Rescuers battled overnight to reach the Rigopiano hotel, with the first of them arriving on skis. Snow disloged by the avalanche had blocked the roads in.
One person has been pulled dead from the snow. Two have been found alive but most others appear to be still buried.
One official said there were "many dead" in the hotel.
The mountainous region of Central Italy was hit by a succession of four earthquakes on Wednesday and further tremors were reported overnight.
The roof on the four-star spa hotel, close to the Gran Sasso mountain in the Abruzzo region, partly collapsed on Wednesday night. Rescuers said at least 20 tourists and seven staff were inside at the time.
Crews had been calling out to survivors but there was no response.
Local residents in Farindola alerted emergency services.
The first victim, a man, was pulled out at about 09:30 (08:30 GMT) on Thursday, Corriere della Sera newspaper reported.
"There are many deaths," Antonio Crocetta, the head of a mountain rescue team, was quoted as saying.
There were children among the guests, and media reports say children are among the dead.
Italian media reported that some guests at the hotel had been able to send text messages after they were trapped.
"Help, we're dying of cold," Ansa quoted one couple as saying.
A snowstorm and blocked routes made access to the hotel difficult. Vehicles struggled to get through the snow, and some rescuers eventually resorted to skis.
Italian media said the first rescuers only reached the hotel on skis at 04:00 on Thursday.
Video footage showed them shovelling through a wall of snow.
Two people were found alive outside the damaged building, which was surrounded by fallen trees. They were taken to hospital, one suffering from hypothermia.
One of them, Giampaolo Parete, said he had gone to get something from his car when the avalanche hit.
"I was covered by the snow but I managed to get out. The car was not submerged and I waited for the rescuers to arrive," he said, quoted by Ansa news agency.
He added that his wife and two children were under the rubble.
The civil protection agency said it was now trying to get rescue vehicles to the hotel. There are reports that there is an ambulance a few kilometres away, which cannot yet reach the building.