To stay in Reykjavik using points, you've got the option of either burning Hilton HHonors points or Club Carlson Gold points.
The Hilton is a category 7 and standard rooms here start at 40,000 points. Category 7s range from 30,000-60,000. This Hilton is located in the financial district but offers a complimentary shuttle to the city center. The property is clean and modern offering great views of the bay but most people complain about its not so central location (15-20 minute walk) and the lack of free wifi.
Lowest average rates for this summer is around $300. If you're flexible and can travel between low season (starting in September) and next summer, lowest average rates are half the cost at $133. Given this comparison and the desire to travel within the next few months, I'd go with redeeming points.
The Radisson Blu is a category 5 and requires 44,000 Gold points. It's location is in the heart of downtown in the financial and shopping districts. People rave about its central location and friendly, helpful staff. The only negative most people found was the loud nightlife crowd out on weekends.
The lowest average nightly rate I found for a standard room was $300 for peak and $180 for low season. Given the close proximity of peak summer travel and the higher cost compared to low season/booking a few months in advance, I'd opt for the points option.
The Radisson Blu is a category 4 and thus requires 38,000 Gold points. Its close proximity to the city centre (only a 10-15 minute walk away) offers quietness that other hotels may not afford. Though its exterior and lobby were undergoing a revamp earlier this year, most people found the rooms and bathrooms were in need as an update. Overall, rooms are clean and comfortable.
The lowest average nightly rate for this summer is about $250 and low season $140. I'd take the points option for the same reason in the previous hotel.
The Park Inn is a category 1 and usually requires 9,000 Gold points. It's 3km from the city center – a 20 minute walk or a 5 minute cab ride away. Alternatively, a bus stop is conveniently located 100m away.
TJ has stayed here earlier last year and found the rooms spacious but worn. The hotel attracts a 'very mixed' clientele. Go here if you are short on points/ cash but not if you like to enjoy Iceland.
The lowest average nightly rate I found for this summer is $230 and $128 low season or 13,500 points per night. Rates here were comparable to the other two Radisson properties, so I wouldn't hesitate for points redemption.