Iceland has been called one of the most beautiful and majestic countries in the world. It is no surprise that this island is loved by everyone who visits it. There are stunning waterfalls, spectacular lava fields, black beaches and majestic volcanic peaks. It’s a country I have loved since childhood.

However, this beauty comes with a price. Iceland is extremely costly. Even if you are a frugal traveler, blowing your budget in Iceland doesn’t take long.

The Land of Fire and Ice is home to a well-traveled backpacker trail that passes through hostels, which can make your stay more affordable.

There are many things you should consider before choosing a hostel. After more than a decade of backpacking the world, I have learned what makes a hostel great. These are the top four things to look for:

Location Iceland is scattered and can be difficult to find your way around. It would help if you chose a hostel close to the attractions you wish to visit and the nightlife you desire to experience. The hostels are all centrally located.

Price In Iceland, you get what you pay. If you choose an expensive hostel, you’ll likely get one with cramped service and poor quality.

Amenities Most hostels provide free Wi-Fi, and some offer breakfast. But, if you need more, do your research to find the one that meets your needs.

Staff All hostels on this page have an amazing staff! They are friendly and extremely knowledgeable. Even if you do not stay at any of these places, you can still look up reviews and make sure you find somewhere that has friendly staff! You can make or break a hostel.

Below is my list of the top Icelandic hostels to help you plan your trip. All of them offer a welcoming respite, a comfortable and friendly place for you to rest your tired head and meet fellow travelers while keeping your budget in check.

KEX Hostel (Reykjavik)

The hostel accommodates 200 people and is located in an old biscuit factory. Sex, the Icelandic word meaning “biscuit” or “cookie”, is where it is found. The huge Scandi-industrial-chic space has various types of rooms: mixed dorms, female-only dorms, private double rooms, and rooms that can accommodate families. You will need your lock, although lockers are available in the dorms.

A hostel is a social place, and it has a bar that makes it easy to meet new people. It is also home to artists and designers who have lived there for a long time, adding a creative, hip element to the area. The complex also features a heated outdoor terrace and kitchen facilities. It is centrally located, making it easy for you to travel around the city.

The Freezer (Snaefellsbaer).

The Freezer, located in Snaefellsbaer, western Iceland, is small. It has only four rooms and can hold 22 people. It makes up for its small size with lots of fun. It’s a laid-back hostel for backpackers that is friendly and open to all. The tiki bar in the hostel is lively during the happy hour, which runs from 6-8 pm. Many board games are available in the common areas, as well as regular events such as film screenings, quizzes at the pub, and live music.

Akureyri Backpackers (Akureyri)

This hostel is in the middle of town, near bars, restaurants and coffee shops. It’s about as lively as you will find in Akureyri’s northern town. The in-house bar offers a selection of local beers on tap and a variety of non-Icelandic comfort foods/tummy fillers such as nachos and burgers.

On three floors there are 103 beds. These include single-gender dorms and mixed dorms. There are also private rooms. Although the dorm beds are not very comfortable, lockers are available, and the rooms are quite spacious. You can even find a sauna in the kitchen!

Bus Hostel (Reykjavik)

This modern hostel is located in a residential area, about 15 minutes from central Reykjavik. Despite its name, it is not housed in an old bus or has a bus theme. The hostel is close to the main bus station, making it easy to get to and from the airport. There are three types of rooms: private rooms, mixed dorms and female-only dorms. The Icelandic hostels offer linens as an unusual perk. Buzz is an excellent place to try any four beers on tap. The bathrooms are clean and modern, with excellent shower pressure. Although the kitchen is adequate, it can be busy, so ensure you get there early if you plan on cooking.

Hafnarstraeti Hostel (Akureyri)

The capsule rooms in this modern hostel are perfect for sci-fi lovers who want to experience Iceland’s futuristic side. You’ll have your pod, which seals shut and allows you to sleep comfortably without distractions. These pods are large and come with plugs, storage space and a screen. The beds are very comfortable, and the bathrooms are spotless.

If you are not in your pod, come to the common room to play billiards and board games with other travelers.

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