Hotel Keflavik — Near KEF Airport, 15 Minutes from the Blue Lagoon, and Nothing Like You'd Expect
An surprising, eclectic hotel with spa on Reykjanes Peninsula
Mac is looking forward to chilling at the spa!
Last update: August 2026
Most people experience Keflavík, Iceland, at approximately fifty miles an hour. They land at KEF, get into a transfer bus, and move toward Reykjavík without a second look. The town slides past the window like the obligatory opening credits nobody reads. A petrol station. Some warehouses. Dark lava on both sides of the road.
It's an unfortunate habit.
We arrived at Hotel Keflavik in March, at the tail end of 17 days against Iceland's winter — frozen waterfalls, snowstorms, wind that had a very clear opinion about us being outside. We were tired in the way that active winter Iceland makes you tired, which is a specific, addictive kind of tired that involves sore legs, perpetually damp base layers, and a negotiated peace with the cold. The hotel was meant to be a convenient pre-flight stop. It turned into a proper, blissful ending to the trip.
🛌 Where to stay:
• Hotel Keflavik — we stayed here. Solid value right by the airport, good base for the South Coast.
🇮🇸 Top experiences:
• Northern lights tour from Reykjavík — guides chase clear skies; free return if the lights don't show.
• Ice cave & glacier tour, Vatnajökull — blue ice and a natural cave under Europe's largest glacier.
🚗 A car is essential in Iceland. Book yours here — the whole country opens up once you leave Reykjavík.
Keflavík is not just an airport city
Kleiflavatn lake, on Reykjanes Peninsula, looks very different in winter. The wind was insane!
Keflavík — "Driftwood Bay" — has been a fishing town for centuries, and the character of that is still in the streets, even if the industry has changed shape. Most visitors don't know that it also spent the better part of half a century as a significant NATO base: the US military operated out of here from World War II until 2006, when the base was handed back to Iceland after years of Cold War-era submarine monitoring and a community of thousands of American servicemen living, essentially, a parallel life next door to the Icelandic one.
In the 1960s and '70s, Keflavík produced enough rock musicians that it became known as bítlabærinn — "The Beatle Town." The Americans left. The music stayed. And, if you’ve never listened to any Icelandic music, you should!
Did you know?
Since 2021, a series of volcanic eruptions near Fagradalsfjall, on Reykjanes penninsula, have added fresh lava to the mix and periodically closed the road to the Blue Lagoon. Grindavík has been evacuated until further notice due to high sismic activity.
Pic: Recent lava rocks near the Blue Lagoon
The town sits on the Reykjanes Peninsula, a UNESCO Global Geopark where the North American and Eurasian tectonic plates meet — and slowly pull apart — right at the surface. The result is lava fields, geothermal vents, bubbling mud pools, and a general sense that the land hasn't quite finished deciding what shape it wants to be. Gunnuhver, a geothermal area near the peninsula's tip, is named after a ghost — a woman called Gunna, whose spirit was supposedly lured into the boiling mud by a pastor who tied her shroud to a stake. Icelandic folklore is, as a rule, not exactly reassuring.
Point being: there's more here than the airport suggests, and the Reykjanes Peninsula is seriously underrated. Personally, after visiting it 3 times, I think it’s much more impressive than the Golden Circle!
Olsen Olsen, fifteen years later
A five-minute walk from the hotel: Olsen Olsen, which is rock'n'roll-themed, consistently the best-reviewed restaurant in Keflavík, and makes hoagies that are the reason to go. I had been fifteen years earlier and still remembered it! We ordered delicious lamb and fish hoagies to go, and enjoyed them in our comfy hotel room.
Our experience at Keflavik Hotel
The restaurant from above
The hotel
Hotel Keflavik has been family-run since 1986 — before Iceland tourism was what it is now, before KEF became one of the busiest transit airports in Europe, before anyone was seriously building luxury properties on a lava field. The hotel has been renovated substantially since, but four decades of independent ownership gives a place a personality that you can't really manufacture from scratch.
The whole property is threaded through with Versace marble tiles and Philippe Starck fixtures. From the Diamond Lounge to the restaurant to the bathroom of a standard room, the design is deliberate: eclectic, opulent, slightly unexpected, completely committed to itself. In a fishing town on a volcanic peninsula, next to an international airport. Sure.
The Diamond Lounge — the hotel's bar — runs along the ground floor and acts as a quiet daytime coffee shop before shifting into cocktails and wines at night. The KEF Restaurant has an impressive glass facade and a large open wine cabinet. The top floor is home to the Diamond Suites — a handful of individually designed suites, each named after a gemstone (Topaz, Emerald, Sapphire, Pearl, Ruby), sharing a private lounge, a fireplace, and outdoor hot tubs on a terrace overlooking the sea.
