The motel is one of 14 motels contracted by the Government to offer emergency housing under a more controlled regime. The contracted motels also include 24-hour security and social service providers work in the motels providing wrap-around support.
Rotovegas is managed by Wera Aotearoa Charitable Trust and the owner said it ran through evacuation procedures with each guest that stays at the motel.
"The whole motel has practiced fire evacuation drills which was displayed in how quickly and safely the motel was vacated. I'm really proud of the team and residents for their actions. The residents of the motel are a lovely community and the motel is their home. I know many of them will be shaken by this experience. We are very thankful."
The fire was reported to Fire and Emergency New Zealand just after 4.30pm. Police were notified at 4.40pm.
A Fire and Emergency New Zealand spokeswoman said the fire was fully involved when crews arrived.
Fenton St was closed temporarily and diversions were put in place while emergency services worked to secure the scene.
The owner said once Fire and Emergency New Zealand cleared the scene, guests were rehoused in other rooms on-site and within Wera-managed properties.
Fire investigators were now working to determine the cause of the blaze.
Rotovegas is one of 12 motels that is the subject of a Ministry of Housing and Urban Development resource consent process. All emergency housing motels are technically operating unlawfully as they are not consented under the district plan to have long-term tenants, only short-staying visitors.
The Government has applied for resource consent for 12 motels to continue operating emergency housing for up to five years.
The other non-contracted motels - of which there are more than 40 - have been contacted by the Rotorua Lakes Council and told to get compliant or else they would be forced to stop operating emergency housing.