One of the joys of visiting Hokkaidō is getting to stay in some truly fantastic (and reasonably priced) lodgings run by eccentric characters. Outside of Sapporo and resort areas like Niseko, world-class hotels are basically non-existent; travelling here means roughing it a bit. In almost any city, you can find basic economy chains, of which Toyoko Inn (www.toyoko-inn.com/eng) is the most reliable and prevalent. Hostels and campgrounds are plentiful, too.
Motorcyclists and cyclists love riding around Hokkaidō, and not just for the winding mountain roads and scenic views. The island has a large number of 'rider houses' (ライダーハウス). These are bare-bones budget accommodation options reserved for travellers on two wheels, usually on the outskirts of town. Nicer ones are similar to youth hostels; at the most basic, you might get a spare futon in a shed. Many have been running for decades and have a devoted following; these are great places to tap into the local network of motorcyclists and cyclists. As they're small they can fill up fast, so it's wise to call ahead during summer. Most close October through May.
For a full list of Hokkaido rider houses, see www.hatinosu.net, in Japanese.