This is a true"little (Japanese) hut in the mountains" with great onzen experience! You just have to embrace the whole experience. If you do, this is definitely 5 stars! If not, maybe look for a more westernized hotel instead.
Just one caution, this mountain resort is up on a winding mountain road around .5-1km from bus stop "sengyoro mae". If you have heavy luggage, it's worth using baggage service at Hakone Yumoto station. I hauled it up the hard way and that was a sauna experience in itself, even in winter!