Places to stay in Iceland on a backpacker’s budget

Iceland is basically one gigantic National Park, where Mother Nature pulls all the stops out: geysers, glaciers, waterfalls, hot springs. Staying in a hostels means that you get to experience these otherworldly phenomenons without maxing out your travel fund. We’re giving you the 411 on places to stay in Iceland where you can see the northern lights from your bedroom window, watch an immersive theatre experience and eat heart shaped waffles for breakkie before you head out into the magic wilderness….

1) Kex Hostel 

In Iceland, everything is a little unexpected, and Kex is a seriously WTF? hostel – in a good way! Housed in a on old biscuit factory, Kex is a self-described “new land within Iceland” with freshly baked breakfast buffets, a barber (yes, you read right – the haircut kind) and a gastropub with live music. The outdoor terrace means you can make the most of the midnight sun with a cool Icelandic beer before heading out to sample Reykjavik’s hipster nightlife with your new hostel mates.

  • Customer rating: 8.9
  • Price: £28/€31/$34

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2) Héraðsskólinn Hostel

✨Wanderlust alert! ✨ This is a hostel designed by Iceland’s most famous architect Guðjón Samúelsson. Nope we can’t cope with how beautiful this is either! There’s a cafe and bistro on site and if you’re lucky, some mind-boggling light action in the evening. September till mid-April is the best time to see the Northern Lights, so the time to book is NOW! ✌️

  • Customer rating: 9.2
  • Price: £35/€39/$44

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3) Bus Hostel 

You have just landed in Reykjavík, and where better to relax with an Icelandic beer than the cosy Bus Hostel?! Drop your bags in your room and head to the lounge for a retro board game or start the party early at the well-stocked “Boogie Wonderland” bar. Hostels in Iceland kick hotel prices to the icy curb, and you can book a private room here for just £29 ?

  • Customer rating: 8.3
  • Price: £18/€1/$20

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4) Akureyri Backpackers

Friendly, cosy vibes emanate from this hostel located on the main street of downtown Akureyri.  This is one of the best places to stay in Iceland if you’re planning to explore Akureyri’s divine landscapes, or visit Lake Myvatn and the whale watching town of Husavik. On your arrival, pick up your complimentary drink at the bar & restaurant that serves Icelandic beers from Borg’s microbrewery. And don’t leave Iceland without trying Brennivin – a pure Icelandic shot with caraway seeds (also known as Persian cumin). Score! 

    • Customer rating: 8.8
    • Price: £26/€29/$32

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5)  Loft Hostel 

This eco hostel can be discovered in Iceland’s capital, and you can take it all in and breath in that seriously fresh air on the hostel’s roof terrace. You may even spot the Northern Lights, with a beer in hand, whilst hanging out with new friends from all over the world. Mornings are all about the free yoga classes and an organic breakfast ?. Are you in?!

    • Customer rating: 9.1
    • Price: £36/€31/$45

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6) The Freezer 

If there was an award for “Most original places to stay in Iceland”, The Freezer would win it. Beaming with personality, with its quirky decor and two onsite theatre spaces, where you can watch all sorts of extreme pro arts performances such as “One night stand (up) with grandma DÍDÍ: Local grandmother´s guide to being seventy, sexy and single in rural Iceland.” This bizarre entertainment and the perfect loaction explains The Freezer’s 9.2 value for money rating! If your road trippin’ the west end of Iceland, Snaefallesjokull National Park is just 10 minutes away.


    • Customer rating: 9.1
    • Price: £30/€34/$37

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7)  Harbour Hostel 

The ideal place to stay if you are driving around the peninsula, Harbour Hostel is Literally ON the harbour in the town of Stykkisholmur.  You can even hear the local fisherman chanting at sunrise, and your surrounded by bars, bakeries and an awesome geothermal swimming pool is only in five minutes walking distance. Our customers praise the wonderful staff here, and all rooms are provided with snuggly warm blankets!

  • Customer rating: 9.2
  • Price: £27/€30/$36

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8) Reykjavik-Downtown-Hostel

If you’re after some Reykjavik waterside action, Downtown is the place to be. The hostel has earnt its 9.6% location rating from our customers, with it being around the corner from the capital’s best bars and fresh seafood restaurants – Icelandic fish and chips is a must! Take advantage of the hostel’s free movie nights, and their organic breakfast buffet which includes ❤️ shaped waffles. Sold! This is one of the best places to stay in Iceland if convenience is your main concern.

  • Customer rating: 9.1
  • Price: £31/€39/$35

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Places to Stay in Iceland

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