Two survivors have been rescued as workers search for at least three people still missing.
Rescuers on skis reached the hotel at 4am local time (3.00am GMT) yesterday after their rescue mission suffered severe delays because the conditions.
The rescued pair have been named as Giampiero Parete and Fabio Salzetta by Italian media.
Early reports from the scene suggest lights at the hotel were on when rescue teams arrived but no voices could be heard from inside.
Two trapped guests sent a WhatsApp message to rescuers which read: "Help help we are dying of cold".
An avalanche has hit Hotel Rigopiano in Italy
Two children were among the 20 guests staying at Hotel Rigopiano in Pescara, a province in the Abruzzo region, when the avalanche hit.
While some hotel guests were able to get away before the avalanche struck, it is unknown how many were in the building at the time of the incident.
The hotel, on the slope of Gran Sasso, had earlier used its Facebook page to warn guests the phone network was down due to bad weather.
Mayor of Pescara Antonio Di Marco described the avalanche as a “terrible tragedy” and said the hotel is buried in snow.
A hotel chef raised the alarm with the local Red Cross
Unfortunately this terrible tragedy has occurred
Mayor Antonio Di Marco
An avalanche warning was triggered earlier yesterday after a series of earthquake rocked central Italy.
Mr Di Marco said: "There seem to be victims, but it all needs to be confirmed. There were 20 guests in the hotel."
In a Facebook post, which has since been deleted, Mr Di Marco said: "Unfortunately this terrible tragedy has occurred. It seems the people are dead, but this has yet to be confirmed."
Italian news agency ANSA said at least three people are believed to be missing with other local media saying as many as 30 guests and staff are unaccounted for.
The chef from the four-star spa resort raised the alarm with Pescara Red Cross who have rushed to the scene.
Hotel and guests are feared missing in the avalanche
Rescuers are trying to reach people trapped in the snow
— InfoEmergencias (@InfoEmerg) January 18, 2017
It comes hours after several strong earthquakes and aftershocks struck central Italy, which has been hit by heavy snowfall in the last week.
Four quakes of magnitude 5.2 and higher struck near the hill town of Amatrice, some 60 miles northeast of Rome, in the space of four hours.
Much of the area had already been abandoned after last year's earthquakes.
The four star Hotel Rigopiano was hit by the avalanche on the slopes of Gran Sasso
The Abruzzo region has been hit with heavy snowfall in recent days
The avalanche hit the hotel on the slopes of Gran Sasso in central Italy
Terror in Italy: Two devastating earthquakes hit central Italy
Thu, October 27, 2016
Shocking images show the mass trail of destruction after TWO powerful earthquakes shook the Italian city of Perugia in the space of a just a few hours.
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Two women carry their belongings after an earthquake in Visso
The central Lazio, Marche and Abruzzo regions have been grappling with heavy snowfall, and one man aged about 82 died after the snow and one of the tremors caused the roof of a farm building to fall on him, a fire service spokesman said.
Prime Minister Paolo Gentiloni said soldiers would help rescue teams get to the affected villages.