I just returned from Beijing where I stayed at LuSongYuan and yes, it is air conditioned. And for winter travelers, it has both radiators and individually controlled heating/airconditioning units in each room. In my opinion staying in a hutong is much to be preferred to a bland international hotel. I loved the fact that my room opened out onto one of the courtyards where I could sit outside if I wished. Real people live on the same street with the hotel so you feel a part of the neighborhood.
I reserved directly on the website but I've used Asiarooms for other trips. I'm glad a chose a "special room" because it had what I think of as 1930s Shanghai decor--lamps, headboard, chairs, etc. with authentic Chinese feel. I don't know what the cheaper rooms offer but I had the sense that they were less atmospheric. Everything was modern, clean, and comfortable (yes, I like hard Chinese beds). Earlier postings mentioned a bad smell but I didn't experience anything like that.
The people at the front desk spoke very good English, and even the maids and bellmen had basic English skills. They were very accommodating when I asked to switch to a room further away from some renovations that were underway. The restaurant provides reasonable meals (nothing fantastic but certainly good) and a breakfast buffet each morning. There are a number of restaurants out on the main streets but it's a lot easier, although more expensive, to have breakfast at the hotel. FYI, the Source Restaurant just down the street is marvelous. It's a modernization of another courtyard building--it serves a fixed price meal and you eat whatever they are making that evening, about 6 or 8 courses. Yummy!
There are two computers for checking email, a very nice room for tea and reading or chatting. But no business center, fitness room, and other fancy amenities. Some times it took a while for the hot water to arrive in my bathroom. If you need/want a lot of special services that come with a 5* rating, then this is not the place for you. It is an old building that has been upgraded to modern standards without sacrificing old Beijing character.
I recommend using their airport pickup service so that you get to the place easily. It costs a bit more than a taxi but is more convenient since the map on their website is almost impossible to read. Once you check in you can use the hotel card with the map on the back to show to taxi drivers, but it is an obscure location. The closest subway station (Andingmen) is about 15 minutes away, but with the new subway lines being built in anticipation of the Olympics in 2008, you will soon have more convenient access to public transportation. I often use the subway because, with Beijing's increasingly congested traffic, it is easier get to the other side of the city that way.