The game came to be after having Phillips help with the SNES-CD, but scrapped the CD accessory. Nintendo gave Phillips the rights to use five Nintendo characters in CD-i games. Originally, a Super Mario World sequel, Super Mario's Wacky Worlds was planned but was cancelled and Hotel Mario filled the need for a Mario game on the CD-i.
Hotel Mario received highly negative reception, being regarded as one of the worst Mario games ever. This is because of the animation of shutting doors, the unresponsive controls, and especially because of the full motion video cutscenes. Many of the quotes from the cutscenes have become internet memes.