The Future Of Iceland: Volcano Tourism, New Hotels, And Authentic Adventures

21 June, 2025 1 category

Godafoss waterfall on Skjalfandafljot river in summer at Northern Iceland

getty

It was a lesson in resilience: layering pillows against the curtained windows of my tiny hotel in a futile attempt to block out the relentless sunlight. It was nearly 2 a.m.—a time when most of the world was deep in sleep—but I was wide awake, caught in the glow of Iceland’s midnight sun. In the peak of summer, the sun dips only slightly below the horizon, creating a golden hue that lingers long into the night.

I was spending my first night in Reykjavik, as many travelers do on transatlantic stopovers en route to the U.S. But I wasn’t staying long in the city. My heart was set on the wilder side: the stark beauty of the North, the Arctic Circle within reach, and the charm of the East, where I hoped to connect with locals in sleepy fishing villages and windswept coastal towns.

Sleep might be scarce, but I didn’t mind. The promise of the day ahead was too exciting—soaking in thermal lagoons, my skin covered in white silica, scrubbed with green algae, and slathered in mineral-rich oils. Iceland was ready to work its magic on me.

Sigló Hotel in North Iceland

Jim Dobson for Forbes

The Land of Fire and Ice

Iceland is a truly remarkable destination of fire and ice, continuing to attract travelers from around the world. Despite the devastating volcano eruption in 2023, tourism is booming. And it’s easy to understand why. Spectacular mountains, endless lava fields, and craggy valleys all showcase a land sculpted by volcanic eruptions and shifting glaciers. The result is a landscape as raw and powerful as it is beautiful.

Most visitors try to pack as much as possible into a short whirlwind trip, often starting with the iconic Golden Circle drive in the southwest of the country. The famed route includes Instagram-worthy favorites like Thingvellir National Park, the bubbling Geysir geothermal area, and the mighty Gullfoss Waterfall. But while the South gets most of the spotlight, the true magic lies further away. The more adventurous explorers drive the ring road that circles the edge of the island.

One of the many stunning waterfalls in Iceland, the breathtaking Seljalandsfoss.

Jim Dobson for Forbes

Northern Exposure: The Land of Trolls

In the north, you’ll find a different Iceland, where dramatic waterfalls, geothermal baths, and sleepy seaside villages feel a world away from civilization. To the east, an entirely different world awaits: rough coastlines where whales breach close to shore, quiet fjords dotted with playful puffins, and lush green valleys filled with Icelandic long-haired horses and, if you’re lucky, a reindeer or two. Locals are quick to whisper about elves and trolls hiding in the hills, though they proved elusive on my visit.

The best way to begin your adventure in the north is with a short flight to Akureyri, often called the Capital of the North. From there, a road trip reveals surreal landscapes and a series of long, jaw-dropping tunnels carved into the mountainsides. One tunnel, narrow and single-laned, feels like a scene from a thriller where oncoming cars seemingly play a game of chicken.

Single lane tunnel. Oddsskard tunnel is between the villages Eskifjordur and Nordfjordur, Eastern Iceland

getty

Something’s Fishy in Siglufjörður

Your first stop should be Siglufjörður, Iceland’s northernmost town, nestled in a narrow fjord surrounded by steep, misty peaks. Once a small shark-fishing outpost in the early 1900s, the town quickly gained fame as the herring capital of the Atlantic. Its fortunes varied with the changing industry, but its history is still deeply woven into every part of the town.

I arrived just in time for the annual Fisherman’s Day celebrations, held each June, to honor the country’s maritime heritage. The entire village comes alive with music, festivities, and races on fishing trawlers—where fish and chips are consumed with glee, and visitors are immersed in authentic Icelandic culture.

East Iceland cottages for rent by the sea on the peninsula of Mjóeyri, outside the village of Eskifjörður.

Jim Dobson for Forbes

Make Hotel Sigló your base camp—this harborside gem offers sweeping views of the fishing boats and distant fjord. The spacious contemporary rooms and warm service make this a destination unto itself.

