It seems a lot of people stay in ryokans there. I would have loved to have done that, but I know our son wouldn't eat any of the food. We will go back without him at some point and do some more adult things.You might try searching for family-friendly places to stay. I loved the traditional ryokan that I stayed at in Hakone, but it definitely wouldn't work for a young child!
I’ve found two hotels that have private onsens on a patio/balcony outside the room. Now I’m trying to decide which one to stay in. One is right next to the Gora station and the other is by the Kowakudani stationYou might try searching for family-friendly places to stay. I loved the traditional ryokan that I stayed at in Hakone, but it definitely wouldn't work for a young child!