Firefighters were called to a blaze at Cathedral Junction in central Christchurch on Monday morning.
Crews from the Christchurch City and Spreydon stations responded to the fire at 8.21am.
It is understood to have broken out in a restaurant near the Quest apartment hotels on Worcester St.
Fire and Emergency New Zealand said they were alerted to the blaze when an automatic alarm went off.
A Fenz spokesperson said the small fire had been extinguished by the sprinkler system before the crews arrived.
The spokesperson said the automatic sprinklers had worked as planned.
"The sprinklers activated on that first floor, which pumps out a considerable amount of water, and then that’s obviously flowing down through the roof space into the floor below," the spokesperson told the Herald.
"We’ve managed to isolate the smoke damage to the first floor, which we’re ventilating now using a positive pressure fan and the water damage to this building as well, but [water damage] is definitely going to impact the Quest for some time."
A worker at Quest told the Herald she initially thought a guest was cooking bacon when she smelled the smoke.
"I heard the fire alarm and it kept going on and on. Then I saw water dripping from the ceiling, from the sprinkler upstairs," she told the Herald.
An estimated 50 guests were evacuated from the hotel, the worker said.
Worcester St was closed for about 30 minutes while the scene was cleared. The fire crews remained at the site for just over two hours.
