The body of 21-year-old Elisa Lam was discovered Tuesday by a maintenance worker at the downtown Cecil Hotel after guests complained of low water pressure.
Lam, of Vancouver, travelled to California alone on Jan. 26 and was last seen five days later by workers at the hotel.
Police initially called her disappearance suspicious. Investigators are now considering the possibility of foul play because of where the body was found.
Lam's body was located at the bottom of one cistern that was about three-quarters full of water, Los Angeles police Sgt. Rudy Lopez said.
The opening at the top of the cistern is too small to accommodate firefighters and equipment, so they had to cut a hole in the storage tank to recover Lam's body.
The cisterns are on a platform at least three metres above the roof.
To get to the tanks, someone would have to go to the top floor then take a staircase with a locked door and emergency alarm preventing roof access.
Another ladder would have to be taken to the platform and a person would have to climb the side of the tank.
Lopez said there are no security cameras on the roof.
The tanks provide water for hotel taps and would have been used by guests for washing and drinking.
British tourist Michael Baugh and his wife said water had only dribbled out of the taps at the downtown Cecil Hotel for days.
On Tuesday, after showering, brushing their teeth and drinking some of the tap water, they headed down to the lobby and found out why.
"The moment we found out, we felt a bit sick to the stomach, quite literally," Michael Baugh, 27 said. "Especially having drank the water, we're not well mentally."
Los Angeles police Sgt. Rudy Lopez said the county Department of Public Health had tested the water and deemed it safe. Department officials did not immediately return calls seeking comment.
A call to the hotel also went unreturned.
An autopsy could be performed as early as Thursday to determine the cause of death.
"We do all the death investigations involving accidents, suicides or homicides or natural deaths where there's not a doctor in attendance," said Ed Winter with the L.A. County coroner's office. "We are conducting an investigation into the death of Miss Lam."
Winter said Lam's family is in Los Angeles.
The coroner's office is not releasing any details about the circumstances surrounding Lam's death.
CBC News has obtained a letter to hotel guests asking them to vacate the premises and advising them not to drink or use any water at the hotel under any circumstances "due to an unexpected emergency."
"The hotel has been asked by local authorities to ensure that the water services at the premises be immediately terminated," the letter reads. "There will be no drinking water, nor water suitable for washing, bathing, showering or use for any purpose whatsoever over the next two to four days.
"Should you remain on the premises, you do so at your own risk and peril."
Lam intended to travel to Santa Cruz, about 560 kilometres north of Los Angeles. Officials said she tended to use public transportation and had been in touch with her family daily until she disappeared.
Hotel surveillance footage showed Lam inside an elevator pushing buttons and at one point sticking her head out the doors and looking in both directions.
The Cecil had once been the occasional home to infamous serial killers such as Richard Ramirez, known as the Night Stalker, and Austrian prison author Jack Unterweger, who was convicted of murdering nine prostitutes in Europe and the U.S., the Los Angeles Times reported.
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