For this post I will focus on mainly the Reykjavik area which I recommend for your first trip. Although this is about Iceland, the general advice is the same for any place you may visit.
First of all, make a list of what is important to you. Do you want to be near anything in particular? Do you want to share your room? Do you want your own bathroom? What sort of budget do you have? What are you willing to compromise?
My first list was centered mainly around cheapness and location. I wanted to be near everything and pay as little as possible. So I chose a 4 bed shared room in a hostel which was a much better experience than you would think. It was a good compromise between a 22 bed dormitory and a single room which would have cost a lot more.
When I had a more flexible budget, I desired a nice view and my own bathroom. My compromise was that I was looking at hotels further out from the centre of the city. Due to the snow and ice on the roads it meant that I was restricted to eating more hotel food as I couldn't get out and about as quickly.
My future ultimate wish list is a log cabin with a perfect 360 view of the Icelandic night sky complete with hot tub, giant telescope and every meal delivered from Glo, oh and my own personal driver and tour guide ;)
I use Booking.com* and Agoda.com for all my hotel bookings no matter where I am going. These sites allow you to compare lots of options, check against a map and choose between different rooms. Using sites like these enables us to find the right room much faster plus they give rewards for booking - win win!
Agoda has the option of showing you other dates that available rooms are free. Booking shows you the price of the whole stay, whilst Agoda shows you per night. It's all a matter of preference. Both will play on your fear that your dream room will be booked out, so remember to not panic.
Consider how you want to deal with the food side of your trip. Do you want to take mostly your own food in your suitcase? Do you want to make trips to the supermarket there and use a shared or private kitchen? Think about the time you'll have free to spend on cooking/eating and how much you want to budget for food each day.
I usually find places that include breakfast. That way it's already paid for and gets the day started well. Just be aware of the times that this is served. If you are booked on day trips, you may be out and on the road before the hotel breakfast is served. Depending on your driver and the time keeping of everyone else booked on your tour, you may only stop long enough for food in one place around lunchtime. This is also why I recommend packing lots of snacks.
I doubt we can cover accommodation without mentioning the famous sulphur smell. Some hotels have it, others don't. I like to embrace it while I am there - it is so uniquely Iceland! The reviews of the place will likely mention it, so you will know if it is in the water.
Location is super important in relation to how you want to spend your time in Iceland. Consider how much you will be happy to travel on foot and the climate of the time you are visiting. There is a happy medium currently in Reykjavik between being too close and too far. Being in the centre is fabulous for a quick bumble around the city, However for tours it isn't as comfortable. In recent times the pick up system in central Reykjavik changed to reduce congestion. There are now bus stops where you congregate and wait. This isn't ideal if it's freezing cold, icy and you have a pick up time of any time within a one hour window (which is usually the case). If you pick a hotel a little further out, you can be collected from your hotel. Many wait in the lobby and keep an eye out for their tour bus, staying warm and comfortable. All this may not matter if your trip is during warmer months.
How far is too far? Use Google maps to tell you how long it will take to walk to the city centre and add on extra time if you are visiting in winter. Another note on Icelandic weather, I urge you to check with the hotel each day about the weather conditions for that day. An Icelandic storm can be dangerous if you are out on foot. It is entirely possible that you could be blown off your feet and into anything the wind takes you.
Being out of the way also brings its own perks. Once I picked a hotel that was around 45 minute walk to the centre of Reykjavik. I had only one day allocated to exploring the city itself and really wanted an en-suite room this trip, so I classed that as a fair compromise. At first I found it frustrating being much less local to shops and restaurants. However one incredible evening, a turn of events meant that I got to see a fabulous display of the Northern Lights right outside that hotel. The lack of surrounding hotels and low light pollution gave me a view of a good 60% of the sky around us. I didn't have to book on a guided tour, I just had to step outside.
You may also be closer to places that you wouldn't have trekked to visit if you were in the centre. Such as the fancy new shopping centre Kringlan. Or perhaps a leisure centre for some city hot spring time such as Laugardalslaug. Another option is to move accommodation every x nights, and try a bit of everything. My final hotel-related advice is to make friends with the front desk of the hotel. These people know everything that you will want to know. They are there to make your life easier. On every hotel stay I have had to date I always brought back something of great value from a discussion with one of the receptionists. Whether this was a way to get something I wanted for free, support with a booking error, or a greater understanding of the Icelandic people. When your tour bus is running late and you are starting to worry that it might not turn up at all, move that energy into building a connection.
Sidenote: I want to address the resistance that so many have with the idea of hostels and sharing a room. This is the one of the biggest conversations I have with people new to Iceland. They have a limited budget but don't want to share. I want to reassure you that your imagination will show you far worse than the reality. I am an introvert and get bathroom anxiety. Yet my solo hostel experience wasn't that bad! I put together a list of tips and advice and strongly encourage you to try hostel life if it is the only thing standing between you and your first trip;
Get a room with less beds. 4 beds will be easier to cope with than a 22 bed room and often offer a good degree of privacy under the circumstances. It is likely that everyone booked in that room will also want that extra bit of privacy on a budget.
Make sure to say hi to those you are sharing with. You can share name, country of origin and roughly what you're doing while in Iceland. It sets a friendly tone and makes it less awkward when you cross paths. That may be the entire conversation you have as people come and go, but you have at least opened the door to feeling more comfortable during your stay.
Keep your stuff organised within your space and plan ahead. This helps minimise disturbance to your room mates, for example having your bedclothes ready for when you return late at night. It also helps when coming and going to the bathroom to shower or get changed.
Shower at unusual hours if you can to avoid having to wait in a queue. Getting up half hour earlier or showering before bed can be sufficient to avoid the rush hours.
Consider ear plugs that eventually fall out over the night to help avoid being awoken by snoring <-- I have never needed these but keep them handy in case.
Check your phone notification alerts. Popping it on silence or low vibrate is kind to your fellow travellers. If you need an alarm, consider a wristband or vibration only.
I want to add that my time in a hostel room was with others who got on with their own trips and plans, were courteous and gave me no issues at all. There's something quite vulnerable and sweet about sharing a bedroom with others that you don't know. Suddenly living as a family but with strangers!
Enjoy choosing your hotel! If you need support or someone to discuss options with, I offer intuitive coaching which can also cover being a trip support buddy! I want to help you get the most out of your trip. Complete the coaching form and I will see if I can help you.
*Some links may be affiliates and generate money or gifts. I only share links to services of products I use myself and will update links if I find better – Clair