I was in Iceland in September, 5 -6 years ago. Because we were in France first, I elected to layer my outerwear, instead of bringing a heavier jacket that I would wear only in Iceland. Looking at my photos from Iceland, I was wearing long sleeves and pants, with a lightweight fleece jacket and then a raincoat with a scarf as a top layer. I also had light gloves and a hat. I can see in a photo, that I was hanging the fleece and raincoat in a closet that was about 2 feet in width.
You don't say when you are going, but I have found that when I have multiple layers of varying weights and types of fabric, I can more easily adapt to the day's weather. This worked especially well for a trip we took in January that started in Barcelona at about 60 degrees, followed by Austria and then Switzerland where I wore every layer I had. (and was quite comfortable.)
We camp, so I have become quite adaptable which carries over to other travel. I've hung/dried clothes on chairs, shower bars, window ledges, window locks, etc. You will figure it out. If it were me and there was a difficulty, I'd ask the staff if they had an idea where to hang outerwear.