"We are extremely sorry for any offence or reference to our Wolf of Watt Street event, with tossing of any people," the statement said. "We had no intention of doing so and this was a misguided comment, in reference to the film."
Reached for comment on Monday, a hotel spokeswoman said, "We sincerely apologise but don't wish to make further comment."
The promotion was met with outrage from Dwarfism Awareness Australia, which told the ABC people should avoid using the word "midget" at all costs.
"It is a derogatory slang word that is pretty much on par (with) calling someone the 'N-word'," the group said.
Paralympian Alicia Jenkins, the former national secretary for Short Statured People of Australia, said the promotion left her "more than gobsmacked".
"It is horrifying, it is gut-wrenching, and I suppose my disappointment and my disgust is really hard to put into words," she told the ABC.
"It still appears that dwarfism is the last disability that people seem to think it is OK to mock and it is just wrong."