District magistrate Suryapal Gangwar said that the hotel had been sealed till further orders.
The fire teams searched the entire premises to ensure that no one was stuck inside, he added.
Of the 30 rooms in the hotel, 18 were occupied on Monday.
A number of occupants managed to rush out before the fire engulfed the floors.
Asked about the cause of the incident, a district official said: “It may be due to a short-circuit. The exact cause is being ascertained. The hotel owner told us that there is a banquet on the first floor where the fire began.”
Meanwhile, the state government has issued an advisory asking the officials concerned to check fire arrangements in hotels, restaurants, hospitals and other public places to check recurrence of such incidents.
IANS