The Chinese Ambassador to Pakistan is suspected to have been the target of the attack in the car park of the Serena Hotel, correspondents say.
He is understood to be in Quetta, the capital of Balochistan province near the Afghan border, but was not present at the scene at the time.
The Pakistani Taliban have claimed the attack, without giving details.
In recent months the group, and other militant organisations, have stepped up attacks in tribal areas near the border with Afghanistan.
Footage of the blast was shared on social media in the aftermath, showing a fire raging in the hotel's car park.
The Serena Hotel is the best known in Quetta, and provides accommodation for government officials and visiting dignitaries.
Interior Minister Sheikh Rashid Ahmad told Pakistani broadcaster ARY News TV that "a car that was full of explosives exploded in the hotel".
He added that the Chinese ambassador, Nong Rong, was at a function at the time of the explosion and so was not at the hotel.
Balochistan is the site of a long-running separatist insurgency.
Militants want independence from the rest of Pakistan, and oppose major Chinese infrastructure projects in the area.