Investigations have revealed the fire at Dunedin's Kingsgate Hotel was started by a lamp near a bed.
Around 30 people were evacuated when the fire broke out on Monday night.
The hotel has suffered extensive damage and will remain closed for the foreseeable future.
The Fire Service says the occupants of the second floor room fled when the blaze started, leaving the door open and allowing the fire to spread quickly.
It's understood the hotel didn't have sprinklers installed, which the fire department say would have meant it could stay open.
