Overlooking Austurvollur square in the very heart of the old town, Hotel Borg is a Reykjavik institution, opened in 1930 as the countrys first luxury hotel by a former strongman and circus performer. Its handsome art deco rooms blend period detail with contemporary comfort, and the location could hardly be more central, mere steps from parliament, the cathedral and the pick of the citys cafes and bars. Ask for a room facing the square, and begin the day at the elegant ground-floor brasserie.