Those injured included children from a nearby school, the Garowe Online news portal reported.
The siege was taking place at Tawakal Hotel, a popular meeting place for government officials, the Dalsan broadcaster said. Militants stormed the hotel after blowing up a car bomb, according to reports.
Al-Shabaab radical Islamist group* has claimed responsibility for the explosions, Garowe Online said.
Al-Shabaab, which is affiliated with al-Qaeda* terrorist group, has been waging an armed struggle against the government of Somalia and is still controlling large areas in the southern and central parts of the country.
* terrorist groups outlawed in Russia and many other countries.