Affordable places to stay in Iceland

Finding affordable places to stay in Iceland is essential if you’re hoping to travel on a budget in one of Europe’s most expensive countries. Accommodation can be a make-or-break part of any budget and on our 10 day road trip, I think we did pretty well!

Of course, season will make a difference but we travelled at the end of summer and still managed to find decent prices. The only downside is, availability can be limited way in advance for the most popular places, so definitely book early to find the best deals.

This guide is made up of everywhere we stayed on Iceland’s ring road. The nature of a lot of these affordable places to stay in Iceland is back-to-basics: you’ll often pay more for a more considered design, but with many of our evenings considering of arrive – eat – sleep, we were looking for clean, functional and good locations. I always choose locations that are reviewed at least 8/10 on Booking.com too!

There wasn’t a single place that I absolutely wouldn’t recommend, although of course some were better than others! So now, without further ado, let’s get dive right in.

Note: all costs listed below are per night, based on two people sharing. Virtually all photos used are property of the hotels mentioned.

Where to stay in Iceland at a glance

The Barn, Vik

Address: Norðurfoss, 871 Vík, Iceland.
Rooms available: Single and double bed dorms, double room – all with shared bathrooms.
Cost: £111 / €133 for a double bed in a six person dorm.

Perfectly located just five minutes drive from Reynisfjara beach, The Barn is potentially Iceland’s most aesthetically pleasing hostel. For a hostel dorm, it was on the slightly more expensive side – similar in price to some private rooms we paid – but given the location and facilities, it’s worth the money.

The facilities has comfy double bunks, a lovely common area and really well-stocked modern kitchen. Each dorm bed had a privacy curtain, individual light and plug socket too, along with plenty of hooks, shoe racks and space for suitcases.

Everyone staying there during our night at The Barn really respected the facilities too, meaning the kitchen and bathrooms were spotlessly clean. The bathrooms are all shared, but have separate toilet, washing area and showers so they didn’t feel crowded at any point.

Höfn Hostel, Höfn

Address: Hvannabraut 3, 780 Höfn, Iceland.
Rooms available: 10 bed dorms, single, twin, triple, quadruple and family rooms – all with shared bathrooms.
Cost: £139 / €166.5 for a twin room with shared bathroom.

Located on the outskirts of town, Hofn HI Hostel is a social hostel that’d work for individuals, groups and families alike. As well as private rooms with shared bathrooms, there are also dorms spread out across the property.

The rooms are very basic, but comfortable with plenty of clean bathrooms and a well-stocked kitchen, two communal dining areas and even an outside deck with BBQ! Sadly, it was pouring down during our visit so we didn’t get to visit the latter.

The hostel is well-located just five minutes from the ring road and ten minutes from Stokksnes, making it a great final stop on your south coast road trip.

Planning your trip? Read my top tips on how to plan an affordable trip to Iceland

Skipalækur Guesthouse, Egilsstaðir

Address: Skipalaekur, 700 Egilsstadir, Iceland.
Rooms available: Double or twin rooms.
Cost: £159 / €190.21 for a double room.

The town of Egilsstaðir is larger than Vik and Hofn, so it’s great to refuel and pick up some groceries ready for your long drive through Iceland’s more remote north.

With more going on here than the rest of Iceland’s east coast, there are quite a few accommodation options to choose from. We opted for Skipalækur Guesthouse and Camping, a really clean lakeside guesthouse with a small kitchen and spacious dining room. The rooms again were basic but included a private bathroom, desk and twin beds that can be made into a double. The self check-in option is really handy here – we didn’t see any staff throughout our short stay but the whole process was super simple and felt seamless.

Along with the gorgeous views just across the road, the location also benefits from one of Iceland’s most stunning thermal spas – Vok Baths – just five minutes drive away. We spent a spontaneous evening here and had the best time! You could easily stop here for two nights to explore the area more, but sadly it was a short and sweet stop for us.

Guesthouse Stöng and Cottages, Lake Mývatn

Address: Stöng, 660 Stöng, Iceland.
Rooms available: Twin, double and triple rooms with shared or private bathrooms, quadruple rooms with a private bathroom and two/three bedroom cottages.
Cost: £133.50 / €159.74 for a double room with a shared bathroom and breakfast.

To be totally honest, we had a mixed experience at Guesthouse Stöng. Located near Lake Mývatn, a few kilometres down a track of its own, the remote location would be a great place to spot the Northern Lights in season! The on-site hot tubs are a huge bonus – we just had to take a dip, even though we arrived back late at night!

