Sure. A hotel will charge what the market supports. To that extent, Kyoto follows the same rules as Paris and the rest of the world. Kyoto is a popular destination with a finite number of hotel rooms...

But the prices of traditional inns (ryokan) in Kyoto get a bit of a special boost, because many people specifically want to stay at a traditional Japanese inn when they visit Kyoto. They're less interested in a bland hotel room. They want to do the traditional thing. As a result, they end up paying a premium for being in a touristy town and a premium for doing the touristy thing in a touristy town.

IME the ordinary hotels in Kyoto don't command such a premium. People are more rational about the cost performance of the Westins / Hyatts / Granvias etc. For this reason, I think that it's a mistake to say that "you get what you pay for" with regard to ryokan in Kyoto.

As for Hakone... nice lake and a view of Fuji. But the Hakone premium is really a function of the resort's proximity to the big city. If you're a stressed out Tokyoite with little leisure time, you're happy to pay for a resort that's easy to reach. But if you're a tourist with a JR pass and time to explore the country, why would you want to pay a "Tokyo's doorstep" premium?

If one wants to experience ryokan in Kyoto and Hakone, then Hakone and Kyoto are the only places to realize that dream. But if one wants to experience the best ryokan at the price point one can afford... and the price point that one can afford is not $1,000+ per night.... Kyoto and Hakone are not the places to do it.