Police said recovery of the unidentified body was delayed because of flowing water from a damaged water main.
An autopsy is expected later this week to determine the cause of death and an identity.
Three other people were taken to an Edmonton hospital Sunday morning with serious injuries as a result of the fire.
A cause of the blaze has yet to be determined, but RCMP said it is “considering this to be a crime scene until proven otherwise.”
The RCMP’s Major Crimes Unit and other RCMP support services have been brought in to help with the investigation.
Randy Thomas has lived beside the hotel for approximately six years. He was watching television around 1:15 a.m. when he heard a loud rumble.
“As soon as I looked out the window, I knew exactly what happened – the place exploded.”
Thomas then rushed outside.
“I rounded the corner of the restaurant [beside the hotel] and it was fully engulfed. It went fast – the whole place was gone in less than two hours,” he said.
Mayor Penny Shantz said the Tiwana family ran the Bashaw Motor Inn and made the motel a cornerstone of the town.
Schantz wants the town to support the family, who not only ran the motel but lived in it.
“They’re part of our community, and there are others in town that I know were friends of theirs,” Schantz said.
Bashaw resident Jackie Northey started a GoFundMe page to support the family.
“Their sons graduated from school here and contributed to our younger community members in sports and school activities.”
As of 4:30 p.m. Monday, $2,950 had been donated on the page. The goal is to raise $10,000.
The Bashaw Motor Inn is located off Highway 53 near Highway 21. Bashaw is about 136 kilometres southwest of Edmonton.