"We got out to the corridor down to the end by the exit, opened the fire door and the foyer was full of black smoke,'' she said. "We were horrified to come across the black smoke.''
One hotel guest was treated at the scene for smoke inhalation, but there were no other reports of injury.
Senior Sergeant Mel Aitken last night said the fire was not being treated as suspicious at this stage.
Dunedin Central Senior Station officer Rob Torrance said last night he was confident all guests were accounted for. "Initially, we had five persons reported missing, but we are certain they are out.''
Fire investigators began examining the room last night but it was too soon to say what caused the blaze, which at its peak was attended by eight fire appliances and dozens of firefighters, he said. He confirmed the hotel has no water sprinkler system. It has no cooking facilities in guests' rooms.
Firefighters worked at the scene late last night, examining the ventilation system as a precaution in case it spread to other rooms.
The three and a-half star hotel, which was recently refurbished, sustained extensive smoke and heat damage, with staff working to reassure guests concerned about their possessions and their accommodation.
The acting manager of the hotel declined to make any comment last night.
Watching firefighters douse the flames was guest Rose Stevenson, of Christchurch, who was dressed in a bathrobe. She was in the bath when the alarm sounded.
Her husband, Dave, said the couple assumed it was a false alarm but were shocked to see smoke coming from the rear fire escape, and thought "this doesn't look too good''.
"We closed that fire escape door and went down the other end and got out.''
A touring Indian couple, who were staying in the room above the fire, said they were concerned their possessions would be ruined just days before they were due to leave the country.
Attracted by the smoke billowing around the city and the large number of emergency services at the central Dunedin site, hundreds of inner city residents watched the drama unfold next to stunned staff and guests.
It is understood the hotel would remain vacant overnight. About 30 guests were being accommodated elsewhere, police said.
- Otago Daily Times