2 Best Hotels in Flúðir, Reykjanes Peninsula and the South Coast (with the Golden Circle)

Despite being in a simple turf house, the Torfhús Retreat is one of the most luxurious hotels in all of Iceland. Mixing heritage Icelandic style with modern amenities and true high-end service, a night in one of their delightfully rugged guesthouses will be one you won't forget. Their basalt stone hot pool is also a nice touch. 

Hidden in the trees in Reykholt is this charming wooden cottage with cozy rooms. The owners are very attentive and warm, and they serve a great breakfast buffet.