Organizers invited 400 guests aged 18 and 80 to the orgy advertised as a “masked ball”. Many attended the event wearing latex, local paper Trostberger Tagblatt reported.
Condoms were placed ready on bedside tables and items ranging from handcuffs to private booths were available to cater for different tastes.
The Bavarian state is the majority shareholder in Kur GmbH, the company which operates the hotel.
“The Royal Spa Hotel was hired by an events agency for a private event called 'masked ball for adults',” Kur director Gabriella Squarra said in a press release on Monday.
“No questionable aspect was visible to Kur GmbH during the contract negotiations.”
Squarra promised that measures to prevent a repeat of the embarrassing error would be announced at the next shareholders' meeting.
CSU state parliament member Michaela Kaniber, who called the event a “desecration” of the hotel, is now demanding a meeting with Bavarian Finance Minister Markus Söder.
The hotel, built in 1900, is usually used for more salubrious events such as professional conferences or receptions hosted by the Bavarian first minister.
It is advertised online as a unique beauty spot with state-of-the-art facilities.
“With optimal control of light and sound, any event can be perfectly staged,” runs an advertising text on the hotel website.