We found a great location on the South coast. The hotel has friendly and helpful staff, nice and cozy rooms with a hot tub just outside the balcony door of our room, excellent food (try the lobster soup, the Icelandic surf and turf and the chocolate cake) and lots to do around the area. We especially enjoyed the ride to Vik, a trip to the Highlands (where we were more or less alone all day) and a day trip to the Vestman Islands where we played golf and saw whales.
Don't forget to get your picture taken by the giant 10-foot polar bear in the lobby. We stayed here 3 nights in September and on 2 of them we had great views of northern lights.
A must stay place if you want to try something a bit different (the whole hotel is out of wood - a rarity in Iceland to say the least). Not the cheapest place to stay or eat - but nonetheless well worth the price compared to what we paid in Reykjavik.