To me the graphics are fine. I have assumed it is the artists style that makes things look like they do. I have seen other games that have almost photorealistic graphics, but to me Harem Hotel graphics are better.
It may be the current graphics engine is tedious to use or some other engine would produce desired result with less work, but project has been running 7 or 8 years now, change now would delay progress perhaps a year.
I have noticed the current engine has troubles when background is water with waves, then the outlines of foreground objects get wavy.