Accomodation in Lugano and Geneva for couple with 5 year old

I can't answer your accommodation question, but I would like to comment on your travel plans.
You mention a car. Where are you picking up the car from, and where are you leaving it? I hope the answer is not "Stresa to Lugano", because that will incur a large surcharge for an international one-way car hire. Check with the car hire company how much.
Stresa to Lugano involves a ferry across the lake, or a long detour around the south end of the lake.

Why are you flying from Lugano to Geneva? You are missing the Alps, doing that by train would give you a scenic few hours (about 6) on a train through the Alps.

I can't answer your accommodation question, but I would like to comment on your travel plans.
You mention a car. Where are you picking up the car from, and where are you leaving it? I hope the answer is not "Stresa to Lugano", because that will incur a large surcharge for an international one-way car hire. Check with the car hire company how much.
Stresa to Lugano involves a ferry across the lake, or a long detour around the south end of the lake.
Why are you flying from Lugano to Geneva? You are missing the Alps, doing that by train would give you a scenic few hours (about 6) on a train through the Alps.

Hi Chris,
Thank you a lot for the tip re: car rental. Yes we were considering "Stresa to Lugano" rental and I just found out that the difference is huge (car rental for week with the same location pickup/return will be $240 and when returning in Lugano one way car hire will be $1220. It is almost $1000 difference. The surcharge is not specified as a seperate entry in the rental quaote but clearly it is built in. Big Thank you! As to flying from Lugano, we did not think it would be feasible for our 5 year old bear the long, connecting train rides but we may reconsider. I just found the EuroCity train and this one is only one train lasting 3hrs.
Thank you very much!

Using a flight from Lugano to Geneva (if there's even one available at a reasonable price) is absurd. That will take longer and be far more of a hassle for your 5 y.o. than a train. One of the shortest rail trips that I can find from Lugano to Geneva is a departure at 09:11, arriving Geneve Cornavin at 14:43 (time 5H:32M, one change at Olten, subject to reservation).

Rather than staying in Geneva, you might consider staying in Lausanne instead (it's not far from Geneva, only about a 40 minute train ride). If you decide to stay there, post another note and I can suggest a hotel. It would help to know what your hotel criteria are?

For your stay in Lugano, I found Hotel Pestalozzi very comfortable. Use a Taxi from the rail station, as that's the easiest method with luggage (it's not far). One point to mention is that Pestalozzi doesn't serve booze in their dining room (it's a long story), but not a problem as there are lots of restaurants nearby that do serve booze.

Sylwia,
The whole thing gets a lot easier if you skip Lugano, or do Lugano before Stresa.
Whereas Lugano is on the main rail line to central Switzerland (Milan - Lugano - Gotthard tunnel - Zürich), Stresa is on the main line to western Switzerland: Milan - Stresa - Simplon tunnel - Geneva.
If you go to Geneva from Stresa, it takes 3 hours. Some trains change at Brig, but there are some through trains. For example:

Depart Stresa 09:21, train EC 32, arrive Genève 12:19
Depart Stresa 13:21, train EC 34, arrive Genève 16:19

That should be 5-year-old friendly. You could rent and return the car at Stesa.

The quickest way by train Lugano - Stresa is via Milan, an inefficient V-shaped trip.

This is a typical children's wagon on a Swiss train. Even on regional trains, kids can get up and move around unlike being in a car.