Sandwiched between the North Sea and the looming Mount Esja, the world's northernmost capital is alternately illuminated by the midnight sun and the eerie glow of the aurora. Dotted among its colorful houses are its unique boutique hotels—some are wonders of cutting-edge design, while others are a study in comfort and simplicity.

Staying in Reykjavik

Cosmopolitan Reykjavik packs a punch with its excellent museums, restaurants, and boutiques. It's an excellent base for your first night in-country or for a short Iceland trip with day-trips into the surrounding countryside (more about that here). After long days of exploring nearby fjords, geysers, and mountains, you'll want to be sure to have a comfortable place to recharge, and most of Reykjavik's boutique hotels are conveniently scattered about the city center, within walking distance of the main Laugavegur shopping street and the harbor. 

The list below includes options from high-end design hotels to stylish budget-traveler favorites—all of which take advantage of the Reykjavik scene.  For more on what to do, check out the best of Reykjavik

101 Hotel

Deluxe King Room (courtesy of 101 Hotel)

Situated in downtown Reykjavik, 101 Hotel may be unassuming from the outside—but it wows you the moment you step through the doors. Designed by politician and owner Ingibjörg Pálmadóttir, it doubles as a contemporary art gallery, while the cozy lounge and library with an open fireplace bring to mind a ski chalet. Its 38 open-plan, immaculately appointed rooms are all slate-greys, whites, and volcanic blacks (with Bose iPod sound docks). To be even more impressed, splurge on a suite for a balcony with harbor views.

Subtly-lit corridors lead to the futuristic-looking Kitchen + Wine restaurant, where a mix of Icelandic and European dishes (including gourmet hamburgers) caters to all palates beneath a dramatic glass ceiling. Don't miss out on the killer cocktails, and head to the basement spa for a soak in the geothermally heated jacuzzi. 

Hverfisgata 10, 101 Reykjavík

Apotek Hotel

Apotek bar (courtesy of Apotek Hotel)

Another comfortable mid-range option in the heart of Reykjavik, Apotek Hotel is nestled inside one of Reykjavik's oldest and most elegant historic buildings, the Reykjavikurapótek (the city's main pharmacy). The interior still contains some of the original features—like the elegant marble staircase and curved walls—but the 45 spacious, comfortable rooms are totally modern, all in neutral tones with clean lines and an urban Icelandic aesthetic.

In keeping with the building's history, the resident "pharmacists" mix medicinal-themed artisan cocktails in the hotel bar, while the on-site restaurant creates a mix of Icelandic and European dishes using the best of local ingredients. Ask the young, multilingual staff to plan your excursions for you.

Austurstræti 16, 101 Reykjavík

Eyja Guldsmeden Hotel

Double Room (courtesy of Eyja Guldsmeden Hotel)

A warm haven to retreat to after cold-weather exploration, rooms at the Eyja Guldsmeden Hotel are both stylish and snug, with four-poster beds and natural sheepskin and cowhide strewn throughout. There's an earthy vibe to the simple color scheme, and an emphasis on sustainability, from local and organic produce at the restaurant to eco-friendly toiletries. There are killer views of Esja Mountain from half the rooms, too.

While the hotel's location near the eastern end of the Laugavegur shopping street is a 20-minute walk from many of the main attractions, you can rent a bicycle in the lobby. There's an excellent breakfast buffet, plus numerous restaurants within a 10-minute walk.    

Brautarholt 10, Reykjavík

Hotel Hilda

Double Room (courtesy of Hotel Hilda)

If you're looking for a hotel in a quiet residential location within a few minutes walk of Reykjavik's top attractions, look no further than Hotel Hilda. A revamped traditional guesthouse, it's surrounded by numerous restaurants and cafes, while the harbor, Reykjavik Art Museum, and Saga Museum are all less than 10 minutes away on foot. The 15 rooms are spread over four floors, and each one is individually styled and brightened up with local artwork and photographs.

If you're traveling solo, the compact single is a good bet. Breakfast is an excellent spread of local breads and cold cuts, and service is warm and personalized. 

Bárugata, 101 Reykjavík

Hotel Óðinsvé

Double Room (courtesy of Hotel Óðinsvé)

Steps away from Laugavegur, Reykjavik's nightlife and shopping hub, a stay at Hotel Óðinsvé puts many of the city's attractions right on your doorstep, including the National Gallery of Iceland, the Hallgrímskirkja, and the National Theater. Inside this early 19th-century building, you'll find 50 contemporary, minimalist rooms—all slate greys, creams, and charcoals, each decorated with characterful black-and-white landscape photos of Iceland. The hotel's award-winning bistro, SNAPS, is among Reykjavik's best, with French-inspired dishes; step inside the adjacent tiny bar for an excellent cocktail. If you want to escape into the countryside, the hotel also rents luxury apartments. 

Þórsgötu 1, 101 Reykjavík

Canopy by Hilton

Lobby (courtesy of Canopy by Hilton)

Spread across six buildings of a former furniture factory, Canopy by Hilton is a great introduction to local culture. The on-site Geiri Smart restaurant pairs Icelandic fish and dry-aged meat from local farms with an impressive list of cold climate wine and nightly tastings of local beers, spirits, and nibbles are held at the Canopy Central Bistro & Bar. There's even a library specializing in Icelandic literature!

The color schemes in the rooms are a nod to local landscapes, with "ocean blue" and grey "volcanic rock" livened up with contemporary pieces by local artists. You're just minutes away on foot from the bars, boutiques, and cafés of Laugavegur street; borrow a Canopy bike from reception to explore the hip harbor area and other nearby attractions.

Smiðjustígur 4, 101 Reykjavík