Militants were able to transport the bombs, which exploded just before midnight (local time) yesterday and were heard across the city centre, inside the walled compounds of the Ishtar and Babylon hotels in central Baghdad.
IS -- which has overrun swathes of territory north and west of Baghdad since June last year -- claimed the bombings in an online statement, saying one car bomb was left at the Ishtar while the Babylon blast was a suicide attack.
The blast at the Ishtar -- formerly a Sheraton -- shattered windows of the recently renovated hotel, turning rows of expensive cars and SUVs into charred, twisted metal.
The force of the explosion turned some cars on their sides, and more than 15 heavily damaged vehicles still sat in the car park today.
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The Ishtar is a popular site for wedding celebrations, and the area -- which also includes a club and the Palestine Hotel -- is crowded with people yesterday nights.
IS frequently targets areas where crowds of people gather, including markets, cafes and mosques.
That a bombing can still happen even here "means there is no security," he said.