You could call it a museum. It's warmer than that. But you could definitely call it a museum, and we spent some time looking at all the artwork.
I came down sick the night before the flight — not dramatically, but enough to be a problem. Kate, at the front desk, was a life-saver in the middle of the night, and we can’t thank her enough. Those are the kinds of details that make all the difference in a hotel.
If you're planning a Blue Lagoon visit, Hotel Keflavik could make more sense for you as a base than Reykjavík — you're 15 minutes away with a rental car instead of nearly an hour. Stay here the night before (there’s free parking), do the Blue Lagoon, and you're back at the airport in five minutes.
The spa
The spa is a newer addition to the hotel, and it continues the design logic of the rest of the building: Versace tiles, serious facilities, a general refusal to do things halfway.
After 17 days of active winter Iceland, walking into KEF Spa felt like the right and much needed conclusion to the trip. Our tired muscles loved the cold plunge, followed by a hot tub or a sauna session. The snow room (year-round artificial snowfall in a cold chamber) was really… cool.
The foam hammam was a surprise. We've done sauna-and-cold cycles across Finland, Norway, Sweden and half of Iceland but had never seen this. It was a lot of fun!
We stayed longer than planned, just enjoying the facilities and chilling in the relax room (with cool northern lights lighting, by the way!)
There’s also a very modern gym.
The breakfast
Breakfast was buffet-style, with options for everyone. We had an early flight but had time to grab breakfast since it starts at 5am.
Penguin tip:
Between volcanoes, sismic activity, glaciers and extreme weather, travel insurance is a good idea in Iceland. We use and recommend HeyMondo — great coverage, and you get 5–15% off if you book through us!
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FAQ: Hotel Keflavik
Is Hotel Keflavik worth staying at, or is it just a convenient airport hotel?
Both. The hotel is five minutes from KEF Airport, which makes it practical for pre-flight or post-arrival nights. But the property itself — the design, the Diamond Lounge bar, the KEF Restaurant, the KEF Spa — is genuinely good on its own terms. If you only ever use it as an airport layover, you're leaving most of it on the table.
How far is Hotel Keflavik from the Blue Lagoon?
About 15 minutes by car. Which makes it a better base for a Blue Lagoon visit than Reykjavík (45–50 minutes) if you're also flying in or out of KEF. The proximity is logistically useful.
What is KEF Spa like?
Versace-tiled, and serious about it. Facilities include a cold plunge, snow room, infrared sauna, traditional sauna, starlit steam room with foam hammam experience, hot tubs, and a massage suite with a private hot tub for treatment guests. It's the kind of spa that makes sense as an end point after a demanding Iceland trip — which is exactly when we used it.
What are the Diamond Suites?
The top floor of Hotel Keflavik houses a handful of individually designed luxury suites, each themed around a precious stone: Topaz, Emerald, Sapphire, Pearl, and Ruby. They operate with their own small private reception and lounge — Versace marble floors, leather seating, fireplace — and have outdoor hot tubs on a terrace overlooking the sea.
Is Keflavík worth visiting beyond the airport?
Yes. The Reykjanes Peninsula has genuine geological drama — the Mid-Atlantic Ridge at the surface, active volcanic areas, Gunnuhver's mud pools and steam vents — and Keflavík itself has more character than people give it credit for. It was known as "The Beatle Town" in the '60s and '70s for a reason. Olsen Olsen, five minutes from Hotel Keflavik, is the best restaurant in town. And if you're chasing the northern lights, Garður lighthouse is about 15 minutes north — a classic aurora-watching spot on the tip of the peninsula, away from town lights, with a clear view of the northern horizon. Worth having in your back pocket for a clear winter night.
Is the hotel family-friendly?
The hotel has family room options alongside its suites, and the location in central Keflavík puts shops, restaurants, and the seafront within walking distance. Some spa facilities have age restrictions — worth checking directly when booking.
What dining options are there at Hotel Keflavik?
KEF Restaurant on site — a proper à la carte venue with a glass facade, a wall-length wine cabinet, and a menu built around fresh Icelandic ingredients, both main plates and small plates. The Diamond Lounge runs alongside it as a coffee shop by day and cocktail and wine bar by night.
We flew out the morning after. As everyone does, eventually. But the last thing we'd experienced in Iceland wasn't a glacier or a lava field — it was Versace tiles, a cold plunge that reset something in the spine, foam on the ceiling of a steam room, and a receptionist who checked in at 5am to make sure the sick one was okay.
For a pre-flight stop, that's not nothing. It's actually quite a lot.
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