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Iceland is such an incredible, beautiful landscape, you’re going to want to see as much of it as you can. But Iceland is also known for being super expensive so you may choose to stay in hostels in Iceland to keep your costs down and save your precious money for some awesome day trips!

Seljalandsfoss waterfall in south iceland bathed in golden light just before sunset

Being a mid-budget traveller, I have to admit, it’s been a while since I last bunked up in a dorm room in a hostel. However, staying in hostels in Iceland is the easiest way to see the country in an affordable way.

Other options would be to camp or stay in a campervan which are both great options for budget ring road accommodation. But if you are travelling in cold weather or travelling solo around Iceland’s ring road, you may want to consider booking hostels in Iceland instead. That way you can be assured of a warm bed and some company over dinner. Another option would be booking an Airbnb – get a free discount code by clicking HERE

I have to admit, the Iceland hostels where I stayed, were all brilliant. Unlike hostels in somewhere like Thailand where the average age will be below 25, Iceland attracts a mixed bunch and my dormitories were made up of travellers of all ages, the young and the retired alike! All the accommodations on the ring road where I stayed were comfortable with good social spaces allowing me to easily get to know my fellow road-trippers. I certainly never felt lonely as a solo female traveller in Iceland!

Reasons why you should consider staying in hostels in Iceland

  • Hostels are the cheapest way of travelling if you don’t want to camp or stay in a campervan. Whilst it might not be the affordable luxury hotels you are used to, staying in hostels in Iceland certainly does make Iceland more affordable and accessible to more people
  • Most hostels in Iceland are set up for road trippers and offer free parking. They are used to people arriving late after a full days drive and activities and have provisions for late check-ins. Some hostels I stayed in just had a list of names posted and directions to your dorm rooms. Others were manned at all times.
  • Hostels are sociable. If you are travelling the ring road as a solo traveller, this is a great way to make some travel friends along the way. Especially as there really are only 2 main routes around the island – clockwise and anticlockwise so there’s a 50% chance you’re new friends will be headed in the same direction as you and will pop up throughout your trip!
  • Hostels are not party hotels in Iceland. Yes in the cities, there are hostels with bars but they seem to close at a reasonable time. Out on the ring road, most people are asleep by about 10 pm – shattered from full days’ activities. So you don’t need to worry about those party people rocking up at 3 am drunk and rowdy!
  • You can save even more money by staying in hostels in Iceland as you can make your own food using the hostel kitchens.
  • Chatting to other travellers in hostels is a great way to find out about must-see places for your next days’ activities. Often the only way to find out about more offbeat locations is via word of mouth. This is how I found out about ‘the secret waterfall’ which you can read about in my Iceland ring road itinerary.

Finding Ring Road Hostels in Iceland

The most difficult thing about booking budget accommodation in Iceland, is to decide where you want to stop on your ring road itinerary. You need to make sure your days are evenly spaced with not too much driving or too many activities for each day.

Selfoss waterfall in north Iceland - framed by basalt collumns
Selfoss waterfall

There are some short stretches of road with so many places to see and stop at that you may only want to allow for 1-2 hours of driving that day to ensure you can see it all. Other days have less ‘must-see’ tourist spots and you’ll want to get more driving done instead. I suggest you plot out a map on google maps with your ring road accommodation and Iceland must-sees to make sure your plans are achievable. Or if you want someone else to do the hard work for you then click the pink button below and ta-da! My 8 day Iceland itinerary is yours!

Another important factor to consider when booking your budget accommodation on the ring road is how much daylight you will have. If you are travelling in winter, the days are much shorter so you should plan to stop more often. Though bare in mind, towns in Icleand are often tiny and there are not always hostels in every town.

Iceland ring road scenery

Booking hostels in Iceland

I mostly used to book my accommodation in Iceland. It’s always straight-forward and hassle-free. I also love how easy it is to search based on preferences eg free parking, free wifi, free breakfast… Get your discount by clicking below!

For a few of the more remote places, I struggled to find any hostels on for example in Vik. Instead, I discovered a hostel on the Iceland Hi Hostel website – a chain of hostels found all over Iceland. I stayed in 3 Hi Hostels along my way.

The best hostels in iceland - ring road accommodation options for budget iceland travel. Som,e of the best ring road accommodation optiosn to help you decide where to stay in iceland. #budgeticeland #icelandaccommodation #cheapicelandaccommodations #icelandhostels #hostelsiniceland

In general, I preferred the independent hostels but I would stay in any of the below hostels again. You just may have to accept that in the remote parts of Iceland, your hostel will be slightly more basic. It’s either that or fork out a few hundred dollars for a night in a budget hotel!

If you have no luck finding hostels, you may want to consider using airbnb instead. You can choose between a room in someone else’s house and booking the whole apartment or house to yourself. It’s certainly not as cheap as staying in a hostel but it is definitely cheaper than many of the hotel prices in Iceland! Get your discount by clicking below…

Where to Stay on Iceland’s Ring Road

Once you’ve finalised your Iceland itinerary you will need to book your Iceland accommodation – especially if you are travelling in peak season when the hotels and hostels in Iceland get fully booked.

