Icelandair Hotels Group is a subsidiary of the Icelandair Group. The Icelandair Group was formed in 1937 when the airline FlugfelasAkureyrar was established at Akureyri on the north coast of Iceland. In 1943, the company moved its headquarters to the capital Reykjavik and renamed it Air Iceland, which later assumed the international trade name Icelandair. In 1944, another Icelandic airline came out, which was called the Loftleioir, which was assembled by three young pilots hailing from Canada. Both companies focused on Icelandic domestic flights but eventually started international flights between Iceland and other countries. In 1973, the companies decided to monopolize the operations and merged. In October 1979, Flugleioir took over the responsibilities for its two parent companies and decided to keep Icelandair as the international trade name. Flugeleioir only maintained its name for domestic services.

As this part of the traveling business was a success for Icelandair, they expanded their operations into other tourism sectors, which gave birth to Icelandair Hotels. Obviously, the hotel chain still kept the international trade name, marking it as a subsidiary of the prominent brand no matter what. In 2013, the company was earning well in all its businesses. They had up to 7% available hotel room nights that year and an income of $1,022,957, which was up to 14%.