The Best Hotel in Iceland Has Northern Lights Wake-up Calls, Outdoor Hot Tubs, and a Private Observatory

Hotel Rangá is nestled on Iceland's popular South Coast and offers quirky décor, incredible dining, and endless adventure.

Northern Lights over Hotel Rangá in Iceland

Courtesy of Hotel Rangá

For more than 10 years, guests at Iceland's Hotel Rangá have been greeted by a 10-foot tall, quiet, selfie-loving doorman. Hrammur lives in the foyer and loves Christmas, as other hotel employees would tell you. He is Hotel Rangá's resident taxidermy polar bear and one of hundreds of unique pieces of décor and artworks adorning the rooms, suites, and public spaces of the property, infusing it with character and lending it a unique sense of place. An arctic fox placed on a wooden cupboard across the front desk keeps him company, while a beautiful nine-by-seven-foot quilt with 3,008 patches in 164 different fabric types hangs on a wall opposite Hrammur.

The hotel, a member of the Small Luxury Hotels of the World, topped Travel + Leisure's World'Best Awards list of the best resorts in Iceland in 2022. Throughout its more than 20-year history, it's been a go-to retreat of world travelers, adventurers, and celebrities (Justin Bieber, the Kardashian sisters) seeking a private and luxury hideaway with a touch of quirkiness on Iceland's popular South Coast.

Game room at Hotel Rangá

Courtesy of Hotel Rangá

Located on the banks of the Rangá River in the small town of Hella, about 60 miles southeast of Reykjavik, the log cabin–inspired hotel was initially built as a countryside retreat with 21 rooms using imported cedar from New Brunswick, Canada. In 2003, Friðrik Pálsson, a former fishing industry executive who had retired six months prior, took over the lodge and transformed it into Hotel Rangá.

"I always say that this is my retirement hobby," he told T+L.

Unlike the ultra-modern and sleek Scandi-chic properties that have popped up in downtown Reykjavik, Hotel Rangá delivers an elevated experience through a different approach rooted in Pálsson's passion for sustainability, food, and impeccable service. Its 51 guest rooms have comfortable beds, spacious bathrooms with hot tubs, and private patios. The public spaces include a game room and several lounges spread throughout the property.

Exterior of Hotel Rangá

Bragi Þór Jósefsson

The hotel became well known for its spacious globally inspired seven suites that invoke the seven continents through eclectic décor — the African suite, for example, is outfitted with a thatched roof. But Hotel Rangá's most impressive suite is one dedicated to Iceland. The bed cover resembles a gigantic Icelandic sweater, the suite features handmade wooden furniture created by a local craftsperson, and a soaking bathtub stands in the middle of the room clad in black basalt columns and pebbles sourced from one of the country's black-sand beaches. The most innovative (and reel-worthy) feature of the suite is the rotating floor of the living/dining room area, allowing guests to enjoy uninterrupted river views both from the breakfast table and the sofa.

Icelandic suite at Hotel Rangá

Courtesy of Hotel Rangá

In 2005, Hotel Rangá became one of the first hotels in Iceland to offer an aurora borealis wake-up call to its guests. Because the property is away from any light pollution, the elusive phenomenon can often be observed in winter. Pálsson has installed several lie-down benches in front of the hotel where guests can enjoy one of Mother Nature's most awe-inspiring wonders. And if the northern lights don't make an appearance, travelers can visit the hotel's private observatory located in a small stand-alone structure equipped with a roll-out roof and two high-tech telescopes.

South America suite at Hotel Rangá

Courtesy of Hotel Rangá

"I found people [were] a little bit disappointed when they were sitting outside and there was a starlit night, and everything was fantastic, but the Northern Lights didn't show up. So at least now, I could invite them to the observatory to take a look at the stars," Pálsson explained, noting that on clear nights, "sky tours" are conducted by expert astronomers who drive out from Reykjavik to Hotel Rangá daily.

Pálsson, who is in his 70s, is often on-site. The hotel really is his hobby; He can often be seen behind the front desk or in the property's restaurant chatting with guests or serving them a shot of brennivín, the country's distilled caraway-flavored liquor, known as "black death."

Guests stargazing at Hotel Rangá

Courtesy of Hotel Rangá

Hotel Rangá's restaurant is wrapped in floor-to-ceiling windows enveloping patrons in spectacular views of the Icelandic wilderness and the nearby Mount Hekla volcano. The culinary offerings curated by Pálsson and chef Péter Jóni focus heavily on Nordic-inspired fare prepared with local ingredients. The wild mushroom soup is an all-time favorite — it's been on the menu for 19 years. Other must-try items include reindeer carpaccio with parmesan, truffle oil, and arugula; smoked puffin; and pan-fried Icelandic cod.

While Iceland's infamous fermented shark is not on the menu, if guests would like to feast on a traditional Icelandic dinner including shark, Pálsson would be more than happy to arrange it in the hotel's private dining room tucked away above the restaurant. The hotel also has two bars stocked with local and international spirits and beer, along with a list of handcrafted cocktails, best enjoyed in one of the three outdoor geothermal hot tubs overlooking the river.

Interior dining and cauliflower dish at Hotel Rangá's restaurant

Brent Darby/Hotel Ranga

And a stay at Hotel Rangá is more than just room and board.

Pálsson has teamed up with one of the best tour operators in the region, Southcoast Adventure, to offer personalized tours and activities such as trekking through glacial ice caves, chasing waterfalls, and driving a buggy through Thórsmörk, a remote mountain ridge where glaciers and moss-covered lava fields make for a fairy-tale-like setting. You can even arrive at the hotel by helicopter if the two-hour drive from Reykjavik seems like a nuisance. Pálsson also recently helped import Iceland's first fully certified electric aircraft — a two-seater that can fly about 60 miles on a single battery charge. Flights can be arranged for Hotel Rangá guests if they inquire in advance.

"We want to make sure that when our guests leave, they have a very good story to tell," Pálsson said.

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