The Best Hostels in Iceland for Every Kind of Traveler: A Guide to Budget-Friendly Stays
Iceland, the land of fire and ice, has become one of the world’s top travel destinations for adventurers and nature lovers. With its dramatic landscapes, volcanic craters, majestic waterfalls, and enchanting Northern Lights, it’s no wonder Iceland draws visitors from around the globe. While Iceland is known for its natural beauty, it can also be known for its higher-than-average travel costs. However, finding affordable accommodation is possible, especially with the fantastic hostels that blend comfort with affordability. Here are my top favorite hostels in Iceland, offering the perfect balance of budget, location, and amenities for an unforgettable stay.
1. Vik Hostel
Why It’s a Top Pick:
Located in the picturesque village of Vik, Vik Hostel is the ideal base for exploring Iceland’s famous South Coast. Vik itself is a charming coastal town, known for its black sand beaches, rugged cliffs, and the nearby Reynisfjara Beach with its iconic basalt columns. Staying at Vik Hostel places you close to these attractions, as well as the breathtaking Skógafoss and Seljalandsfoss waterfalls, making it a prime location for nature enthusiasts.
The hostel offers both private rooms and dormitories, making it suitable for solo travelers, couples, and groups. The common areas are spacious, and the fully-equipped kitchen allows guests to cook their meals, an important feature in a country where dining out can be pricey. The relaxed vibe of Vik Hostel, coupled with its incredible surroundings, makes it one of the top choices for travelers heading to Iceland’s South Coast.
Highlights:
Prime location in Vik, near major South Coast attractions.
Cozy dorms and private rooms with scenic views.
Spacious common areas and fully equipped kitchen.
Close to natural wonders like Reynisfjara Beach and Skógafoss.
Book Here: Vik Hostel
2. Puffin Nest Capsule Hostel
Why It’s a Top Pick:
For travelers looking for a unique and budget-friendly option in Iceland, Puffin Nest Capsule Hostel offers a futuristic twist. Located in Höfn, a charming fishing village in southeast Iceland, this capsule-style hostel provides modern pods for travelers who want both privacy and a sense of community. Each capsule is equipped with lighting, charging stations, and a personal safe, ensuring that you can relax comfortably after a day of exploring Iceland’s wilderness.
Höfn is known for its proximity to Vatnajökull National Park, the largest glacier in Europe, and Jökulsárlón Glacier Lagoon, where you can witness floating icebergs in a stunning glacial setting. Puffin Nest Capsule Hostel is perfect for adventure seekers who want to stay somewhere cozy and affordable while experiencing Iceland’s natural beauty.
Highlights:
Unique capsule-style accommodation for privacy and comfort.
Convenient location in Höfn, near Vatnajökull National Park and Jökulsárlón Glacier Lagoon.
Modern amenities within each capsule, including charging stations and personal safes.
A communal kitchen and social areas for guests.
Book Here: Puffin Nest Capsule Hostel
3. Osar Hostel
Why It’s a Top Pick:
Situated on the remote Vatnsnes Peninsula in North Iceland, Osar Hostel offers a one-of-a-kind experience for nature lovers and wildlife enthusiasts. The hostel is in a rustic setting, surrounded by untouched wilderness and located near the famous Hvítserkur rock formation, a towering monolith in the sea that resembles a dragon drinking from the ocean. This area is also known for its seal colonies, making it a great spot for wildlife viewing.
Osar Hostel is a cozy, family-run hostel with basic but comfortable amenities, creating a homey atmosphere. It’s ideal for travelers seeking peace, tranquility, and a deeper connection with Iceland’s rugged landscapes. With the Northern Lights often visible in winter, and long, bright days during the summer months, Osar Hostel is perfect for a serene Icelandic escape.
Highlights:
Remote location on the Vatnsnes Peninsula, perfect for nature lovers.
Close to the Hvítserkur rock formation and seal-viewing spots.
Cozy, family-run hostel with a welcoming atmosphere.
Great opportunity to view the Northern Lights in winter.
Book Here: Osar Hostel
4. FisherInn, Hostel & Apartments
Why It’s a Top Pick:
For travelers looking to explore North Iceland, FisherInn, Hostel & Apartments in Dalvík is a great budget option. Dalvík is a small town renowned for its outdoor activities, including whale watching, hiking, and skiing in the nearby mountains. FisherInn is centrally located in Dalvík, providing easy access to the area’s natural attractions and adventures.
The hostel offers a mix of dorms and private apartments, giving travelers a range of accommodation options depending on their preferences. With fully equipped kitchens and cozy common spaces, FisherInn creates a comfortable environment for those seeking adventure by day and relaxation by night. The friendly staff can also help organize whale-watching tours or hiking excursions, making it an ideal base for outdoor enthusiasts.
Highlights:
Located in Dalvík, a hub for whale watching, hiking, and skiing.
A mix of dormitory and private apartment options.
Fully equipped kitchen and cozy common areas.
Perfect for outdoor enthusiasts and adventure seekers.
Book Here: FisherInn, Hostel & Apartments
5. Hafaldan HI Hostel
Why It’s a Top Pick:
Hafaldan HI Hostel is located in the charming town of Seyðisfjörður in East Iceland, a region known for its stunning fjords and artistic community. The hostel is housed in a former hospital, giving it a quirky and historic feel while offering modern and comfortable amenities. This hostel stands out for its beautifully designed interiors, including spacious dorms and private rooms, as well as the inviting common areas, which include a kitchen and lounge spaces.
Seyðisfjörður is a picturesque town with brightly colored houses and a thriving arts scene, making Hafaldan HI Hostel an ideal stay for travelers looking to experience Iceland’s cultural side. From here, you can hike to nearby waterfalls, take in the stunning fjord views, and explore the local art galleries and cafes. The hostel’s cozy and friendly atmosphere makes it an excellent choice for travelers looking for a unique stay in East Iceland.
Highlights:
Located in Seyðisfjörður, a charming town with a vibrant arts scene.
Housed in a historic building with modern, comfortable interiors.
Spacious dorms and private rooms with beautiful views.
Close to waterfalls, hiking trails, and local attractions.
Book Here: Hafaldan HI Hostel
Conclusion
Iceland offers a wealth of natural wonders and unforgettable experiences, and staying at one of these hostels is a great way to explore the country without breaking the bank. Whether you’re looking for a cozy spot in the wilderness like Osar Hostel, a unique capsule experience at Puffin Nest Capsule Hostel, or the central convenience of Vik Hostel, there’s an option for every type of traveler. Each hostel provides a welcoming atmosphere, modern amenities, and a chance to connect with like-minded adventurers, making your Icelandic journey even more memorable.
So pack your bags, book your stay, and get ready to explore the wonders of Iceland with the perfect hostel as your home base!
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