The building, in the northern resort town of Muree, collapsed in the early hours of Thursday morning.
There was confusion over who was killed in the incident, with some local reports saying the owner died, while others said his wife and son had also been killed.
"It felt like an earthquake jolt and then things started falling," the owner's daughter told local media.
"I don't know what happened at the time and why the building collapsed."
Up to 15 people remain trapped in the building, although one woman was saved after calling rescuers on her mobile phone, local police said.
Army rescuers equipped with cranes have joined police and local rescue workers to help recover those trapped, police said.
Local police chief Sajid Kiyani said the collapse was due to shoddy construction work.
"It [the hotel] was built three to four years ago using sub-standard material. A notice had already been given to the owner to improve its condition," he said.
The city mayor said an order had been given for the building to be demolished, however he said the building's owner had not carried out the demand.
Up to 75,000 people died in last October's 7.6 magnitude earthquake,which struck near Muzaffarabad in Pakistani-administered Kashmir, while at least three million were made homeless.