Posting to expand on the answer, was stuck on this one for several hours.
In my project I have a typescript colyseus server and a client which uses typescript, react & webpack.

I had tsconfig.json in both server/ and client/ directories + a basic one in the project root with just experimentalDecorators and esModuleInterop set to true to get things going.

I tried setting target to ES2016 in ./tsconfig.json and ./client/tsconfig.json but that did nothing until I added "include": ["node_modules/colyseus.js/**/*" ] into the root config. - That helped me.

Hope this helps someone down the line.