Twenty-six fire engines were sent to the seafront hotel at about 01:05 BST, and nine were still on site by 15:00 dampening hotspots after what firefighters called a very severe fire.
One person was taken to hospital with minor injuries, while officials warned the building's structural integrity may have been compromised and sought advice from inspectors.
Witnesses described smoke billowing from the underground car park, explosions and intense heat, as the district council opened a welfare centre and nearby businesses sheltered displaced guests.
The fire shut down part of the area around the hotel and left police appealing for witnesses as investigators work to establish how the blaze started.