I travelled to Iceland in September 2018 and these are the places where I stayed. Some I preferred more than others but all of them were great places to stop off at along your Iceland road trip. All were clean, quiet and friendly with great social spaces and adequate kitchen facilities. The pre-requisites for a good hostel experience!

Stop 1: Hostel in Reykjavik – Kex Hostel.

There’s no denying, The Kex hostel in Reykjavik is cool. Housed within what felt like an old warehouse and with plenty of cute reading nooks, industrial architecture and mood lighting. There’s a lively bar which shuts down at a reasonable time allowing for plenty of sleep.

It’s also very conveniently located a 2-minute walk from the iconic Harpa Opera Hall – a must see place in Reykjavik!

The Kex Hostel seems to be one of the most popular hostels in Reykjavik. Countless times at the airport I heard solo travellers discussing where they were staying and The Kex Hostel was mentioned a lot!

My only criticism would be that the showers were communal. As a bit of a British prude, I like to have my own shower cubicle at the very least. Fortunately, there are private shower rooms located on some of the floors so make sure you ask where they are when you check in!

The dorm rooms were basic but comfortable and there were large lockers for your belongings – just remember to take your own padlock.

Whilst there was no free parking at Kex Hostel, there is a carpark just outside and it’s free overnight. The prices during the day are actually quite cheap (Yep probably the only thing in Iceland which doesn’t cost a fortune.)

Stop 2: The Snaefellsness Peninsula – The Old Post Office.

Okay so technically this one is a guesthouse not a hostel and it’s reflected in the price. At €70 this was the priciest place I stayed but with good reason. The reason I chose this guesthouse over a hostel in the Snaefellsness peninsula is purely due to location.

There are hostels in this area but none were close enough for my liking to Kirkjufellsfoss. This is one of the most spectacular viewpoints in Iceland and I wanted to be close by to get there for sunset and sunrise.

Sunset at Kirkjufellsfoss on the snaefellness peninsula in icleand. a conical mountain sits behind 2 small waterfalls and the sky is a blend of purple, yellow and pink tones.

Hostels were about 20miles away which was just a tad too far for my liking but the Old Post Office was literally a 2minute drive away. Yes, that’s Kirkjufell mountain in the photo of The Old Post Office. And that sunset photo is the reason you should splash out on your accommodation here!

The guesthouse itself was great. Clean, quiet and homely and I had a room to myself – bliss! The bed was super comfy and I had my own desk and TV. Of course, I chose the desk and spent my evening editing photos!

The kitchen was well supplied with some group foods you can help yourself too. The bathrooms were clean and homely – it reminded me more of a home than a hotel.

If you arrive late, use the phone on the wall to call reception and they will arrive within a few minutes to let you in and show your to your room.

Stop 3: Akureyri – Akureyri Backpackers.

Ah, I LOVED this place. I wish I could have stayed longer but I had so much more to see on my trip east.

The rooms were light airy and spacious. I loved the cute reading nook in the corridor and if I had more time I could have happily spent a few hours curled up with a book.

The bathrooms were modern and spacious. The kitchen was small but well equipped. There was a large communal dining table which really encouraged you to get chatting to other travellers.

There was also a lovely pub attached serving food if you can’t face yet more home cooked pasta (did I tell you how expensive food is in Iceland?!) I spoke to one backpacker a few days later who told me she’d been put off by Akureyri backpackers because of the pub as she thought it would be too noisy. Well I can report this isn’t the case. The pub shut by 11 and the dormitories were actually very quiet.

There is no parking here but there is a car park just behind the hostel which is free overnight and reasonable in the daytime. It’s a 2-minute walk from there to the hostel. The crime rate is so low in Iceland that I never worried about leaving my car in public car parks like this!

One thing to note here is that bedding is not included. It’s the only place I stayed where this was the case but you can hire bedding for a few euros. Bit cheeky perhaps but the hostels laid back vibe did make up for it!

Stop 4: Seydisfjordur – The Old Hospital Hi Hostel

Again, this was another flying visit where I wished I could stay longer. If nothing else for the delicious and reasonably priced hot croissants for breakfast!

I actually didn’t spend long in my dorm bed here as I got super lucky and spent most of the night sat in my car watching the Northern lights! However, the short amount of time I was actually at the hostel for allowed me to meet plenty of other backpackers all on the same route as me. It was great as we kept bumping into each other for the next few days!

Northern Lights in iceland - the Aurora Borealis

The first thing that jumped out at me was how cosy the decor was. The building is old with period features and the kitchen was so cosy, I wanted to copy it in my own home! The rooms were spacious and comfy.

The main thing you should be aware of is that there are 2 Hi Hostels . called Hafaldan in Seydifjordur which are partner hostels. You need to actually type ‘The Old Hospital’ into google maps to get to the right one. I’d kicked my boots off and got chatting to some other travellers before we realised I was in the wrong place and had to jump in my car and head back into town.

