An excellent onsen and ryokan hotel combo, Hotel Tsubakino in Yudanaka is a great pick within easy reach from Tokyo – you won't need more than two and a half hours worth of train travel to get there. Yudanaka itself is a tiny, friendly and relaxed town adding to the experience. And the nearby Snow Monkey Park is a great bonus.
Hotel Tsubakino have their onsen on the top floor, overlooking the nearby valley and surrounding mountains. Pretty great scenery. The dressing room sports the usual setup with baskets for clothing and personal items along with a few basic but descent grooming stations with all the amenities you'd expect. Towels are not available – you're supposed to bring one from your room. When entering the onsen itself you'll find yourself in the indoor pool area with washing stations lined up along the wall to your right, with the opposite wall made up entirely of windows, giving you a nice view of the surrounding scenery.
Another door over at the far right-hand side of the indoor pool leads to one of the two awesome features of this onsen – the outdoor section. First off are two one-person tubs lined with a nice, dreamy, deep blue coating. The water in these tubs seems to be quite a bit warmer than the usual onsen level. Not too far from the Yasuragi Iojima experience outside Nagasaki, in fact. And I love it. The hotter the better. A larger, wooden, regular onsen pool is right next to the tubs. The views are fairly unobstructed towards the valley and all in all, the setup is really, really nice.
The second thing Hotel Tsubakino has going for it is the separate, private onsen. You sign up in advance, choose an available time slot and get 50 minutes of allocated, private time and a fridge with two small bottles of bubbly. Great if you happen to be of opposite sexes and want to share the onsen experience. You should definitely try it. I forgot to grab a few pics but here's a picture of the private onsen from the hotel's own Picasa album.
Despite being the size of a smaller hotel, Tsubakino feels more like a slightly larger ryokan with nice, informal and friendly service (no surprises there, this being Japan). I would definitely recommend you to opt for a Japanse-style room. It's a rather odd but incredibly nice experience sleeping on the soft, elevated floor. And those sheets are the best ones I've ever had. Period. Once settled underneath all the fluffiness, neither of us wanted to get up. The blanket underneath the table is an electric one to make sure you stay warm and cozy while enjoying your meal.
With some heads-up the hotel will serve you breakfast and dinner but there are a couple of decent options nearby too and we ended up getting most of our meas outside the hotel. And a 24/7 convenience store, Lawson, is a mere two-minute walk away.
Yudanaka itself is a nice, small town and going for a walk late at night is a wonderfully tranquil experience. And then there's the Snow Monkey Park with onsen-bathing monkeys. Definitely worth a visit.
Assuming you want to use the excellent Japanese train services, the first step is getting to Nagano Station. The Hokuriku Shinkansen runs frequently from Tokyo station and the journey runs about an hour and forty minutes. And it's easy to find train routes from other parts of Japan, too. A local line, the Nagano Dentetsu, then streches into the mountains from Nagano, ending in Yudanaka. It's not run by JR so any rail pass you may have won't be useful on the Nagano - Yudanaka leg, sadly, but tickets are incredibly cheap and you buy them from simple ticket machines at the station.
Once you find yourself at Nagano Station, look for the Zenkoji exit. The Nagano Dentetsu line has its own station nearby but you have to venture outside to get to it. Make a right after the Zenkoji exit and head down the stairs, then look for the subway-style entrance to the Dentetsu line station (shown on the map below). The Yudanaka Shibu Onsen website has a pretty good explanation of how to get to Nagano and on to Yudanaka.
Dentetsu Express services use 45 minutes or so to reach Yudanaka while regular services stopping at every station bumps it up to about 70 minutes. When you arrive at Yudanaka station, someone may cheerfully walk up to you and offer help. And, since this is Japan, there's absolutely no reason to worry – these people are volunteers from the local English conversation class, eager to help you find your way around Yudanaka while practicing their language skills. Should any of them be around, simply ask for directions to Tsubakino and they'll get you an analog map and point you in the right direction. It's a short, simple three-minute walk. Below, the location of Hotel Tsubakaino is shown along with Yudanaka station.