Reykjavik on a Budget: A Practical Guide
How to navigate Iceland's capital without overspending on every meal and hotel.
Reykjavik is a compact capital that you can explore entirely on foot. While Iceland has a reputation for high prices, you can manage your daily spend by avoiding luxury hotels and sticking to local favorites. The city center is dense, meaning you do not need to spend money on local transport once you arrive.
Where to Stay
Your biggest expense will be your room. To keep costs low, you should look at hostels in the City Centre or the Grandi neighborhood.
Budget Lodging
70 to 110 dollars per night is the range for a bed at Loft HI Hostel in the City Centre. This is a strong choice if you want a social scene and a rooftop bar. If you prefer an industrial atmosphere, Kex Hostel in Grandi costs between 80 and 120 dollars. Staying in Grandi puts you within walking distance of the Old Harbour.
Mid-Range and Luxury
If you have more to spend, CenterHotel Plaza and Hotel Borg in the City Centre range from 150 to 210 dollars. For high-end stays, The Reykjavik EDITION in Laugavegur and Hotel Reykjavik Residence in Austurstræti cost between 240 and 350 dollars.
How to Eat Cheaply
Dining in Reykjavik can be expensive, but there are ways to eat well for under 20 dollars.
3 euros is the approximate cost of a pylsur from a stand on Skólavörðustígur. These are topped with raw onions, ketchup, and remoulade. For a more famous version, 5 dollars gets you a sausage with all the fixings at Bæjarins Beztu Pylsur.
15 euros is the price for a bowl of lamb soup at a small bistro in the Austurstræti area or at Café Loki. This is a filling, traditional meal that uses locally sourced meat. If you need a caffeine fix, most espresso drinks at sidewalk cafés cost about 5 euros.
Low-Cost Activities
You can see a large portion of the city without spending any money.
0 dollars is the cost to enter the Harpa Concert Hall. You can spend about 30 minutes exploring the glass façade and the interior. If you want to get out of the city center, a short walk takes you to the Grotta Lighthouse at the end of the Seltjarnarnes peninsula, which is free and takes about 1 hour.
Öskjuhlíð is another free option. This forested hill offers walking trails and city vistas and takes about 1.5 hours to explore.
If you are willing to pay a small fee, 12 dollars gives you access to the tower of Hallgrímskirkja. The 10 minute climb provides a panoramic view of the red roofed houses. For those interested in history, the National Museum of Iceland costs 15 dollars and takes about 2 hours to tour.
Getting to the City
50 km southwest of the city is where Keflavík International Airport (KEF) is located. This is the only international gateway for regular flights. If you are flying from New York (JFK or EWR), the nonstop flight time is 5 hours and 30 minutes. From London (LHR), the flight is 2 hours and 45 minutes.
Estimated Daily Budget
The following table shows a realistic daily spend for a budget traveler.
| Expense | Budget Option | Estimated Cost |
|---|---|---|
| Lodging | Loft HI Hostel | $70 to $110 |
| Breakfast | Grocery store/Hostel | $5 to $10 |
| Lunch | Bæjarins Beztu Pylsur | $5 |
| Dinner | Café Loki (Lamb Soup) | $15 |
| Activities | Harpa / Öskjuhlíð | $0 |
| Drinks | Kex Hostel Bar | $10 |
| Total | $105 to $150 |
What Not to Cut
You should not skip the 12 dollar ticket for the Hallgrímskirkja tower. While you can see the church from the street for free, the view from the top is the best way to understand the layout of Reykjavik. Similarly, do not skip the lamb soup. At 15 dollars, it is one of the most affordable ways to experience authentic Icelandic cuisine without paying for a full restaurant tasting menu.
On the other hand, you can skip the high-end dining at Matbar if you are on a strict budget. The cost of a formal dinner will likely exceed your entire daily food budget.
Final Takeaway
The secret to Reykjavik on a budget is utilizing the walkability of the City Centre and Grandi. If you stick to pylsur for lunch and free nature spots like Grotta Lighthouse, you can offset the high cost of lodging. Focus your spending on the few iconic views that are actually worth the price.