Four crews were called to the scene in Sea Lane at 11.52am.
A Tweet from Lincolnshire Fire and Rescue said: “Four appliances and ALP attending a fire at a hotel on Sea Lane, Ingoldmells. Further updates will be posted when available.”
Sheila Cane said on Facebook: “It started at the back of one of the spot lights on the roof. Only me on the street. I panicked wow I had to phone 999 I was so so scared.”
Witness John Shackleton told the Standard: “We were driving past on the way to Skegness and saw the fire and ambulances and the police heading towards the scene.
“The roof was totally gone but it didn’t look like anyine was running from the scene.”
Residents have been expressing their shock on social media. Karen Ellis said: “Thank God no one is hurt. My heart goes out to the owners who are going to be faced with so much devastation.”
Diane Oldham said: “I know the guy who runs these as well as the laundrette and cafe. The nicest bloke ever, feel soo sorry for him he must be gutted.”