Iceland is an expensive country to live and visit; it ranks among the top third on the cost of living index. Iceland has very many wonders to visit, like, Gullfoss Waterfalls, Jökulsárlón Lake, numerous geysers, and northern light or aurora tours. So when you’re visiting the more expensive parts of the world, it’s always a good idea to spend less on accommodation and save more for the real touring. Thankfully, there are several low-cost accommodations, some that deviate from the conventional places to stay. Some good examples are the quirky pod and capsule hotels. Planning a trip to this fascinating destination? Read on and know about the pod and capsule hotels in Reykjavik, Iceland.
We handpicked these listings carefully, considering (wherever possible) Superhost status, recent guest reviews, location, accommodation type, prices, availability of dates, decor, and amenities. The image galleries get refreshed with the latest updates regularly. They were last updated on April 19, 2025.
1. Reykjavík Lights Hotel (from USD 154)
Top-quality, fresh, and delicious breakfast buffet with ample variety, accommodating to dietary needs
Reasonable pricing for Iceland, free parking, early check-in available
Convenient location with easy access to city sites, close to restaurants and shops, near bus stop
Clean, modern, stylish, elevator, knowledgeable and friendly staff, 24-hour reception
This hotel is located in Sudurlandsbraut Street; it is two kilometers (slightly over one mile) far from the city center. This lodging is a walking distance from two sports arenas of Reykjavík - the Laugardalsholl Stadium and Laugardalslaug Swimming Pool, hence, it’s a convenient option when someone is visiting just for game events. This hotel has a continental restaurant and bar. Reykjavík Lights has private bed space and dormitory options. Each room has a television, a telephone, and a private bathroom. Underground parking and WiFi are also available for free. An elevator is present and there are few facilities for disabled guests. Guests can lodge with young children but they must share the same bedding. The reception speaks English and Icelandic.
Reykjavik Lights Hotel by Keahotels This is a Proud Certified property where you can be extra sure of a welcoming stay.
Address: Sudurlandsbraut 12
2.2 km (1.4 mi) from Hallgrimskirkja
2. Hotel Cabin (from USD 79)
This hotel also has a restaurant and it is sitting on the boundary of the city center region. Faxa Bay shoreline is only a two-minute walk, the Laugardalslaug geothermal swimming pool, and Reykjavík Family Park & Zoo are also in the vicinity. Hotel Cabin’s lodging options range from the standard triple bedroom to single rooms. Windows of this hotel present either the ocean or the street views. Every room has a television, telephone and a private bath. Parking and WiFi are free amenities. Children can stay, and the hotel also facilitates handicapped guests. This hotel also gives bicycles for rental. The staff understands Icelandic and English.
Hotel Cabin
Address: Borgartún 32
1.65 km (1.1 mi) from Hallgrimskirkja
3. Kex Hostel (from USD 34)
Delicious and reasonably priced breakfast, diverse menu at the bar/restaurant, and a good selection of food and drinks. However, occasional noise from the bar area.
Reasonable pricing for a hostel in the heart of Reykjavik, with options for private rooms and dormitories.
Conveniently located near the city center, with easy access to attractions, public transportation, and a supermarket. Close to the sea and main sites.
Spacious communal areas, well-equipped kitchen, comfortable beds with curtains for privacy, and a cozy bar/restaurant with a vibrant atmosphere.
This hostel is also located in the heart of Reykjavik. The old harbor is in the vicinity; purchase some tickets and enjoy whale watching tours. Kex is a boutique style hostel, its theme is world-travel and reading. This gives a friendly ambiance to writers. The hostel has a heated terrace, a shared kitchen, and a lounge. The reception would give bicycles for rental to explore this city. The lodging options are a twin bed, a double bed, a single bed, and a dormitory. The private rooms have private bathrooms, a television, a DVD player and a wardrobe. WiFi is available to all. Children lodging is not allowed here. Kex Hostel features a restaurant and bar. Apart from Icelandic, the staff also speaks English.
Kex Hostel
Address: Skúlagata 28
514 meters (0.4 ft) from Hallgrimskirkja
4. Capital Inn (from USD 15)
This hotel is located on the southern side of Reykjavík, a geothermal beach, and the famous Saga Museum is located near this location. Capital Inn features several lodging types, from dormitories to an independent one-bedroom apartment, every option is cheap. Shared amenities are a kitchen, a laundry room, and a dedicated smoking area. This hotel has a restaurant, a mini bar and a barbecue on site. Lodgers get free breakfast, free parking and WiFi. Guests can lodge two children with them for free, existing bedding has to be shared though. The hotel provides bicycle rental, and it’s the only option on our list that allows pet lodging. Including Icelandic, the reception speaks 10 other languages.
The Capital-Inn
Address: Sudurhlid 35D
2.54 km (1.6 mi) from Hallgrimskirkja
5. Hlemmur Square (from USD 21)
This is an art déco building. The ground floor has Reykjavík’s renowned bar & restaurant, the third and fourth floors have a hostel, and the fifth floor has a hotel. The famous shopping street, Laugavegur, is only 100 steps away from this hotel. For the accommodation, options vary from a triple room to dormitories. Depending on your choice of stay, you get shared and private bathrooms. Non-adults cannot be accommodated in the hostel part. Private rooms have a television, heating, and seating area. A small kitchen is the only shared amenity. Parking is not available but WiFi is free. This hostel is not disabled friendly, but there is an elevator. The reception speaks 10 languages.
Hlemmur Square
Address: 105 Laugavegur
574 meters (0.4 ft) from Hallgrimskirkja
6. Galaxy Pod Hostel (from USD 84)
The Kjarvalsstaðir Art Museum and Laugavegur Shopping Street are less than a mile (1.6 km) from here, and this hostel sits on the border of the city center region. It boasts spaceship design pods as the sleeping zone and features female only, and mixed gender dormitories, while the bathrooms are shared. The pods have television, ambient lighting, and many more buttons to control your personal space. Shared amenities are a lounge, television, game room, kitchen, and a mini bar. Galaxy Pod Hostel has an elevator and this place is wheelchair accessible. The parking and WiFi are free, and the breakfast buffet is paid. Children under the age of seven aren’t allowed here. The reception speaks English, Italian and Portuguese.
Galaxy Pod Hostel
Address: Laugavegur 172
1.18 km (0.8 mi) from Hallgrimskirkja
Be a minimalist in Iceland
Iceland is an expensive country and we have shown you some economical accommodations to stay. In the final few lines, all we have to say is to be minimalistic when you arrive here. Walk to explore the cities, they aren’t huge. Never hire a taxi, opt for buses instead, there are plenty of bus stops. Estimate your daily budget and always join groups for sightseeing tours.
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