The Most Extraordinary Hotels in Iceland
- The Blueberry Trails
- Jul 31
- 8 min read
There is a particular kind of traveller who chooses Iceland not just for what they will see, but for where they will stay.
This makes sense once you have been there. Iceland's landscapes are so dramatic, so otherworldly, that the line between accommodation and experience tends to blur. A hotel here is rarely just a place to sleep. It is a vantage point for the aurora. A geothermal ritual built into volcanic rock. A wooden lodge at the edge of the inhabited world, reachable only by superjeep.
We have curated five hotels that capture this idea perfectly — each one extraordinary in a completely different way. Whether you are planning a honeymoon, a Northern Lights chase, or simply the trip of a lifetime, this list will help you choose the stay that matches the journey you want to have.
1. Hotel Rangá — For the Aurora Chaser
Location: Hella, South Iceland — approximately 90 minutes from Reykjavik
There are hotels that offer a Northern Lights view, and then there is Hotel Rangá — a property that has built its entire identity around the aurora since 2005, when it became one of the first hotels in Iceland to offer a dedicated wake-up call service for guests the moment the lights appear.
Set on the banks of the Eystri-Rangá river, far from any artificial light pollution, Rangá is countryside luxury at its most characterful — a log-cabin atmosphere, themed suites inspired by the continents, and a kitchen known for serving Icelandic delicacies like reindeer fillet alongside an exceptional wine list.
What makes it extraordinary: Three outdoor hot tubs sit directly facing the river and open sky — guests regularly watch the aurora unfold while soaking in geothermally heated water, often with a glass of something good in hand. For the more scientifically inclined, Rangá has its own observatory with a roll-off roof and two high-quality telescopes, with a local astronomer available on clear nights to guide guests through the constellations. The hotel even lends out snowsuits and blankets so guests can comfortably wait outside for the show to begin.
Best for: Aurora chasers, couples seeking romance without pretension, and anyone who wants their Golden Circle and South Coast base to feel like a destination in itself.
2. Highland Base Kerlingarfjöll — For the Off-Grid Adventurer
Location: Kerlingarfjöll, Iceland's central highlands
If Rangá is countryside luxury, Highland Base is something else entirely — Iceland's wild interior, made accessible for the first time.
Opened in 2023 by the team behind The Retreat at Blue Lagoon, in collaboration with Basalt Architects, Highland Base sits at the foot of the Kerlingarfjöll mountain range — a remote, volcanic, copper-hued landscape that has long been beloved by Icelanders but largely inaccessible to international travellers. The hotel's wooden buildings, with their angular rooflines and vertical timber cladding, echo the jagged peaks around them, built using sustainable cross-laminated larch designed to flex rather than crack in the brutal highland cold.
What makes it extraordinary: Getting there is genuinely part of the experience. During winter, the highland roads are impassable by standard vehicle, so the hotel transports guests via professionally driven 4x4 superjeeps across a roadless, snow-covered landscape. Once you arrive, Highland Base offers 46 rooms, two suites, and six standalone lodges — all with sweeping views of the surrounding mountains — alongside geothermal baths where you can soak away the day's hike, and a restaurant serving hearty, locally inspired fare. This is not the place for five-star polish; it is the place for travellers who have already seen Iceland's highlights and now want the country's wild, untouched heart.
Best for: Adventurous travellers who have done the Golden Circle before, hikers, and anyone seeking a genuinely off-the-beaten-path Iceland experience.
3. ION Adventure Hotel — For the Design Purist
Location: Golden Circle area, near Thingvellir National Park — approximately 75 minutes from Keflavik
ION is what happens when sustainable design and dramatic landscape meet in perfect balance. Built on the site of a former workers' inn for the nearby Nesjavellir Geothermal Power Plant, the hotel was constructed almost entirely from reclaimed and local materials — driftwood, lava stone, and Icelandic wool — and seems to dissolve into the moss-covered terrain around it rather than interrupt it.
Located just thirty minutes from Thingvellir National Park, a UNESCO World Heritage Site and one of the three stops on the classic Golden Circle route, ION strikes a rare balance: genuinely remote enough for excellent stargazing, yet close enough to Reykjavik (under an hour) for easy access.
What makes it extraordinary: The hotel's Northern Lights Bar is the standout feature — a striking, glass-walled space cantilevered over the lava field, offering uninterrupted panoramic views that make aurora watching feel like a front-row seat rather than a stroll outside. All 44 rooms carry a minimalist Nordic aesthetic — light woods, soothing neutral tones, and original work by contemporary Icelandic artists — while the spa offers geothermal pools, a sauna, and treatments using local herbs. Like Hotel Rangá, ION offers a nightly aurora wake-up call for guests hoping to catch the lights.
Best for: Design-conscious travellers, couples, and solo travellers who want boutique sophistication paired with genuine sustainability credentials.
4. The Retreat at Blue Lagoon — For the Ultimate Indulgence
Location: Grindavík, near Keflavik Airport
If there is one hotel that defines what "extraordinary" means in an Icelandic context, it is The Retreat at Blue Lagoon. Built directly into an 800-year-old lava field, with much of the property carved below ground level, The Retreat is less a hotel than an architectural and geothermal experience — widely considered a rite of passage for first-time visitors to Iceland.
The design, by Basalt Architects and Design Group Italia, takes its cues directly from the mossy lava landscape and the lagoon's striking milky-blue water, resulting in interiors that feel sculpted rather than built — rough volcanic stone walls juxtaposed against warm wood, soft textiles, and floor-to-ceiling glass.
