Witnesses say dead bodies and building debris littered the street outside the hotel in central Peshawar Tuesday.
The blast tore through the ground floor of the four-story Marhaba Hotel.
Local officials suspect that the attack was a suicide bombing.
Provincial police chief Sharif Virk says investigators recovered several body parts, one reportedly with a message from the bomber attached.
He says a statement was taped to one of the alleged attacker's legs warning that anyone spying for America would meet a similar fate.
Peshawar is the capital of Pakistan's Northwest Frontier Province, which borders Afghanistan.
Pro-Taleban and al Qaida extremists are active throughout the region.
Local militants have murdered scores of Pakistanis in the area after accusing them of working for America or Pakistan's central government.
Last month, a suicide bomber targeted the country's interior minister, Aftab Sherpao, following a political rally just outside Peshawar.
Sherpao escaped serious injury, but at least 28 people were killed.
The latest blast occurred while Pakistan was recovering from political violence that rocked the southern city of Karachi on Saturday.
At least 41 people were killed when pro- and anti-government forces squared off in the country's largest city. The point of contention was President Pervez Musharraf's suspension of the country's chief justice in March.
Pakistani officials say more violence is possible as public anger continues to mount over the suspension.
Authorities say there is no apparent connection between the on-going political crisis and the Peshawar explosion.