Don’t miss a visit to Segull 67 Brewery, a family-run craft brewery housed in a converted fish factory. Run by three generations—a grandfather, father, and son, this brewhouse is a local favorite. Their small-batch beers are served in a cozy, minimalist tasting room.

Owner Elvar Reykjalin and grandson Sigmar Reykjalin Hjelm and their Hot tubs on the Black beach in Hauganes

Jim Dobson for Forbes

Rotten Shark Appetizers in Hauganes

From Siglufjörður, head south to Hauganes, a peaceful village by a fjord. Perched above a black sand beach, you’ll find the Fjöruböðin Black Beach Hot Tubs, a unique experience created by Elvar Reykjalin—Iceland’s very own Pierce Brosnan. After soaking in the waterfront tubs, visit the Baccalá Bar for a drink and seafood.

And for the adventurous and daring, try the Rotten Shark (Hákarl) tasting they offer. If anything, it is worth it for the laughs alone, thanks to the comedy team of Elvar and his grandson. Big things are in store for Hauganes: plans are underway for a new beachfront hotel and expanded soaking areas to open next year.

One of the cottages for rent at Fjalladýrð. The adjacent Cafe in the mountains is owned by farmer Vilhjalmur Vernhardsson

Jim Dobson for Forbes

Lake Mývatn and the Middle Ages Cafe in the Mountains

Next up is Lake Mývatn, one of Iceland’s most famous volcanic lakes. Grab a quick bite at Fish & Chips Lake Mývatn, a quaint roadside stop with lake views and cod that comes directly from the Sólberg óf 1 fishing vessel. Expect long lines—it’s a favorite among road-trippers.

Then, take a detour to Möðrudalur, a tiny outpost at the edge of the northern highlands. Stop at Fjalladýrð Möðrudalur, known to locals as the “cafe in the mountains.” Owned by farmer Vilhjalmur Vernhardsson, the property feels like a location from The Lord of the Rings. It’s Iceland’s highest inhabited farm, dating back to the settlement era. Here, you’ll find turf houses for overnight stays, fabulous gourmet dining, and even your own reindeer roaming the grounds.

Sævar Guðjónsson at his Randulffssjóhús Restaurant in East Iceland

Jim Dobson for Forbes

East Iceland: Fishing, Foxes and Baths

As you make your way through East Iceland, follow Route 92 to Eskifjörður, a charming fishing town nestled beneath the stunning Hólmatindur mountain. The adjacent Hólmanes nature reserve is home to excellent walking trails that weave between the majestic rock formations.

Eskifjörður, officially a trading post since 1789, is still an important hub. Dine at Randulf’s Sea House, an old seafarer’s lodge run by Sævar Guðjónsson and Berglind Ingvarsdóttir. The upstairs fisherman’s quarters have remained untouched since 1890. For a unique stay, you can book one of their bright red cottages on the Mjóeyri peninsula—complete with a resident baby fox and an outdoor soaking tub built into an old fishing boat.

Fishing excursion with Captain Hafthor Valgeirsson and his wife Sunna Julia Thordardottir with Skorrahestar.

Jim Dobson for Forbes

Continue to Neskaupstaður, the easternmost town in Iceland, nestled in a fjord surrounded by towering mountains. While accommodations here are really basic (mine was a converted school dorm), what it lacks in luxury, it makes up for in raw beauty. Skip sleep and head out on a sea-angling night with Captain Hafthor Valgeirsson and his wife, Sunna Julia Thordardottir, fishing under the midnight sun.

Marina in Siglufjörður.

Jim Dobson for Forbes

Be sure to stop at Beituskúrinn Bait Shack, a former whaling station house brought from Norway in the 1800s. It served as a summer bunkhouse and cod storage for almost a century. Now, the building has been converted into a lively bar and restaurant.

Spend a leisurely afternoon watching whales offshore or visit the nearby Reindeer Park in Fellabaer for an intimate, hands-on experience with rescued reindeer. Unlike a zoo, the park focuses on creating close, respectful encounters.

