No one claimed responsibility for the attack in Dera Allah Yar, a town in the southwestern province of Baluchistan, although police said they suspected ethnic Baluch separatists.
"The bomb was planted inside the hotel and it exploded when a large number of people were sitting in a hall," local police official Javed Gharsheen told Reuters. The town is around 300 km east of provincial capital Quetta.
Witnesses said the two-story building was destroyed. Rescue workers and police were removing the rubble to find any survivors.
Police said the death toll could rise as several people were believed to have trapped in the rubble.
Baluch militants have been waging a low-level insurgency for decades for more autonomy and control over the natural resources of their impoverished region.
The activists often target government installations, security forces, gas pipelines, railway tracks and electricity pylons.
They have intensified their campaign since the assassination of a tribal elder, Nawab Akbar Bugti, in a military operation in 2006 during the rule of military President Pervez Musharraf. Read More