Where to Stay and What to Book First in Iceland for Christmas and New Year

Which areas fill first over the holidays

Central Reykjavík 101 — the streets around Laugavegur, Skólavörðustígur and Ingólfur Square — is the first to go for 24–26 December and again for 31 December, because the fireworks at Hallgrímskirkja and the public bonfires draw everyone into the same few square kilometres. Properties within a five-minute walk of Austurvöllur sell out months ahead; the same rooms 15 minutes out along Hringbraut or near Sundlaugavegur on Laugardalur stay available noticeably longer.

Outside the capital, two clusters tighten first: Hveragerði and the Selfoss area on Route 1, roughly an hour's drive from Reykjavík, and the Vík stretch on the south coast, about 2 hours 45 minutes. Both are popular as two-night Christmas bases. Akureyri, 4.5 to 5 hours north on Route 1 in winter, has a softer market, and Ísafjörður in the Westfjords is quieter still — though some guesthouses there close for the season.

What to reserve before you arrive

Book the 24 December dinner table at the same time as the room. Most Reykjavík restaurants serve a set holiday menu that evening and close early; 25 December is the thinnest day of the year, with many kitchens shut entirely and a handful of hotel restaurants carrying the trade. If your hotel has an in-house restaurant, ask in writing whether it opens on 25 and 26 December. For 31 December, Reykjavík tables sell out weeks ahead and usually run in two sittings.

Then the transport. Rental cars are limited over the holidays and most offices shut on 25 December and 1 January, so collect on 23 December if you can — and check the tyre policy, because studded or winter tyres are standard on Icelandic rentals from November. Christmas Eve is a half-day in practice: shops close by mid-afternoon and much of the country goes quiet. Read our guide to getting to and around Iceland in December before you fix driving distances.

Christmas week versus New Year

The two holidays behave differently. Christmas in Iceland is a family occasion, quieter than many visitors expect: 24 December is the main evening, 25 and 26 December are slow, and the northern lights season is in full swing with long dark nights. New Year is the opposite — Reykjavík becomes a city-wide party on 31 December and hotel rates peak accordingly. A common and sensible pattern is three nights in the capital over Christmas, a two- or three-night south-coast loop, then back to Reykjavík for 30 December to 2 January.

If you must choose one, choose New Year for atmosphere and Christmas for calm and value. Either way, book accommodation before flights firm up. Our northern lights season booking guide covers how far ahead to reserve in the darker months — for the Christmas fortnight, add another month or two on top of whatever it advises.

What I would book, and what to skip

For a first holiday trip I would take a mid-range hotel in 101 within walking distance of Hallgrímskirkja, accepting a small room for the location, and pair it with two nights near Hvolsvöllur or Vík so the south coast is not a single long day out. Reykjavík's 101 Hostel and the guesthouses along Framnesvegur in Vík show how quickly the value end goes; check them early. Downtown Apartments near Laugavegur suit families who want a kitchen on 25 December.

Skip the Blue Lagoon on 31 December and 1 January if you want a relaxed evening — the transfer eats the afternoon. Skip self-driving the Ring Road in a Christmas week; snow closure on Route 1 near Hellisheiði or Öxi can cost you a day. And skip changing hotels every night: three bases over ten days is plenty.