A Backpacker’s Guide to the Best Hostels in Iceland

Iceland is a land of ice and fire in the true sense of the world. The sheer force of the elements makes a warm, cosy accommodation top priority for all travelers.

The good news is that regardless of your budget, there will be a cool option for you.

The bad news – a tiny budget has an entirely different meaning here and some hostels in Iceland cost as much as 5-star hotels in other parts of the world.

Either way, the country is welcoming an all-time high of tourists and this time the crowd is really onto something.

To help you experience the wonders of its’ otherworldly beauty without breaking the bank we have compiled the best, most interesting hostels in Iceland. Happy travels!

Galaxy Pod Hostel At Reykjavik

Located in downtown Reykjavik, this is the country’s very first pod hostel. What the capsules lack in space (khm, that is the entire point of a pod hostel) they more than make up for in the design.

It is called Galaxy for a reason. Expect bright neon lights, pods that look like they belong on a spaceship, and an overall sci-fi aesthetic.

You don’t get a lot inside the pods, though, and you might want to think twice about staying here if you suffer from claustrophobia. Each space is just two by one-meters in size and does not offer much more than the ridiculously comfortable bed and a reading light (plus curtains for privacy, of course).

There are smaller dorms, as well as a female-only dorm and they all have in-room lockers. Safety is not something you need to worry about anyway. Iceland is one of the world’s safest countries, to begin with.

You have a self-service kitchen at your disposition but there is no breakfast included on-site.

The snack bar in the lobby is a cool place to spend the night sipping beer with fellow travelers but for actual meals head over to the restaurant area. It’s less than 15-minutes away by foot and you have plenty of options – both fancy and budget-friendly.

Héraðsskólinn Hostel

Designed by the country’s favorite architect Guðjón Samúelsson, this hostel is your one-stop destination to see the Northern Lights. It’s location, location, location with this one. 

Located in a rural building on the banks of Laugarvatn Lake, this hostel used to be a school/ educational center up until the 90’s. It remained forgotten for almost two decades until they reopened it as a hostel.

The original design was preserved but the Héraðsskólinn has all the modern amenities you need.

You can choose from shared accommodation in rooms of up to 14, or private accommodation, which is perfect for families. Your linen, towels, Wi-Fi, and parking are included, making it an easy place to stay during an out-of-city trip to see the Northern Lights.

The kitchen and lounge facilities are homey and always neat. Breakfast is not included but you can purchase it for an additional (very reasonable) fee. Finally, the best thing about the hostel – they wake everyone up when the Aurora borealis is on. No chance of sleeping through the show!

The Freezer

It does not get any more cool hostel than ‘The Freezer’ in the west of Iceland. This award-winning social hostel would top any ‘most funky place to stay’ competition if it were up to me.

They always have something going on – from musicals, to stand up comedy, to movie nights with indie masterpieces on their huge cinema widescreen. Here is a peek into what they had in store for their guests during the summer of 2017:

  • A musical based on Jules Verne’s classic ‘Journey to the Center of the Earth’, which apparently attracted audience from all over the province
  • Improv nights with local stand-up comedians. In English!
  • Purgatorio, a formidable work of drama penned by Chilean playwright and human rights advocate, Ariel Dorfman and brought to life by Australian performers. Yes, they went cross-continental on this one and it was a huge sensation!

If you are wondering if these performances happen in the lobby while random guests sip their drinks… Well, they don’t.

There are actually two theaters in the building, as well as a lounge bar (but no performances at the bar). The Freezer is truly a cultural space and a center for the arts.

But maybe performance art is not your thing. Not an issue, there is also an active book exchange going on at all times and plenty of board games if you are not a big reader, either.

And since you are in Iceland for the natural wonders, The Freezer is just 10 minutes away from the Snaefallesjokull National Park.

Spend the day hiking, come back for mulled wine and some live music/ comedy/ a dark and deep movie about the meaning of life. You never know what you will land on at The Freezer!

Harbour Hostel

You are literally on the harbor of the town Stykkishólmur and you will hear the fisherman chant and feel the breeze (more like freezing cold winds) every morning.

On that last note, all visitors are provided with warm snuggly blankets so you are less likely to take pneumonia back from your Iceland adventure.

If the warmth of the hostel grounds is not enough, there is an awesome geothermal pool not a couple of minutes away. The Stykkishólmur swimming pools (yes, there are two – an indoor and an outdoor one and they are both hot ) has Fresenius certified water, claimed to have regenerative powers.

It’s a locals’ favorite as much as a tourist magnet and it has the decent price (plus water slides) to thank.

But how about the actual hostel? Well, for one it is a very historic place. It started out as a basement space for ice that was delivered to the harbor. Fishermen would lay their catch here for sale and storage.

In 1938 they erected two floors above the initial basement and an actual shop was opened (where the owners would live upstairs and welcome clients downstairs).

The house was nicknamed Sjávarborg, meaning the Palace by the Sea and it has housed a bookstore, a barber shop and a grocery store to name a few.

The current owners bought the space in 2012 and by the summer of 2013, a hostel appeared. Today, The Harbour is one of the most beautiful accommodation options in all of Iceland and a very cosy and comfortable one, too.

All rooms come with a view of the Stykkishólmur harbor and Breiðafjörður. Linen and Wi-Fi are included and so are the earplugs, in case one of your roommates is a snore-er. You are within walking distance to all of the town’s cool restaurants. 

Narfeyrarstofa and Sjávarpakkhúsið are two establishments that you absolutely cannot miss. Yum, Icelandic food!

Reykjavik Downtown Hostel 

Going back to where we started, the Reykjavik Downtown Hostel is a wonderful starting point for you to explore Iceland’s capital. This one is located on the harbor as well and it boasts beautiful and affordable rooms for lone travelers and families alike.

You will be at the heart of the downtown area but the hostel is on a residential street so you will be able to get a good nights’ sleep.

What won me over to include this place in the best hostels in Iceland list was the food. You get a free organic breakfast buffet every morning, heart-shaped fresh waffles included (these will look great on your Instagram, I promise).

The Reykjavik Downtown Hostel is truly going to appeal to the environmentalist in you as it has been certified to be an eco-friendly place to stay since 2010.

As for entertainment, free movie nights and live music gigs are hosted in the lobby bar quite frequently (which is humble hostel slang for virtually every night). If you are not one for socializing, there is an on-going book exchange, too.

You have a neat and fully equipped kitchen at your disposal (making your own meals is a great way to cut costs during your trip to Iceland) and a spacious lounge for you to enjoy your food.

There is free high-speed Wi-Fi in all of the rooms and common areas. If you forgot your laptop, use the computers they have provided. Once again, it is all free of charge.

Finally, what do the rooms look like? There is an option for all travelers. Mixed dorms house anywhere from 4 to 10 guests and they all have in-room lockers included.

Families would enjoy the private accommodation rooms that can house as much as 5 family members (or a group of 5 privacy-loving friends) at a time. Linen is included on all beds. And the beds are super comfy!

Hostels In Iceland: There Are So Many!

Iceland is incredibly backpacker-friendly.

Feel free to explore beyond our recommendations and to come back with your field reports.

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