The dramatic fjords of East Iceland

Jim Dobson for Forbes

It’s always time for another hot soak, so visit Vök Baths in Egilsstaðir. Set on the shores of Lake Urriðavatn, this large spa features multiple floating thermal pools with infinity views, two onshore hot tubs, a sauna, a cold water mist tunnel, and a swim-up bar. This spa is the perfect spot to wrap up your adventure before heading off to Egilsstadir Airport for the short flight back to Reykjavik.

On my final day in Iceland, I still couldn’t sleep. It wasn’t the endless sunlight keeping me awake, but the feeling that I didn’t want to miss my final glimpses of this otherworldly land. Iceland isn’t just a place you visit. It’s a place that stays with you long after the midnight sun has finally set.

Vök Baths

Unique Hotels Are Coming For the Adventurous Traveler

As tourism surges and adventure-seeking travelers look for unique experiences, a wave of new resorts is being planned to meet the demand.

Iceland’s famed Blue Lagoon is plotting further hospitality expansion, with a second Retreat-branded hotel expected to open in the highlands of Iceland by 2027. Blue Lagoon said the new hotel will be located in a mountain destination that’s relatively close to the company’s post-apocalyptic feeling Highland Base at Kerlingafjöll resort, which opened last July. The highlands have been off-limits to outsiders in winter, but Highland Base changed all of that.

The new adventure-focused Highland Base concept features a geothermal spa and a high-end 40-room hotel in Þjórsárdalur Valley, Iceland. The building is carved into a rocky mountain and partially covered with the volcanic materials of the site. The natural rock is always present within the interior of the building, with large windows that open up to the surrounding landscape.

This new geothermal spa and high-end hotel in Þjórsárdalur Valley is carved into a rocky mountain and covered in part with the volcanic materials of the site.

basalt architects

Six Senses Össurá Valley

The first phase of the project, slated to open in 2030, is located in Svínhólar near Lóni. The flatland at the southern end is adjacent to the Lón Lagoon, which is separated from the North Atlantic Ocean by a beautiful black sand beach. There will be a 70-guestroom resort and private cottages as well as branded Residences on the surrounding land. Futuristic architect John Brevard will design the property inspired by the country’s mystical elves, whose pyramid-shaped homes will add mysticism to the project.

Hofdi Lodge in Northern Iceland

Hodfi Lodge

Hofdi Lodge – Höfði Lodge

With 40 rooms and breathtaking views of Eyjafjörður, this remote adventure lodge is just 25 minutes from the north capital, Akureyri. Built by the owners of Viking Heliskiing, the property is perched on cliffs overlooking the longest fjörd in Iceland; Hofdi Lodge offers a peaceful escape with stunning views. Alongside a restaurant, rooftop bar, and spa, Hofdi Lodge also features a gym, helicopter pads, horse stables, and indoor golf.

Mirrored house at ÖÖD

ÖÖD Hotels

ÖÖD Hekla Horizon

This new development is bringing seven mirrored homes to the south of Iceland near the Hekla Volcano. The houses are designed to blend seamlessly into the landscape. Jaak and Andreas Tiik run a popular mirror house company with projects worldwide, from California to Ghana. They have been engineered to withstand some of the world’s most extreme weather conditions yet still provide a 180-degree floor-to-ceiling glass façade that seamlessly blends into the natural surroundings.

New Forest Lagoon Hotel will join the existing Forest Lagoon geothermal spa.

Forest Lagoon

Forest Lagoon Hotel

This 120-room hotel is currently under construction next to the Forest Lagoon, just outside of Akureyri. The hotel will feature a restaurant, a conference hall, and, of course, a great connection to the Forest Lagoon, which both locals and visitors in North Iceland have highly regarded. The hotel will open at the end of 2027, and the lagoon will be expanded to connect to the building.

Among other properties, Hilton will be expanding in Iceland with two new additions: the Akureyri “Skáld” Hotel, Curio Collection by Hilton, set to open in summer 2025, and a premium lifestyle hotel in Reykjavik, scheduled to open in spring 2026.

Fjöruböðin – Beach Baths Hauganes