Hotel Breidavik is all about location, location, location. Its not a place you stumble upon by chance, it's specifically the closest place you can stay to the puffin and other bird colonies at Latrabjarg Cliffs. And this is an area mostly serviced by rough, unpaved roads, so being close makes it much more likely that you will go and see the birds multiple times, even during a short stay. And it makes it easier to bird watch late at night when the birds remain active. The nearest town with multiple hotels to choose from looks close on a map but is almost an hour away because of the road quality, whereas Hotel Breidavik is just a few minutes from the bird action.
The hotel has a combination of rooms with private bathrooms, rooms with shared bathrooms, basic rooms without linens, and also a campsite. This is quite an interesting combination, and ultimately very useful, as there are unusual features like laundry facilities and a shared kitchen and eating area, in addition to the more expected bar and restaurant.
But plan ahead - you need to check in advance where gas stations and supermarkets are. And the (long) drive to Breidavik is a bit more relaxed (and takes less gas) if you take the Stykkishólmur to Brjánslækur ferry, perhaps both ways, perhaps even with a stopover on Flatey Island. But taking the ferry reduces the number of supermarkets you'll see on the way from two to one!
Hotel Breidavik is a fantastic find with the friendliest owner!