“A booby-trapped car exploded against hotel Jazeera,” said police officer Muhidin Ahmed, adding that the blast had caused an unspecified number of deaths and injuries.
“It appears to be a suicide attack,” he added.
Another loud explosion followed as ambulances began arriving on the scene of the attack, an AFP journalist said.
Eyewitnesses also reported an intense exchange of gunfire between assailants and security officers.
One of the witnesses, Ali Ibrahim, said five people were killed.