Is Traveling to Iceland Expensive? A Detailed Trip Cost Guide

Iceland has long held a reputation as one of the most expensive travel destinations in the world. Travelers frequently wonder, “Is Traveling To Iceland Expensive?”, and the short answer is often yes, it is. However, understanding the true cost goes beyond a simple affirmative. It’s about breaking down the various expenses involved – from flights and accommodation to transportation, food, and activities – to see where the money actually goes and how value aligns with the price tag. This detailed guide aims to provide a transparent look at the costs associated with a 13-day road trip in Iceland during the peak travel season of August 2022, offering insights based on real spending data to help future visitors plan their budgets effectively.

Traveling during peak season (mid-May through August) inherently drives up costs, particularly for accommodation and rental cars, which are two of the biggest expenses. The summer months offer the best weather, longest daylight hours (even midnight sun), optimal road conditions, and full availability of tours and services, making it a popular, albeit expensive, choice. Conversely, winter travel can be significantly cheaper and less crowded, appealing to budget-conscious travelers or those specifically seeking the Northern Lights experience, though they must contend with limited daylight, colder temperatures, and potential road closures due to storms.

Determining how expensive a trip to Iceland is on a daily basis depends heavily on your travel style. A highly budget-conscious approach, such as hitchhiking and camping or staying exclusively in hostel dorms, might keep costs as low as $100-150 USD per day. For a more comfortable experience that includes budget hotels and some paid activities, a more realistic daily cost could start from $250 USD per person. The specific breakdown of expenses from a recent journey highlights just how quickly costs can add up, even when actively seeking budget-friendly options. Understanding these categories and typical costs is key to answering whether traveling to Iceland is expensive for you and how to manage your budget effectively.

Deconstructing Iceland Trip Expenses

Managing finances effectively is a crucial part of planning any trip, especially to a destination like Iceland where costs are high. Keeping detailed track of expenditures allows for a clear understanding of where money is being spent and helps inform budgeting for future travel. For the 13-day Iceland road trip in August 2022, expenses were meticulously tracked using a combination of financial software and a shared spreadsheet between two travelers. All costs were recorded in USD, based on credit card statements, simplifying the process compared to converting numerous small receipts from Icelandic Kroner. Mutual expenses, such as car rental and gas, were split, while individual expenses like most food and activities were paid separately. This approach provided a transparent view of both shared and individual spending, allowing for easy reconciliation at the end of the trip. For those looking to optimize their travel spending and track their costs, exploring different financial tracking methods is highly recommended as part of planning a successful trip.

The travel style adopted for this trip leaned towards the budget-conscious end of the spectrum, recognizing Iceland’s high price point. While the usual preference might be mid-range hotels, the choice was made to opt for the cheapest available accommodations with acceptable ratings, which often meant booking rooms with shared bathroom facilities. This strategy significantly impacted the accommodation costs compared to choosing hotels with private amenities or higher-end properties. Food expenses were managed by primarily eating at restaurants and cafes, with some self-catering using groceries for breakfasts to keep costs down. This balance allowed for experiencing local eateries while capitalizing on savings opportunities where possible. Coordinating travel styles and financial expectations with travel companions from the outset is paramount in expensive destinations like Iceland to ensure everyone is on the same page regarding spending priorities and comfort levels. Planning ahead and making joint decisions on major bookings like flights, car rentals, and accommodation were key steps taken to manage the budget effectively. For anyone considering a similar adventure, especially a extensive journey like the Ring Road, a well-thought-out travel itinerary shared with companions helps in anticipating costs and shared responsibilities.

Total Cost Breakdown for a 13-Day Iceland Trip (August 2022)

Based on a 13-day road trip for two people sharing major expenses (accommodation, car rental, gas), with individuals covering their own food and activities, the total expenditure amounted to approximately $8606.21 for two people, or $4303.11 each. This figure encompasses a wide range of costs associated with traveling through Iceland during its most expensive season. Below is a detailed breakdown by category, reflecting the real spending during this specific trip.

