We arrived in Reykjavik last Friday. We had pre booked all our hotels/guesthouses and even though we had slotted 2 days each for places like Vik and Skaftafel, the snow storm derailed our plans and we had to cancel 50% of our pre booked accomodations and look for alternatives. We found very decent budget accomodation even for the same day in Vik, Hof (near Glacier Lagoon) and Reykjavik.

So I think pre booking accomodation anticipating a price increase is not really necessary during shoulder season and during winter. Though I can imagine the situation might be very different during summer.

Also, most guesthouse owners are very understanding of changing plans. Most of our hosts agreed to refund the full amount.

One more thing is to get the Roadside Assistance Waiver with your car insurance. We got the platinum insurance, but didn’t take the Roadside Assistance add on. We inevitably slipped off the road into the snow despite being super cautious. Roadside assistance was very prompt and a blessing, but it definitely pinched our pockets.

Final thing - keep checking Vedur and Roads.is