"Free Steil" is a small and comfy hotel, very affordable, and just a five-minute walk from the sandy dune-lined beach. It has the feel of a typical German middle-class hotel with a late-1990s design, with quaint furniture, a small TV set, and a small yet relatively modern bathroom. Breakfast was more than adequate; an unusual feature was a coffee machine that allowed making all kinds of different coffees. The owner was friendly but initially a bit difficult to talk to; he warmed up after a while, which I guess is very northern German.
Hohwacht itself is somewhat sleepy, with limited touristic infrastructure (i.e., few shops, a handful of restaurants). This is not necessarily bad, as it promises a quiet vacation. But with a somewhat cold German summer (air and water temperatures were at 15 degrees Celsius the day we stayed in Hohwacht), choices are a bit limited.
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