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Where to stay in Reykjavik on a budget: Hlemmur & Borgartún

Updated October 20, 2026 · Ranked by Axel from research, its own hotel reviews and recent rates · How we rank

Hlemmur & Borgartún is the budget winner, combining the strongest hotel value with access to eastern Laugavegur and walks west toward downtown. Laugardalur is runner-up, with below-city-median hotel rates plus hostel and campsite options. The choice is practical city access versus pools and parks, with construction the important Hlemmur caveat.

  1. Storm Hotel by Keahotels, Hlemmur & Borgartún
    #1 for travelers on a budget

    Hlemmur & Borgartún

    food-hall lunches · office streets · eastern Laugavegur · seafront walks · street works

    7.6/10

    The strongest hotel value and below-city-median rates make this the budget lead; check construction and temporary bus stops.

    Getting around
    9.5
    On your doorstep
    4.8
    Hotels
    7.8
    Value
    6.1
    Axel’s verdict
    7.2

    Hlemmur is where Laugavegur meets a more everyday city of food-hall lunches, bus stops and the offices along Borgartún. It suits work trips near Höfðatorg and travellers happy to walk west for sightseeing. The seafront by Höfði gives this end of town an alternative to the shopping street.

    Best for
    business trips and conventionstravelers on a budgetshopping
    Skip it if
    Construction disruption would spoil your stay; You want Old Town character immediately outside
    Getting around
    Bus 12 serves Borgartún, with other routes using temporary stops around Hlemmur; walk west along Laugavegur; KEF: Flybus via BSÍ and booked onward shuttle; RKV: taxi.
    After dark
    The Laugavegur end retains late-night eating, while visitors staying farther east describe quieter nights; choose the street rather than assuming uniform calm.
    Where to look
    Hlemmur square. Choose this end of Laugavegur for food-hall meals and shopping, but expect construction and changing access through late 2027.Þórunnartún near Borgartún. Look toward Borgartún for a practical business-area base rather than historic streets; the waterfront offers an alternative walking route.Brautarholt–Mjölnisholt. Try these blocks for a more everyday setting with coffee stops, while keeping Hlemmur's eating options within reach.

    Top hotels by Axel's take

    Typical Axel rate $202 a night · usually 12% under the public rate
    1. 1. Storm Hotel by Keahotels8.8
    2. 2. Midgardur by Center Hotels8.7
    3. 3. Fosshotel Reykjavik8.5
    See all 8 hotels in Hlemmur & Borgartún, ranked
  2. Hotel Lotus, Laugardalur
    #2 for travelers on a budget

    Laugardalur

    geothermal swimming · botanical gardens · family recreation · sports grounds · quieter evenings

    7.2/10

    Below-city-median hotel rates, a hostel and a campsite widen the options, but downtown trips need planning.

    Getting around
    8.1
    On your doorstep
    2.9
    Hotels
    8.0
    Value
    5.2
    Axel’s verdict
    6.3

    Laugardalur is for a different rhythm: swimming at Laugardalslaug, walks through the botanical garden, children at the Family Park and Zoo, and sport around Laugardalsvöllur. Ásmundarsafn adds sculpture without a trip downtown. The hostel and campsite give budget travellers a reason to look here beyond the park, especially on longer stays.

    Best for
    familiestravelers on a budgeta quiet staysports fans
    Skip it if
    You want to walk home from downtown nightlife; Your short visit centres on Old Town sightseeing
    Getting around
    Bus 14 serves Laugardalslaug, with routes 2 and 5 useful elsewhere nearby; pool and park attractions are walkable; KEF: Flybus via BSÍ with a confirmed onward transfer; RKV: taxi.
    After dark
    Expect pool-going rather than bar-hopping: Laugardalslaug opens into the evening, while the district's appeal is its calmer recreational setting.
    Where to look
    Sundlaugavegur by Laugardalslaug. Start around the pool for swimming and park-focused days; this recreational setting suits families better than downtown nightlife seekers.Suðurlandsbraut near Reykjavegur. Choose the park's southern approach for sports events and nearby restaurants, rather than repeated trips back from downtown.Ármúli–Hallarmúli. Look south of the park for a practical base near places to eat; drivers suit this setting better than nightlife-focused visitors.

    Top hotels by Axel's take

    Typical Axel rate $229 a night
    1. 1. Hotel Lotus9.1
    2. 2. Reykjavik Lights by Keahotels8.8
    3. 3. Hótel Múli8.6
    See all 8 hotels in Laugardalur, ranked
  3. Reykjavik Residence Apartment Hotel, Laugavegur & Hallgrímskirkja
    #3 for travelers on a budget

    Laugavegur & Hallgrímskirkja

    independent shops · rainbow street · bakery mornings · bar-hopping · church views

    6.9/10

    Rates sit close to the city median, with strong hotels and central convenience balancing the higher accommodation cost.

    Getting around
    9.7
    On your doorstep
    7.4
    Hotels
    8.5
    Value
    5.0
    Axel’s verdict
    8.9

    Laugavegur puts shops, bakeries and bars outside the door; Skólavörðustígur climbs through galleries and the rainbow-painted stretch to Hallgrímskirkja. Sundhöllin adds a neighbourhood pool rather than another sightseeing stop. This is the strongest choice for shopping and LGBTQ+ nightlife, with Kíkí on Laugavegur rather than in a separate gay district.