Rooms are spacious and we really enjoyed the restaurant too, with complimentary breakfast that included a create-your-own waffle station – definitely the best breakfast throughout our Iceland road trip. However, if you’re cooking on the go like we did, just be aware there aren’t any kitchen facilities at Guesthouse Stöng: I didn’t realise when booking which might have ruled it out for practicality.

The downsides of our experience were a few hiccups along the way. We were given the wrong room and, when reception must have realised the mistake, we were drifting off to sleep around 11pm when we heard hammering on the door of the outdoor room. For security, we didn’t answer – it freaked me out to be honest! – and therefore moved in the morning once we were told about the mix up. We left our luggage there, having been assured by reception that it would be moved to our room once cleaned, but returned to find it sat, unsupervised, in the entrance. Mistakes happen, but it did tar my experience slightly.

Apotek Guesthouse, Akureyri

Address: Hafnarstræti 104, 600 Akureyri, Iceland.
Rooms available: Twin and double rooms with shared or private bathrooms or three bedroom suites.
Cost: £110 / €132.43 for a double room with private bathroom.

Out of the wilderness and into the heart of Akureyri, Iceland’s most northern city. Apótek Guesthouse is really well-located in the centre of town so everywhere is easily walkable, with several bars and restaurants on the same street. Because it’s right in town, it was a little loud with building work in the morning – although saying that, loud for Iceland is still not anything that’ll cause you an issue!

Our room was a little small, but was clean, neutral and had everything we needed for our one-night stay including a private bathroom. When travelling on a budget, anything above basic facilities is a bonus! The kitchen is decent, although not quite as well-stocked as some others we visited, but we were pleasantly surprised by the big common area including a balcony.

The Castle, Búðardalur

Address: Brekkuhvammur 1, 370 Búðardalur, Iceland
Rooms available: Single, twin and quadruple rooms with shared or private bathrooms.
Cost: £122 / €145.88 for a double room with private bathroom.

This was a last-minute booking when we switched locations to move further south west at this stage of our road trip, and what a great decision it was!

Located right on the beachfront, The Castle has two parts: the main house and outdoor cabins. We stayed in one of the outdoor cabins and, although the view above is from the main house, the cabins are really cute with their own fridge, microwave and toaster. This makes it really easy to make a simple meal to enjoy in your own mini dining area. There’s also a beautiful communal kitchen and dining area for those not staying in a cabin, or just wanting to socialise.

As well as the lovely beach just outside the property, you can also get to some local attractions in a short drive, including the Erpsstaðir Creamery and Guðrúnarlaug natural hot spring. We really enjoyed our stay here!

Stöð Guesthouse, Grundarfjörður

Address: 13 Sólvellir, 350 Grundarfjordur, Iceland
Rooms available: Double and twin rooms, with upgrades to a sea view rooms – I snuck into one during cleaning and can confirm the views of Kirkjufell is amazing!
Cost: £140 / €167.98 for a double room with private bathroom.

Located in a former fish factory, Stöð Guesthouse feels a little militaristic with its long corridors and thin carpet, but its rooms are nicely spacious and cosy with private bathrooms. However, your stay here is all about the view and if you’re lucky enough to bag a room where you can glimpse Kirkjufell mountain directly opposite, you’ll never want to leave.

Again, the kitchen and dining area was great, with tons of utensils, plenty of space and a nice area where people would leave food they no longer needed for others to use. Of all the affordable places to stay in Iceland, those with quality kitchen areas made the experience much nicer.

The town is quiet, but with enough amenities to do a basic restock. The restaurant just next to the guesthouse also comes highly recommended by others, although we didn’t visit this time.

R13 – A Townhouse Hotel, Reykjavik

Address: Ármúli 13a, 101 Reykjavík, Iceland
Rooms available: Studio apartments
Cost: £151.50 / €181.86 for a deluxe studio with private bathroom.

For our final stop, we chose a hotel just outside the city centre for its easy access to the ring road and free parking. If you don’t mind a walk into Reykjavik’s central attractions, this could tick all your boxes too!

R13 – A Townhouse Hotel was a great place to end the trip, with a more boujie design than the rest of our guesthouses and our own kitchenette to cook in. Keeping to our budget, we had a pizza movie night and it felt like such a treat to be in a room with a more considered design. The bathroom was lovely with a rainfall shower and again, we enjoyed the chilled out self-check in approval.

Of all the affordable places to stay in Iceland we visited, this was one of the best value by far – especially considering its city centre location.

Laura x

Read more about how to plan a budget Iceland road trip

The ultimate 10 day Iceland road trip itinerary
How to plan an affordable trip to Iceland