• Airfare: Approximately $1096.40 for two ($548.20 each) – This figure is highly variable depending on the origin city and booking time. The cost reflects flights from Prague, including checked luggage fees (though checked bags were not ultimately used). Booking well in advance is generally recommended for better fares, particularly from North America.
• Car Rental and Ground Transportation: $2615.30 for two ($1307.65 each) – This was the largest single expense. It covers the 12-day automatic sedan rental ($1991.32), an extra driver fee ($25.65), gas ($400.71 for the entire Ring Road plus detours), tunnels ($54.30 for five passages through the single paid tunnel), parking ($40.77 at various sites), and a ferry ($102.55 for a round trip to the Westman Islands with the car). Car rental shortages since 2020 have driven prices up significantly.

Toyota Corolla rental car parked with Snaefellsjokull glacier mountain background, showing Iceland car rental costs

• Accommodation: $2371.80 for two ($1185.90 each) – Seeking budget options resulted in a wide range of nightly costs, from a low of $82.05 to a high of $347.06, averaging $182.45 per night. These prices were for private rooms, some with shared bathrooms. Value varied significantly; some budget guesthouses offered a pleasant experience, while a basic hotel room in a popular but expensive area like Lake Myvatn proved to be the worst value for money. Staying in towns slightly off the main tourist path or considering alternatives to hotels can impact this cost.
• Food: Approximately $1381.20 for two ($690.60 each) – Eating out regularly adds up quickly in Iceland, where restaurant entrees often cost $25-30 USD. The cheapest consistent option found was the hot dog, typically around $6 USD at gas stations or restaurants. While mainly dining out, groceries were purchased for some breakfasts, which is a key strategy for saving money. Despite the focus on budget, occasional splurges on highly-rated local restaurants did occur. For travelers considering how to manage food expenses, bringing best food for travelling in bus or other forms of ready-to-eat or easy-to-prepare meals can offer significant savings compared to relying solely on restaurants.
• Activities: $1,141.81 for two ($570.91 each) – This was an area where spending was higher, reflecting a priority to experience a variety of Iceland’s unique offerings.
  • Paid Activities Breakdown:
    • Thermal Baths: $427.04 ($213.52 each) – Included visits to Krauma, Forest Lagoon, GeoSea, Myvatn Nature Baths, Vök Baths, and a local swimming pool in the Westman Islands.
    • Tours and Activities: $541.20 ($270.60 each) – Covered whale watching in Húsavík, horseback riding in Húsavík, and a RIB boat trip in the Westman Islands.
    • Museums: $155.00 ($77.50 each) – Visited museums like the Bjarnarhöfn Shark Museum, Herring Era Museum, Whale Museum, Jaja Ding Dong Eurovision Museum, Petra’s Stone Collection, and Eldheimar.
    • Outdoor Attractions: $18.57 ($9.29 each) – Included entrance fees or parking for sites like Stokksnes (Viking Village) and Kerid Crater.
• Restrooms: $6.96 for two ($3.48 each) – While most restrooms are free, some popular tourist sites charge a small fee for use.
• Souvenirs: $0 – Personal spending on souvenirs was zero for this specific trip, prioritizing experiences and photos over material goods.
• Travel Insurance: Cost was covered by existing arrangements, highlighting the importance of securing travel insurance for any trip to Iceland due to potential unexpected events like medical emergencies or trip disruptions.

While the paid activities contributed significantly to the total cost, Iceland also offers an abundance of stunning natural attractions that are free to visit. These include numerous waterfalls (Svodufoss, Skógafoss, Dettifoss, Goðafoss, and many more), dramatic canyons (Stuðlagil Canyon, Múlagljúfur Canyon), unique lagoons and beaches (Jökulsárlon, Diamond Beach), and fascinating outdoor sites (Hvitserkur, Dimmuborgir Lava Field). Many churches and viewpoints across the country are also freely accessible. This mix of paid experiences and free natural wonders allows travelers to tailor their spending based on their interests and budget. For instance, prioritizing scenic drives and hikes means focusing on the free attractions, keeping activity costs much lower.

Strategies to Reduce Costs in Iceland

Given the high price of visiting Iceland, implementing cost-saving strategies is essential for many travelers. Numerous approaches can help lower the overall expenditure without necessarily sacrificing the core experience.

