There were a couple hostels in Reykjavik, Iceland, I stayed at the large one near the campground. Was a great place to start and end my bike tour. Grocery store and liquor store were about a km away if I recall correctly. The airport shuttle stopped at the Hostel, I think I had to change buses, but it was still quite convenient.
Considering the price of lodging in Iceland, the hostels were clearly the choice for frugal travelers on a budget.
Speaking of Iceland, after riding my bike all day through windy rain when I was pretty much soaked, I was looking for the campground in a small community. Could not find it but I saw a hostel, so I went in to ask where the campground was. After being in a warm and dry building for about 5 seconds, instead of asking where the campground was, I asked if they had room for one more traveler for the night. It kept raining for the rest of the day and night, I was so happy I found the hostel there.
https://www.hihostels.com/hostels/s-berg
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I mentioned above that I stayed at the San Francisco Fishermans Wharf hostel. That is another high cost city, but the hostel was quite affordable.
But, I thought that the Moab hostel was a dump. Good price, but that was about all it had going for it. I do not think it met the standards for HI.