• James Taylor

Eco Friendly Hotels in Iceland: The 10 Best Sustainable Hotels

Updated: Jan 12

Sustainable travel has never looked so good. Discover the best eco-friendly hotels in Iceland for a low-impact adventure in the land of fire and ice.

A eco-friendly hotel in Iceland surrounded by lava
The ION Adventure Hotel in Iceland is one of the best eco friendly hotels in Iceland

Iceland in the far north Atlantic Ocean is a hot spot for eco-friendly hotels and sustainable stays. With geothermal energy bursting from the ground, endless opportunities for outdoor adventures, and sustainably sourced cuisine, it’s a fantastic choice for a low-impact vacation. To help you offset your stay in the country, we’ve picked out the 10 best eco-friendly hotels in Iceland.

Jump Ahead:

  1. Grand Hotel, Reykjavik

  2. The Retreat at Blue Lagoon, Reykjanes Peninsula

  3. Eyja Guldsmeden Hotel, Reykjavik

  4. ION Adventure Hotel, the Golden Circle

  5. Hotel Fljósthlíð, South Iceland

  6. Von Guldsmeden Hotel, Reykjavik

  7. Hotel Eldhestar, South Iceland

  8. Hotel and Guesthouse Rauðaskriða, Northeast Iceland

  9. Loft Hostel, Reykjavik

  10. Reykjavik City Hostel


1. Grand Hotel, Reykjavik

The Grand Hotel in Reykjavik is all about low-impact luxury in the Icelandic capital. This is the only accommodation option in Iceland that has both a Nordic Swan Ecolabel and a Gold Class environmental rating from Vakinn. As such, it’s one of the best choices for a sustainable hotel in Reykjavik.

Rooms are plush and modern, there’s an onsite spa, and the restaurant sources sustainable, organic ingredients for their dishes. Amenities are all from local organic companies, and the hotel takes serious care when it comes to food wastage.

There are also a few charging stations for electric vehicles in the parking area. Located 10 to 15-minutes’ walk from downtown, guests are close enough to the action without being in the middle of it all. It’s the perfect choice for a sustainable city break with a quick escape route into the countryside.

The Grand Hotel Reykjavik, one of the best environmentally friendly hotels in Iceland
The Grand Hotel in Reykjavik is an environmentally friendly hotel just outside the city centre

2. The Retreat at Blue Lagoon

The Retreat at Blue Lagoon is environmentally friendly opulence at its best. This exclusive spa sits a few levels above the Blue Lagoon, switching out the tourist-trap feel for a more sophisticated wellness experience.

The hotel suites here are luxuriously minimalist, designed to blend in with the natural features that surround the hotel: mineral blue geothermal water and dark basalt lava rock. It's a superb eco-friendly hotel in Iceland. Staying overnight at The Retreat comes with a whole suite of extras you’d expect for such price points. You’ll receive access to The Retreat’s own private geothermal lagoon and the subterranean spa area where all treatments take place.

Guests can also go on guided hikes, attend relaxing yoga sessions, and access a private golf course. Admission to the Blue Lagoon is included as well. Boasting the Gold Class environmental rating from Vakinn, this might just be Iceland’s most sustainable wellness experience to date.

A girl sitting outside her room at The Retreat, the Blue Lagoon's low-impact and luxurious spa hotel
Having your own balcony overlooking a slice of private lagoon? Yes please

3. Eyja Guldsmeden Hotel, Reykjavik

The Guldsmeden Hotel chain is for its commitment to environmentally friendly practices and local, sustainable style. Thanks to its strong eco-friendly ethos, Eyja Guldsmeden has obtained the Nordic Swan Ecolabel. Expect light and airy rooms filled with bamboo furnishings, gorgeously soft beds, and local, organic amenities. The Eyja Hotel is in Reykjavik’s 105 neighbourhood, a short walk from all the downtown action. It's another great option for an eco hotel in Reykjavik.

The fantastic hotel restaurant uses organic and local food, while the bar is stocked with local craft beers and Icelandic spirits. There are bikes for rent to help you get around town, and pretty much everything inside is eco-friendly and sustainable. While not a part of the criteria for this list, the Eyja is also the first (and only) hotel in the country to be awarded the Green Globe certification. This level of sustainability is what all hotels should aspire to.

All the hotels from the Guldsmeden chain feature eco-friendly furnishings and amenities

4. ION Adventure Hotel, The Golden Circle

Combining the latest green technology with sleek Nordic design, ION Adventure Hotel is a luxurious eco-friendly hotel in Iceland’s Golden Circle. Located south of Lake Thingvellir, this sophisticated establishment is smack bang in the middle of a geothermal hotspot. Sulphurous steam swirls out of rifts in the landscape, kaleidoscopic colours collide at the edge of bubbling mud pots, and an ancient, moss-laden lava field stretches towards the nearby mountains. It’s ritzy, yet responsible; perfect for indulging in some low-impact volcanic adventures.

From inside the hotel, floor-to-ceiling windows offer views over this landscape, lifted straight out of a science fiction novel. The hotel incorporates lava, reclaimed wood, Icelandic wool, and other natural recycled materials into its construction, and everything from the bed linen to the food in the restaurant is organic and fair trade. Electric car charging ports are located in the parking area, allowing guests to jump into nearby Thingvellir National Park with ease. Environmentally-friendly travel in Iceland has never looked so good.

The ION Adventure Hotel features thoughtful design, sustainable architecture, and unbelievable views

5. Hotel Fljósthlíð, South Iceland

Located on the grassy fields northwest of the ice cap Eyjafjallajökull, Hotel Fljósthlíð is an extraordinary escape into Iceland’s countryside. This eco-friendly hotel is located on a family-run farm called Smáratún, and is quietly leading the charge for responsible tourism in Iceland. This sustainable hotel received its Nordic Swan Ecolabel back in 2014 – one of the very first to do so in the country.