• Travel During the Off-Season: Visiting between October and April can lead to significant savings on airfare, accommodation, and car rentals compared to the peak summer months. While daylight is limited and weather can be challenging, it’s the prime season for potentially seeing the Northern Lights and experiencing a less crowded Iceland.
• Travel with Companions: Sharing costs for accommodation, rental cars, and gas with friends or family can dramatically reduce individual expenses. This was a major factor in managing the budget for the featured trip.
• Book Early: Especially for popular seasons, booking flights, accommodation, and rental cars several months in advance can secure better prices before availability becomes scarce and demand drives costs up.
• Limit Time in Expensive Areas: Reykjavík, the Golden Circle, and the South Coast tend to be the most expensive regions. Spending more time in relatively cheaper areas like Snaefellsnes or the rural north can help lower costs.
• Choose Accommodation Wisely: Opting for guesthouses with shared bathrooms is a common and effective way to find cheaper rooms. Considering alternatives like hostels (dorm rooms are cheapest) or Airbnb rentals can also offer savings, though Airbnb prices can vary widely. Camping is the most budget-friendly accommodation option, provided you have or can cheaply rent the necessary gear.
• Rethink Transportation: While a rental car offers maximum flexibility, it’s a major expense. Renting a manual transmission vehicle is typically cheaper than an automatic (if you can drive one). Alternatively, consider taking the bus system along the Ring Road, though routes and frequency are limited, especially outside summer. Hitchhiking is considered relatively safe in Iceland for the adventurous budget traveler, though research is advised. When comparing transport costs, consider the overall journey, whether it’s by car, bus, or even thinking about how ktm train ticket or railway booking might factor into transport costs in other regions for comparison, highlighting the specific transport landscape of Iceland.
• Utilize Credit Card Benefits: Some credit cards offer primary car rental insurance, which can save you from purchasing expensive supplemental insurance from the rental company.
• Minimize Cash Usage: Iceland is largely cashless. Using a credit card for virtually all transactions ensures you get the best exchange rate provided by your bank and avoids the need to withdraw local currency with associated ATM fees.
• Pack Light: Traveling carry-on only can save on luggage fees. Packing versatile clothing like merino wool or planning for laundry stops can help manage with less luggage.
• Self-Cater Meals: Buying groceries at supermarkets, especially discount chains like Bónus, is the most effective way to save significantly on food costs compared to dining out for every meal.
• Embrace Gas Station Food: While not fine dining, gas stations offer relatively cheap hot meals and are a common and acceptable budget option for travelers on the road.
• Make Hot Dogs Your Friend: The humble hot dog is consistently the cheapest item on menus across Iceland, a quick and inexpensive bite.
• Carry a Reusable Water Bottle: Iceland’s tap water is excellent and safe to drink everywhere. Refilling your bottle for free eliminates the need to buy expensive bottled water.
• Limit Alcohol Consumption: Alcoholic beverages are heavily taxed and very expensive in Iceland. Skipping alcohol or significantly reducing intake can save a considerable amount of money. Trying local non-alcoholic drinks like Collab soda can be a fun alternative.
• Prioritize Free Activities: As shown in the breakdown, countless stunning natural attractions are free to visit. Focusing your itinerary on hiking and exploring these sites minimizes spending on tours and paid entrances.
• Visit Local Swimming Pools: Instead of expensive geothermal baths, experiencing a local swimming pool is a more affordable cultural activity enjoyed by Icelanders of all ages and great for families.

In conclusion, traveling to Iceland is undoubtedly an expensive endeavor, especially during the high season. The detailed costs from a recent trip illustrate where the major expenses lie, particularly in car rental and accommodation. However, understanding these costs and leveraging various money-saving strategies, from traveling in the off-season and sharing expenses with companions to utilizing budget accommodation options, self-catering food, and prioritizing free natural attractions, can make the trip more manageable financially. Iceland offers incredible value in its unique landscapes and experiences, and while the price tag is high, careful planning and smart choices can help mitigate the expense, allowing more travelers to enjoy this extraordinary destination.