A Fire and Emergency New Zealand spokesman said crews were called to The Bank, a historic bed and breakfast in Ophir at 8.30am.
The fire at the Swindon St property was well involved and the focus was on protecting surrounding structures, the spokesman said.
A spokesman later said the building had been deemed unsafe and a digger was on site to demolish it.
A reporter at the scene said the blaze had completely gutted the villa. It was still smouldering just before 10am, but was largely contained.
The roof had collapsed.
There were four appliances at the scene and firefighters were battling strong winds.
The fire spread to a shed on the property, but a small cottage on the property was unaffected.
An owner was home at the time the fire started and managed to get herself and her pets out.
