Major Abdullahi Aden, a police officer told Reuters the car bomb exploded at the gate of Nasahablod Two hotel.
"They are fighting inside. So far we do not have casualty figures," he said.
"It is a busy hotel frequented by lawmakers, (military) forces and civilians." A Reuters witness heard a loud explosion and smoke rose over the scene. Ambulance sirens could be heard.
It was not immediately clear who was behind the assault but Islamist group al Shabaab frequently carries out bombings and gun attacks in the Horn of Africa country.
Al Shabaab is fighting to topple Somalia's western-backed government and rule according to its strict interpretation of Islam's sharia law. A bomb attack in Mogadishu this month killed at least 358 people.
Editor: Ade P Marboen
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