Guests at this comfortable Icelandic eco hotel are welcome to explore the farm, filled with free-range sheep, cows, Icelandic horses, and more. The vegetables grown on the farm feature heavily in the restaurant menu, as do other local and sustainably sourced ingredients. But the real winner? The owners of this farm have set up their own tree-planting initiative for guests to take part in. Those who want to are welcome to visit the surrounding fields, planting native birch trees to create windbreaks and offsetting their travel even further.

Organic and environmentally friendly breakfast food at the low-impact Hotel Fljósthlíð
A snapshot of the eco-friendly and organic breakfast at Hotel Fljósthlíð in South Iceland

6. Von Guldsmeden Hotel, Reykjavik

Back to Reykjavik again for another of the best eco-friendly hotels in Iceland. The recently opened Von Guldsmeden is the second hotel by the Guldsmeden group in Reykjavik. Located in the middle of Laugavegur, it’s perfect for responsible travellers who want to be in the busy downtown area.

Like its bigger sister Eyja (listed above), Von is furnished with the distinctive and sustainable furniture of the Guldsmeden group. Rooms are bright and airy with views towards the water, while the amenities again focus on local, organic products. However, that’s where the similarities stop. Whereas the common areas in Hotel Eyja are bright and airy, Von channels a stormier and more wintery Iceland. Dark hues, leather-clad furniture, and even a sophisticated whiskey den all give this place a great atmosphere.

A cosy and inviting bar of the eco-friendly Von Guldsmeden hotel in Reykjavik, Iceland
The bar of the Von Guldsmeden, perfect for a tipple of whiskey after battling the elements of Iceland

7. Hotel Eldhestar, South Iceland

Wedged between glaciers, volcanoes, and rivers swarming towards coasts of black sand, Hotel Eldhestar is sustainability at its best. This working horse farm was one of the first hotels in the country to be awarded the Nordic Swan Ecolabel. They’ve also adopted the initiative set up by the Energy Agency of Iceland, ‘Recharge in the Barnyard’, encouraging guests to rent electric vehicles and charge them up in the hotel parking area. It's a fantastic eco-hotel in Iceland and a great base for further explorations of the south coast.

Not trying out one of the famous horse tours here would be a big mistake. Since 1986 this company has offered wild horseback rides through Iceland, from half-day tours to epic jaunts through the highlands. The sustainable hotel restaurant serves up hearty meals for guests after a hard day’s ride, with all ingredients sourced from the surrounding farms and nearby fishermen.

The exterior of Hotel Eldhestar, a green and sustainable hotel in South Iceland
Hotel Eldhestar in South Iceland is also home to some of the country's most exciting horse riding tours

8. Hotel Rauðaskriða, Northeast Iceland

For another taste of the idyllic life in the Icelandic countryside, the Hotel and Guesthouse Rauðaskriða in the northeast of the country is a winner. The farm hotel has always been run with sustainable principles in mind and was one of the first hotels in the country to earn itself the Nordic Swan Ecolabel. It’s by far the best eco-friendly hotel in Northeast Iceland.

Rooms are thoughtfully decorated with plush and comfortable furnishings – like the south, life in the north is pretty good. The owners also run their own wildlife tours like bird and whale watching. Having such personal service in this volcanic region of the country is a pleasure, and a great opportunity to learn more about Iceland’s natural environment. This area is very much different from the south and the capital region. Nearby you can find the volcanic oasis of Lake Mývatn, one of the highlights of any trip to the country.

The interior of a room at Hotel Rauðaskriða, one of the best eco-friendly hotels in Iceland
Hotel Rauðaskriða embraced sustainable principles before it was trendy

9. Loft Hostel, Reykjavik

Rounding out this list are the hostels operated by Hostelling International in Reykjavik. This group has a strong commitment to sustainable travel, so you can be sure that staying at one of their hostels is a great way to lower the impact of your journey in Iceland. And while there are plenty of options around the country that follow their environmental guidelines, only the two locations in Reykjavik have done enough to meet the criteria of the Nordic Swan Ecolabel.

The first one is Loft Hostel, located on the top floor of a building along Bankastræti in the middle of downtown Reykjavik. It’s a lively hostel with a beautiful roof terrace where guests can enjoy a beer or two with a view. There's also a regular lineup of events each week, from trivia nights to karaoke. For a more affordable sustainable hotel in Iceland, Loft is a great choice.

One of the comfortable dorm rooms at Loft Hostel, one of the greenest hostels in Iceland
Loft Hostel is an affordable, cool and sustainable hostel in downtown Reykjavik

10. Reykjavik City Hostel

The second hostel and the final eco friendly accommodation option on this list is the Reykjavik City Hostel. Located about 15 minutes walk from downtown, this hostel is right next to the city’s busy campsite.

Since most buses to the highlands make a stop here, it’s perfect for adventurers looking to escape into the countryside on public transport. It’s also more affordable than any downtown accommodation, and right next door to the biggest and best swimming pool in Reykjavik: Laugardalslaug.

A guitar hangs on the wall at Reykjavik City Hostel, an environmentally friendly option to stay in Reykjavik outside the city centre
Does anyone here know how to play Wonderwall?

This article contains affiliate links to accommodation options. If you follow them and book a stay at one of these eco hotels in Iceland, we receive a small commission. We immediately donate 40% of earnings to One Tree Planted, helping to plant trees and offset your travel even more.


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This article contains affiliate links to products, hotels, and tours. If you make a purchase or reservation, we receive a small commission. 40% of that goes towards planting trees with One Tree Planted.