Make sure when you are here that you take the time to explore the small town Seydifjordur. It’s seriously cute with its rainbow brick road!

raindow road to church at seydisfjordur

Stop 5: Hofn – Hofn Hi Hostel

For one of the larger towns you will encounter in this region of Iceland, Hofn had surprisingly few hostel options (though many more expensive hotels where you can stay.) Whilst Hofn hostel was a little more basic than my previous few hostels in Iceland, it was comfortable and sociable and kept very clean.

My favourite thing about this hostel was the availability of plug sockets. Sounds something silly to get excited over but trust me, this is the downside to staying in hostels. There is always a fight over the plug sockets and with so much camera gear to charge up overnight, I appreciated how easy this was at Hofn Hostel!

It’s also very sociable with a large open plan lay out and several group tables – it’s easy to get chatting to other backpackers here.

It’s a little out of town on a housing estate but with a free carpark attached, it’s easy to nip into town for food if you wish.

Stop 6: Vik – Vik Hi Hostel

Another fairly large town (I mean this one EVEN has a supermarket) but again, few choices of where to stay if you are set on staying in hostels in Iceland!

This is an old house set up on a hill overlooking pretty Vik. It’s a little old and rambling but in a sort of charming way.

Again, I found this to be very clean and friendly. The rooms were a little small but what it lacked in dorm space was made up for with breakfast. Breakfast was free (yep actually FREE) and was amazing! I made sure to totally stuff my face given that eating out in Iceland sometimes involves selling a kidney so a free brekkie was a massive bonus. There were even waffles…

Top tip: when you are leaving Vik hostel, drive past the little church and up the hill a bit. You’ll have a great view overlooking charming Vik that you may well have seen on postcards!

Stop 7: Sejalandfoss – Nice Hostel

Well the name here is pretty damn accurate! The Nice Hostel was actually one of my favourites despite not being that enthralled after seeing the photos on  The pictures really don’t do it any justice!

One thing I noticed here was that it seemed like a really mature version of a hostel! I mean they even had quiet jazz music playing in the background and a posh coffee machine!

Again, breakfast was free and was amazing! Alongside your posh coffee, you will be spoilt with fruit, cereals, toast and pastries.

The dormitories were spacious and the beds were actually really comfy – I had such a peaceful night’s sleep.

Even showering was a more pleasant experience in the Nice Hostel – there were areas designated for doing your hair and makeup with powerful hairdryers provided. A real treat after allowing my hair to air dry throughout my whole trip! (Top tip for those of you with unruly hair, consider a keratin blow dry before you travel. Seriously, it’s AMAZING!)

The Nice Hostel, sejalandsfoss, one of the best hostels in iceland on the south part of the ring road

The best thing about the Nice Hostel was it’s proximity to Sejalandsfoss – one of the most beautiful waterfalls you will see in Iceland! Without a doubt, you need to go here for sunset. The golden sun bounces off the waterfall during golden hour and sunset seen from behind the fall is just spectacular. The Nice Hostel is a 2-minute drive away so you can take your time here getting amazing photos and soaking up the scenery! (Rather literally! Don’t forget to protect your camera from the spray with a rain cover!)

Seljalandsfoss waterfall in south iceland bathed in golden light just before sunset

Stop 8: Keflavik – The Base Hostel

This will be your final stop and you should totally make sure to visit The Blue Lagoon for sunset here.

ariel view of the blue lagoon in iceland

This hostel certainly isn’t flashy but it’s super convenient being just 5 minutes from the airport, it’s perfect for your early morning flight!

The hostel is huge so it loses a bit of character. But the bed was the comfiest I slept in – shame it was for only a few hours! There’s also a nice pub in the basement of one building to spend a bit of time.

The hostel is so large that it’s split into 2 buildings. You’ll find reception in the building furthest from the carpark.

Heads up, don’t expect a brilliant night sleep here. As it’s so close to the airport, people will be leaving at all hours to catch their flight. If your beauty sleep is important to you, maybe look at booking a hotel in Keflavik. If you just want to save money (since you will be up at the crack of sparrows no doubt anyway) then choose the Base Hostel.

Whilst these hostels varied from clean but basic to charming and brimming with character, I would be willing to stay at any of these again. In general, the hostels in the South are a little more basic but always clean and comfortable. And let’s face it, you won’t spend much time there anyway! At the top of your priority list for accommodation on the ring road should be convenience. You have a lot of miles to cover and a LOT of things to see and do. You want to make sure the places you stay are convenient and don’t require any backtracking to get to. If you do want to stay somewhere luxury, be warned, you will have to pay $$$$! Iceland is certainly not cheap!

Now here are a few other articles you may find useful…

You also might want to consider joining my Facebook group; Iceland Tips & Advice. Feel free to ask as many questions as you like there and I will do my best to answer them!

Or browse my Iceland Tips Board on Pinterest which is full of the articles I read when I was planning my own trip!

As always, I love to hear from you. Have you stayed in any of these hostels or do you have any questions? Feel free to use the comment box below! And if you’re feeling super generous and would like to share my article on Pinterest, Twitter or Facebook then, well, I’d be really chuffed!