We are considering a flight from Europe back to the US which will include a 17 hr layover in Reykjavik, Icelandfrom 11:10pm till 4:45pm the next day. Is there some inexpensive place to sleep a few hours? Would the Blue Lagoon be the best place to visit in that limited time?
Why not spend 2 - 3 days in Iceland ? We spent 3 days in Iceland at the front of our European trip this summer and really loved the place. Day 1 - Golden Circle tour, Day 2 - Snaefellsness Peninsula, Day 3 - Blue Lagoon and Reykjavik sights. I enjoyed the Blue Lagoon but would not have stayed overnight in order to visit it.
I don't know about cheap, but there are several hotels in Keflavik where the airport actually is. Reykjavík is at least an hour away. By all means, hit the Blue Lagoon. The Flybus will take you. A hotel shuttle might also. It's amazing and well worth the time and money. Get a massage in the water if you can. On one trip, we stayed over in Iceland on the way to Europe and spent 2 nights in Keflavik. I wish it would have been longer. Someday I want to go back for a week in that unique country.
That's enough time to hit the Blue Lagoon and take a nice stroll in the city in the morning. I think Iceland and inexpensive and polar opposites, at least when I visited (pre-finanacial meltdown). Try booking.com or airbnb (if they have it there).
To Agnes: I visited after financial meltdown and Iceland and inexpensive are still polar opposite. I stayed in hotel Clinic at Blue Lagoon. While it certainly cannot be called inexpensive (as almost anything in Iceland) Blue Lagoon visit is already in the price and hotel has its own private approach to the Lagoon from the terrace and the Lagoon is really light blue. I would strongly recommend that hotel and you will be rested. Splurge, you won't regret. And also to see a real price to you deduct the price of entry for commoners to the Blue Lagoon from your hotel price because Blue Lagoon is already included in the price of hotel.