes limited by logistics and location. Thus, some of the further reaches of Iceland are more limited in their accommodation. For those who wish to spend the night in some of the more remote, unusual parts of Iceland, hostels and guesthouses are the best options.  

Iceland, as you can see, is a welcoming place. We’re used to curious visitors and we can accommodate any kind of traveller.

Whether you want to lie on luxury sheets, or you’ve brought your own sleeping bag, there’s a bed waiting for you in Iceland.

Now that you’ve had some time to consider your accommodation, why not decide which adventure tours you’d like to take?