Guesthouse Dyngja was our favorite accommodation on our recent ring road trip. It is right in the middle of town, with 4 restaurants less than a block away, plenty of parking, and offered an easy walk out the edge of the harbor (good for sunset). Very modern/up to date furnishings and everything is spotless (probably recently renovated because everything just seemed new). Beautiful large pix of south Iceland sites on the wall. We met several other families also staying there and the shared kitchen area was plenty big enough for multiple groups to share the space along with a very large shared refridgerator. Coordination on arrival (via code) was straightforward. Generally, we also just liked Hofn a lot as well (especially on a clear day when the glaciers are visible in the distance!)