Police said they brought Williams and his daughter to the police station, talked to them and then released them. No charges were filed.
Police would not elaborate on the nature of the argument, saying it was minor.
Renaissance Hotel management declined to comment on the incident.
People in Hollywood said they were glad the police and the hotel management did not elaborate on the incident.
"It's absolutely a family matter. Family matters should be to family matters unless there's extreme violence of some sort," said Hollywood resident Charles Gorgana.
Williams was an Ohio homeless man whose incredible voice made him a YouTube sensation.
He has been in Los Angeles for several television appearances. He also went to a Lakers practice where he met Kobe Bryant.