It is the deadliest terror attack in Somalia since the Islamist al-Shabab group launched its insurgency in 2007.
It is not clear who staged the bombing, but Mogadishu is a target for al-Shabab militants battling the government.
President Mohamed Abdullahi “Farmajo” Mohamed has declared three days of mourning for the victims of the blast.
Local media reported families gathering in the area this morning, looking for missing loved ones amid the ruins of one of the largest bombs ever to strike the city.
Police official Ibrahim Mohamed told AFP news agency the death toll is likely to rise.
Officials also confirmed that two people were killed in a second bomb attack in the Madina district of the city.
A BBC Somali reporter at the scene of the main blast said the Safari Hotel had collapsed, with people trapped under the rubble.
An eyewitness, local resident Muhidin Ali, told news agency AFP it was the biggest blast he has ever witnessed, destroying the whole area.
Meanwhile, the director of the Madina Hospital, Mohamed Yusuf Hassan, said he was shocked by the scale of the attack.
72 wounded people were admitted to the hospital and 25 of them are in very serious condition while others lost their hands and legs at the scene.
The international community has been quick to condemn the attack.