Most ryokan are in the onsen district and Oku-Yugawara, 10 to 20 minutes up the valley by bus or taxi. A night there usually includes dinner and breakfast, and the baths are the point.
Stay near the station if you'd rather eat out, come and go, or catch an early train. Every place below has photos, the practical details, and a link to book.
To sleep outdoors, The Base has walled glamping cabins with their own hot-spring baths, and Kamiya is a proper campsite on the hill with a hot spring on site. JaCamp, Matt's English-language camping directory, covers more campsites and glamping around Yugawara and Manazuru.