Yumoto Onsen is a small village built around the hot spring industry, as its name suggests. Located in the Oku-nikko ("Inner-Nikko") region that lies up in the mountains just beyond the area famous for its UNESCO World Heritage shrines and temples, Yumoto Onsen is easily reached by bus from Nikko, and makes a great destination for nature lovers.
The town is located in Nikko National Park, and is surrounded by gorgeous nature. There are mountains on all sides, the beautiful Lake Yu-no-ko on its south border, some breath-taking waterfalls in the near vicinity, and hiking trails branching out in all directions. The town is a popular destination in fall when the autumnal colors are out in full force (usually mid- to late- October), and winter when the ski areas open and the snowfall makes the area even more pretty. The Nikko Yumoto Camping Grounds and Nikko Yumoto Ski Area (which offers ski and snowboard rental, as well as play and sledding areas for children) are both just a few minutes' walk from the center of town.
Speaking of winter, it's also the best time of year to enjoy the town's most notable feature: onsen. Yumoto Onsen is built on and around natural hot springs, which get enjoyed to their fullest. Hot spring baths are everywhere in the town, found in nearly every hotel and ryokan, as well as some open to the public. There is a hot-spring foot bath center in the middle of the town. There are even a Hot Spring Temple and a Hot Spring Shrine to visit - and the former has baths of its own for visitors to enjoy. The hot water comes from the Yunodaira Marsh, which is located in the northeast corner of the town and is an interesting place to visit and see the hot water bubbling up from the earth. The hot water springs have a high sulfur content here, so the baths are usually a cloudy yellow color, and the scent of sulfur can be detected across the town. The best baths can be found in the many hotels and ryokan, many offering outdoors bath areas with beautiful views of the surrounding scenery.
Wintertime visitors should make a point of scheduling a trip to this area to catch the excellent Yumoto Onsen Snow Festival. It's a small event that packs a big punch, with some absolutely majestic ice sculptures inside snow domes, all set to a beautifully-coordinated LED lights and music display.
Yumoto Onsen (in Tochigi Prefecture, not to be confused with areas of the same name in other parts of Japan) is an excellent side-trip to include with Nikko. From Nikko or Lake Chuzenji, take one of the many Tobu busses bound for Yumoto Onsen, and get off at the last stop, which is #42 "Yumoto Onsen." It's about 40 minutes away from Lake Chuzenji, or 90 minutes from Tobu-Nikko Station.