Fire services officials said the fire broke out in the hotel located in a multistoried building on Lenin Sarani in the heart of the city at 10.10 am.
"Five fire tenders were pressed to service and fire is totally under control," they said.
There was no report of any casualty though some people compleined of uneasiness due to the fire.
Fire fighters evacuated the hotel guests to safety, which was a difficult task as the rooms were small.
There was a threat of the fire spreading to adjacent buildings, in which eventuality there would have been a major disaster as the area is a crowded commercial one, they said.
Traffic congestion was reported in the area for an hour due to the incident.