9 Best Hotels in East Iceland and the Eastfjords, Iceland

What began as minimalist rooms with shared bathrooms and a kitchen inside a renovated fish factory now encompasses hotel-standard rooms with private balconies, plus well-appointed, family-size apartments. The spa here has saunas and hot tubs overlooking the sea, with the options of beer and seaweed baths, too. The on-site restaurant-bar Frystiklefinn serves a range of locally sourced dishes. The cherry on top of it all: an on-site craft brewery and distillery.

This historic lakeside farm saw the town grow up around it and began offering guesthouse services in 1884. It has since transformed into a modern 50-room hotel, with a mix of older and more modern rooms as well as a quality restaurant and spa.

Evidence that Icelanders will renovate almost any building to turn it into a guesthouse, the Milk Factory was once—you guessed it—a milk factory, and the stylish redesign has resulted in modern, minimalist rooms, including family rooms that sleep four (with beds on a mezzanine level). It's a friendly place with thoughtful touches, and it's open year-round.

The photogenic cluster of small red cottages by the shore on the east side of the fjord belongs to Mjóeyri—a local family-run travel service offering accommodations and activities. Apart from the cottage accommodations, you can also stay in the main guesthouse (cheaper rooms with shared bathroom). Views from the property are sensational, especially from the small boat that's been converted into a hot tub.

A gem of a guesthouse, Við Lónið has gorgeous rooms featuring either beautiful views over the fjord or the charming scene over Rainbow Road. The cozy tungsten lighting and oil paintings add warmth and a touch of vibrancy to the classy, minimalist Scandinavian design. Rooms facing toward the fjord have private balconies.

Set amid big, bucolic landscapes about 13 km (8 miles) south of Djúpivogur, Bragðavellir is a family-run farm with a collection of cozy timber cottages, with one or two bedrooms. Each has a small kitchen, though the farm has a Barn Restaurant open in the summer that showcases local ingredients. 

This modern, Nordic-chic hotel has large portrait windows in the lounge that frame the cliffs outside. There's lots of comfort here but not a huge amount of personality, though the restaurant and lounge areas can get lively, especially during the 4 pm to 6 pm happy hour.  

Spread across three properties, Hotel Aldan takes up much of the town: the reception and restaurant are located next to the famous Rainbow Road while the guest rooms are found in fjordside Snæfell (also known as the Old Post Office) and the renovated Bankinn, or Old Bank. Both locations have lots of vintage character; rooms in Bankinn are slightly larger and more luxurious while the Snæfell rooms are more boho chic and share a kitchen. The hotel also operates two apartments in the town that can each sleep up to six people.

The main building of Hótel Framtíð, which means "Hotel of the Future," was once a store and then a post office before it was converted into a hotel in 1987. Rooms are clean and comfortable, but lacking in character. The hotel manages a handful of buildings around town, including cheaper guesthouse and hostel lodgings, and some larger modern apartments.