Sounds like it could be a lap dance club. I wouldn't worry there a quite a few in Cyprus. They don't cause any trouble though nor do they cause any noice so it shouldn't be a problem.
I remember I used to go there (sandy beach, not lap dancing club...just thought I might clear that up...Lol) and swim in the swimmig pool....but they made it off limits to non-guests...was a sad day when we found out we could no longer go...
From what I can see, it's a really nice hotel, although I have only seen the pool and beach...but there great so no worries!!
PS, if your looking for a good restaurant in Larnaca, try Lysia, it's does brilliant Cypriot food, especially the souvla...my mouths watering just thinking about it!!!