Where to stay in Iceland: the best areas and hotels

Reykjavik is tiny for a capital, but it has everything you'd want from a city break: cafés and design shops along Laugavegur, the rocket-shaped Hallgrímskirkja church, the glittering Harpa concert hall on the harbour and a restaurant scene that has put Icelandic lamb and Arctic char firmly on the map. Most day tours to the Golden Circle, the south coast and the northern lights pick up from central hotels.

The Reykjavik Edition is the city's slickest hotel, by the harbour, with a spa and three bars. Radisson Blu 1919 is a short stroll from Laugavegur and six minutes' walk from the harbour; Canopy by Hilton spreads across six connected houses; and Hótel Borg is an Art Deco classic in the old centre.

If you only have a few days outside Reykjavik, head south. The Golden Circle loops past Þingvellir, where the continents are pulling apart, the spouting Strokkur geyser and the mighty Gullfoss waterfall. Further east along the ring road come the waterfalls of Seljalandsfoss and Skógafoss, the black sands of Reynisfjara near Vík, and glacier tongues you can walk on with a guide.

Hotels here are mostly countryside stays, dark enough for the northern lights. Torfhus Retreat has turf-roofed suites inspired by Icelandic tradition; Skálakot Manor is a 14-room hideaway in the mountains with a spa; the Landhotel at Hella, about an hour east of Reykjavik, is handy for Hekla and the south coast; and Örk Hotel sits in the hot-spring village of Hveragerði, around 45 km from the capital.

The Reykjanes Peninsula is where you land: Keflavík International Airport sits on its northern shore, with the Blue Lagoon steaming in the lava fields to the south. It's a wild, volcanic place, and recent eruptions near Grindavík have closed the lagoon at times, so check before you go.

The Retreat at Blue Lagoon is the splurge, a five-star spa hotel with the Moss restaurant. In Keflavík, the Diamond Suites occupy the top floor of Hotel Keflavik, five minutes from the terminal. The Lighthouse Inn is a calm hotel by the sea with views from its terrace, and Hotel Duus is right in the heart of Reykjanesbær.

West Iceland packs a lot into a short drive from the capital. The Snæfellsnes Peninsula is often called Iceland in miniature, with a glacier-capped volcano, black and golden beaches, fishing villages and Kirkjufell, the most photographed mountain in the country. Inland lies saga country, with hot springs, lava-field waterfalls and glaciers.

Hotel Húsafell is a design-led base near the glaciers, hung with art by the local artist Páll Guðmundsson. Fosshotel Reykholt is in the village where the medieval saga writer Snorri Sturluson lived, near his natural hot pool. In Borgarnes, Hótel Vesturland draws its colours from the surrounding mountains, and Kirkjufell Guesthouse in Grundarfjörður is about ten minutes from Kirkjufell itself.

The north has its own capital, Akureyri, a cheerful town at the head of a long fjord with a botanical garden, good restaurants and its own airport. From here you can reach the whale-watching harbour of Húsavík, the horseshoe falls of Goðafoss and Lake Mývatn, surrounded by craters, lava pillars and bubbling mud pots.

In Akureyri, the Centrum Hotel and the Kea by Keahotels sit on the town's lively pedestrian streets by the fjord. Up the coast, Hotel Siglo is right on the marina in Siglufjörður, a former herring boom town, steps from the Herring Era Museum. Fosshotel Mývatn makes a good base for the lake.

The south-east and east are where Iceland gets big and empty. Jökulsárlón, a lagoon full of icebergs that have broken off Vatnajökull, Europe's largest glacier, is one of the country's great sights, and the ice washes up on the black sand of nearby Diamond Beach. Höfn is the fishing town nearby, and beyond it the Eastfjords wind past tiny villages.

The family-run Hótel Jökulsárlón is a stone's throw from the lagoon, with glacier views in summer and the aurora in winter. Brunnhóll Country Guesthouse near Höfn is close to Vatnajökull National Park; Hotel Breiðdalsvík sits between mountains and black-sand beaches; and Hotel Valaskjálf is a quiet base in Egilsstaðir, the main town of the east.

The Westfjords are a claw of land in the far north-west, all steep fjords and mountain passes, and they are the least visited part of Iceland. Here you'll find Dynjandi, a waterfall that fans down a mountainside like a bridal veil, and the Látrabjarg cliffs, where puffins nest in summer. Distances are long and the roads slow, so give it time.

Ísafjörður is the region's lively little capital, with Hotel Isafjordur Horn and Hotel Ísafjörður. In the south, Fosshotel Westfjords is in Patreksfjörður, and Hotel Latrabjarg is the base for the bird cliffs.