It was a gloomy scene outside the hotel, with hotel staff clearly shaken.
A guest said she saw a distressed child wrapped in a towel being led out of the pool area by a staff member.
Hotel staff members said they could not comment on what had happened.
The Rotorua Daily Post tried to contact the Sudima Hotel Lake Rotorua's manager, but he was unavailable for comment.
Another guest said she did not witness the drowning but said the mood throughout the hotel was "pretty glum".
"All I know is that whatever happened, it doesn't sound good. It's very airy in there [the hotel]," she said.
Rotorua police Senior Sergeant Karl Konlechner said he could confirm there was a sudden death at the hotel, but could not speculate on the cause of the person's death.
Police were investigating the cause of the death, he said.
Mr Konlechner said the police's main priority was to notify the victim's next of kin and family members.