In both Nikko and the Fuji-Hakone-Izu area, there are modern, Western-style hotels that operate in a fairly standard international style. More common, however, are the traditional ryokan (inns). The main difference between these lodging options is that Western-style hotels are situated in prime tourist locations whereas ryokans stick strictly to Japanese-style rooms and are found in less touristy locations. The undisputed pleasure of a ryokan is to return to it at the end of a hard day of sightseeing, luxuriate for an hour in a hot bath with your own garden view, put on the yukata (cotton kimono) provided for you (remember to close your right side first and then the left), and sit down to a catered private dinner party. There's little point to staying at a Western-style hotel: these places do most of their business with big, boisterous tour groups; the turnover is ruthless; and the cost is way out of proportion to the service they provide.
The price categories listed here are for double occupancy, but you'll find that most normally quote per-person rates, which include breakfast and dinner. Remember to stipulate whether you want a Japanese or Western breakfast. If you don't want dinner at your hotel, it's usually possible to renegotiate the price, but the management will not be happy about it; the two meals are a fixture of their business. The typical ryokan takes great pride in its cuisine, usually with good reason: the evening meal is an elaborate affair of 10 or more different dishes, based on the fresh produce and specialties of the region, served to you—nay, orchestrated—in your room on a wonderful variety of trays and tableware designed to celebrate the season.