What makes it extraordinary: Guests at The Retreat have private access to a secluded section of the Blue Lagoon, exclusively reserved for hotel residents — meaning you can experience Iceland's most famous geothermal spa without the crowds that visit as day guests. The in-house spa, the Michelin-recognised Moss Restaurant, and suites that open directly onto private lagoon-fed pools combine to create an experience that is, without exaggeration, one of the most singular hotel stays anywhere in the world.
Best for: Honeymooners, couples celebrating a milestone, and anyone who wants their first (or every) Iceland trip to begin with an unforgettable arrival.
Must Read: 10 Unforgettable Things to Do in Iceland in Summer – A Curated Guide to Luxury Travel Experiences
5. The Reykjavik EDITION — For the City Sophisticate
Location: Old Harbour, Reykjavik
Not every extraordinary Iceland stay needs to be remote. The Reykjavik EDITION proves that the country's capital can hold its own against the wild landscapes that surround it.
Designed by hospitality visionary Ian Schrager in partnership with Marriott International, The Reykjavik EDITION is widely regarded as Iceland's most stylish city hotel — a five-star property that sits directly on the Old Harbour, just steps from the striking glass facade of the Harpa Concert Hall. The 253 rooms and suites are finished with warm oak floors, locally sourced volcanic stone, and Icelandic wool blankets — cosmopolitan minimalism with a distinctly Nordic soul.
What makes it extraordinary: Panoramic views stretch out across Faxaflói Bay toward Mount Esja, or over the colourful rooftops of central Reykjavik, depending on your room. The hotel's restaurant and bar scene has quickly become part of the city's social fabric, and its location means you are within easy walking distance of Reykjavik's best restaurants, galleries, and the iconic Hallgrímskirkja church. For travellers who want to bookend a wilder Iceland itinerary with a few nights of pure urban polish, this is the hotel to do it in.
Best for: City lovers, design enthusiasts, and travellers wanting a sophisticated start or finish to their Iceland journey.
How to Choose: A Quick Comparison
Hotel | Setting | Signature Experience | Best For |
Hotel Rangá | Countryside, South Iceland | Aurora wake-up calls, riverside hot tubs, observatory | Aurora chasers, couples |
Highland Base Kerlingarfjöll | Remote central highlands | 4x4 access, geothermal baths, volcanic wilderness | Adventurers, repeat visitors |
ION Adventure Hotel | Golden Circle, near Thingvellir | Northern Lights Bar, sustainable design | Design lovers, boutique stays |
The Retreat at Blue Lagoon | Grindavík, near Keflavik | Private lagoon access, lava-built suites | Honeymooners, first-timers |
The Reykjavik EDITION | Reykjavik city, Old Harbour | City views, Harpa proximity, five-star polish | City sophisticates |
The TBT Way: Designing Your Iceland Stay
At The Blueberry Trails, we believe where you stay shapes how you experience a destination — and nowhere is this truer than in Iceland. A night at Highland Base feels nothing like a night at The Reykjavik EDITION, and neither should it. Each property on this list offers a genuinely different relationship with the landscape, and the best Iceland itineraries often combine two or three of these — a few nights of remote wonder, balanced with a few nights of considered indulgence.
Our curated Iceland holidays are built around exactly this kind of thoughtful pacing — pairing the right stays with the right experiences, so that every part of your journey, from the moment you land to the moment the aurora finally appears overhead, feels considered.
Frequently Asked Questions - Most Extraordinary Hotels in Iceland
Which is the best hotel in Iceland for seeing the Northern Lights? Hotel Rangá and ION Adventure Hotel are both renowned for their dedicated Northern Lights wake-up call services, minimal light pollution, and outdoor viewing spaces. Highland Base Kerlingarfjöll, due to its extreme remoteness, also offers exceptional aurora visibility for travellers willing to make the journey.
What is special about The Retreat at Blue Lagoon? The Retreat at Blue Lagoon is built directly into an 800-year-old lava field and offers guests private, exclusive access to a secluded section of the Blue Lagoon — Iceland's most famous geothermal spa — without the crowds of day visitors. It is widely regarded as one of the most architecturally significant hotels in the world.
Is Highland Base Kerlingarfjöll difficult to reach? Yes, intentionally so. The hotel is located deep in Iceland's central highlands, and during winter the roads are only accessible via a 4x4 superjeep arranged by the hotel, as standard vehicles cannot make the journey. This remoteness is precisely what makes the experience so extraordinary.
Which Iceland hotel is best for a honeymoon? The Retreat at Blue Lagoon is the most popular choice for honeymooners, thanks to its private lagoon access and indulgent suites. Hotel Rangá is also a wonderful romantic option for couples who prefer a countryside, Northern-Lights-focused stay.
Can I stay in Reykjavik city and still see the Northern Lights? Light pollution makes aurora viewing more difficult directly within Reykjavik, though on strong activity nights it is sometimes visible. Most travellers combine a stay at a city hotel like The Reykjavik EDITION with one or two nights at a countryside property such as Hotel Rangá or ION Adventure Hotel for dedicated aurora viewing.
Plan Your Iceland Journey With The Blueberry Trails
Iceland rewards travellers who take the time to choose their stays as carefully as their itinerary. Whether you are drawn to the drama of the highlands, the indulgence of a private lagoon, or the polish of a city hotel on Reykjavik's harbour, there is a stay on this list that will define your trip. Contact us to know more.
The Blueberry Trails is a Mumbai-based curated travel company designing international holiday packages for Indian travellers from Mumbai, Delhi, and Bengaluru. Every journey — and every stay — is chosen with intention.
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