Staying on a houseboat moored in Dal Lake is the defining Srinagar experience and has been since the British colonial period. The boats range from very basic (a bedroom and a small sitting area, shared bathroom, and a cook who does three meals) to genuinely luxurious (multiple bedrooms with carved walnut panelling, antique furniture, proper kitchen, and dedicated shikara). The Heritage category boats, licensed by the tourism department, are the most regulated and generally most reliable in quality.
The houseboat experience means sleeping on the water with the sounds and light of the lake around you and, in the morning, a shikara arriving with breakfast. It means sitting on a rooftop terrace watching the mountains turn pink at sunset. It also means that getting anywhere requires either a shikara to the shore or a wade through the politics of the Houseboat Owners Association. Most houseboats include all meals in the room rate; the food quality varies considerably. Reading traveller reviews and asking specifically about recent guests' experience is worth the extra research. Book directly with the houseboat owner rather than through agents, who take a significant cut and sometimes misrepresent the boats.