Hotels in Iceland can range from ultra-luxury (at an ultra-expensive price) to basic and boring. Though prices have gone some somewhat in the last two years, the cost of accommodation is still high and you may be surprised by the amenities, or lack thereof, offered at a pricey hotel. To save money, opt for guesthouses that offer free wi-fi, free breakfast, and extras like the use of kitchen or laundry facilities; though they may be less posh and require that you share a bathroom, surprisingly, these places tend to be cheaper than their hotel counterparts.
In Reykjavik, you’ll want to stay in the city center, or 101. Though you may find cheaper lodging further on the outskirts of town and in nearby suburbs, you’ll spend more in time and money getting back and forth to the city center each day. Most tour operators offer free pickup within the 101; if you stay outside you’ll need to arrange your own transportation.
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If you are on a tight budget, consider visiting during colder months. From mid-September through April, it’s off-season, and when hotels can be discounted by up to half.