Luxury Accommodations in Iceland: Icelandair Hotels

Due to the high cost of visiting Iceland, even travelers who don’t consider themselves “budget travelers” may have a hard time coming to terms with the prices for accommodations. Private rooms (usually with shared bathrooms) in smaller guesthouses and hostels are the cheapest option, and anything even approaching luxury costs a good deal more. If you’re looking for a more traditional hotel experience, with a queen or king bed, a flat screen tv and an ensuite bathroom, expect to pay a premium, and know that you’ll have fewer options outside of the capital city, Reykjavik.

Icelandair used to run a chain of upscale hotels around the country, but it sold the business to Malaysia’s Berjaya group in a deal finalized in 2021, and in 2022 the chain was renamed Iceland Hotel Collection by Berjaya. The group now lists 11 hotels: five in Reykjavik, three in the north, one in Höfn and two in Egilsstadir. Several of the hotels I originally wrote about here have since left the chain and trade under new names. Here’s where they stand now.

Reykjavík Natura

The four-star Reykjavík Natura (formerly Hotel Loftleidir) is near the Pearl, close to Nauthólsvík thermal beach and the domestic airport. It would be about a 25 minute walk into the city center. The hotel no longer appears on the Berjaya group’s hotel list, so check its current status before you book.

Reykjavik Marina

The other city center hotel from the original chain is now the Berjaya Reykjavik Marina Hotel, with 154 rooms at Myrargata 2, next to the old Slippur dry dock. It has the Slippbarinn restaurant and bar and a small cinema, and it’s close to the shops, restaurants, galleries and harbor of Reykjavik.

Hotel Keflavik

On the Reykjanes Peninsula, a 15 minute drive from the Blue Lagoon, the Hotel Keflavik offers excellent accommodation for those with a very early flight out of Iceland. The four-star hotel is family-run, sits a few minutes from Keflavík International Airport and has the KEF Spa & Fitness, KEF Restaurant, a cafe and a wine and cocktail bar.

>> Read about other hotels near the Blue Lagoon

Hotel Hengill

Close to the UNESCO-listed Thingvellir National Park and the geothermal area on the slopes of Mt. Hengill, the old Hotel Hengill building at Nesjavellir is now the ION Adventure Hotel, about 45 minutes’ drive from Reykjavík. It has a spa, a geothermal pool, a bar and a restaurant, along with beautiful views of the surrounding countryside.

Hotel Akureyri

In the north of Iceland, in the country’s second largest urban area of Akureyri, the Berjaya Akureyri Hotel makes a great base for exploring Lake Myvatn, Dettifoss, Husavik, and the other attractions of northern Iceland. The hotel has 98 rooms, the Aurora restaurant and bar and a garden, and the town’s geothermal swimming pool is nearby.

Hotel Hamar

One hour away from Reykjavik, tourists interested in golf can stay at Hotel Hamar near Borgarnes, which now runs outside the Berjaya group and sits on the Hamarsvöllur golf course in West Iceland. The hotel has the Hamarinn restaurant and bar and outdoor hot tubs, and rooms range from standard doubles to larger cabins.

Hotel Herad

In the east Iceland town of Egilsstadir, the Berjaya Hérað Hotel offers comfortable accommodation close to some of Iceland’s best outdoor activities like bird watching, fishing and hiking. The hotel has 60 rooms, the Lyng restaurant and a bar, and the Vök Baths and Hallormsstadur Forest are a short drive away. It is closed from November 1, 2026 to February 20, 2027.

Hotel Klaustur

Those looking to explore the glaciers of Iceland can stay at Hotel Klaustur in Kirkjubæjarklaustur, which is located mid-way between Myrdalsjokull glacier and Vatnajokull in southern Iceland and now operates as an independent boutique hotel. It has a restaurant, and its packages include access to the local swimming pool. Standard and deluxe rooms are available, as well as a suite.

Hotel Fludir

The former Hotel Fludir is now The Hill Hotel at Flúðir. It’s in an ideal stop-off point in South Iceland, close to the Golden Circle, excellent hiking spots and outdoor activities like white-water rafting and horseback riding, and it has standard and superior rooms.

Rates at each hotel vary a lot by season, so compare prices on each hotel’s own site. Icelandair no longer owns any of these hotels.