    Best for
    first-time visitorsnightlifeshoppingLGBTQ+ travelers
    Skip it if
    You are a light sleeper considering a main-street room; You dislike busy shopping streets
    Getting around
    Bus 14 runs along nearby Hverfisgata; the church, shopping streets and downtown are walkable; KEF: Flybus via BSÍ and a booked onward shuttle; RKV: taxi.
    After dark
    Laugavegur becomes a bar-hopping street; visitors seeking less noise favour nearby residential streets rather than the main frontage.
    Where to look
    Laugavegur, Klapparstígur to Barónsstígur. Stay along this shopping stretch for cafés, shops and nights out; main-street convenience comes with evening bustle.Hallgrímstorg. Start around the church square for sightseeing uphill from the main shopping street, rather than directly along its bar frontage.Barónsstígur by Sundhöllin. Choose the pool end of Barónsstígur for swimming between outings, with the church and shopping streets nearby.

    Top hotels by Axel's take

    Typical Axel rate $247 a night · usually 7% under the public rate
    1. 1. Reykjavik Residence Apartment Hotel9.2
    2. 2. Alda Hotel Reykjavik8.8
    3. 3. Skuggi Hotel by Keahotels8.7
    See all 9 hotels in Laugavegur & Hallgrímskirkja, ranked
  4. Hotel Local 101, Old Harbour & Grandi
    #4 for travelers on a budget

    Old Harbour & Grandi

    working harbour · converted warehouses · seafood · maritime museums · design workshops

    6.5/10

    Choose it for harbour character rather than savings; typical hotel rates sit above the city median.

    Getting around
    9.4
    On your doorstep
    6.8
    Hotels
    7.8
    Value
    4.9
    Axel’s verdict
    8.0

    Grandagarður still feels like a working waterfront, with old industrial buildings reused for food, design and museums. The Maritime Museum and Grandi's food hall make it especially good for travellers who enjoy a harbour walk between meals. The Reykjavík Grapevine's 2026 dining guide also singles out the food hall's range.

    Best for
    couplesfood lovers
    Skip it if
    You want downtown's bars immediately outside; You want to minimise walks back between outings
    Getting around
    Buses 3 and 14 serve Grandi; harbour museums are walkable and downtown is a longer stroll; KEF: Flybus via BSÍ with a booked onward shuttle; RKV: taxi.
    After dark
    More dinner-led than club-led: local reporting describes the food hall as quieter in the evening, while visitors mention music around harbour-side dining.
    Where to look
    Tryggvagata–Mýrargata. Choose the near-town harbour edge for boat departures and dockside meals without heading deep into Grandi.Grandagarður near Seljavegur. Look here for maritime museums, reused industrial buildings and leisurely food stops; it suits harbour-focused days rather than downtown bar-hopping.

    Top hotels by Axel's take

    Typical Axel rate $256 a night · usually 6% under the public rate
    1. 1. Hotel Local 1018.8
    2. 2. Exeter Hotel8.7
    3. 3. Grandi by Center Hotels8.7
    See all 4 hotels in Old Harbour & Grandi, ranked
  5. Hotel Reykjavik Centrum, Old Town & Harpa
    #5 for travelers on a budget

    Old Town & Harpa

    historic streets · café squares · waterfront architecture · late-night bars

    6.2/10

    Excellent convenience and strong hotels come with the weakest value here and typical rates above the city median.

    Getting around
    9.6
    On your doorstep
    7.8
    Hotels
    8.5
    Value
    4.4
    Axel’s verdict
    9.2

    Old Reykjavík around Aðalstræti and Austurvöllur makes an easy all-round base: older streets, the Settlement Exhibition, Tjörnin and the harbourfront fit naturally into the same day. Harpa adds concerts and conferences without separating you from the older town. Stay here when you want to wander out for dinner rather than organise each outing.

    Best for
    first-time visitorsmuseums and cultureluxury travelerstravelers without a car
    Skip it if
    You need reliably quiet nights; You want a residential rather than visitor-focused setting
    Getting around
    Bus 14 serves Lækjartorg; Old Town, Harpa and the harbour are walkable; KEF: Flybus to BSÍ with a booked onward shuttle; RKV: taxi is simplest.
    After dark
    Central bars keep Austurstræti and adjoining streets lively late; do not treat a square-facing room as a quiet option.
    Where to look
    Ingólfstorg and Aðalstræti. Start here for old-town wandering and easy dinners; nearby bars make this less suitable for early sleepers.Smiðjustígur–Þingholtsstræti. Choose these central side streets for shopping and bar-hopping, not an escape from downtown nightlife.Austurbakki by Harpa. Look here for waterfront walks and concert evenings while keeping the older town within walking distance.

    Top hotels by Axel's take

    Typical Axel rate $270 a night
    1. 1. Hotel Reykjavik Centrum8.9
    2. 2. Canopy by Hilton Reykjavik City Centre8.8
    3. 3. Reykjavik Konsulat Hotel, Curio Collection by Hilton8.8
    See all 9 hotels in Old Town & Harpa, ranked

This ranking weights how well each neighborhood fits travelers on a budget at 20%, then getting around, things to do, hotels and value. How Axel ranks neighborhoods

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