Emergency crews were called to the Metropole Hotel and Spa in Llandrindod Wells on Tuesday evening.
Smoke billowed from the luxury four star Victorian hotel after the fire alarm was raised.
The fire, which began in the basement, affected the rear rooms of the six-storey hotel, which was unoccupied at the time.
No staff were injured and the hotel owner and managing director Justin Baird-Murraysaid the damage had not been significant.
At 6:25pm, crews from Llandrindod Wells, Builth Wells, Rhayader, Llanwrtyd Wells, Talgarth and Knighton attended the fire.
The hotel comprises of six floors, above ground, and two basements.
The fire was contained to a laundry room basement, but the smoke had spread to all rear rooms of the hotel.
Firefighters extinguished the fire using ten breathing apparatus, four hose reel jets and four thermal imaging cameras. Mid and West Wales Fire and Rescue Service also deployed an Incident Command Unit to the incident.
Firefighting operations ceased at 9:33pm however crews remained on scene overnight to monitor and dampen down hotspots, while police also attended the scene.
The cause of the fire is now being investigated by the Fire Service.
Group Manager Craig Thomas, Northern Division Commander for Mid and West Wales Fire and Rescue Service said “When crews arrived at the scene, they were met with a fully established fire in the laundry room and quickly established that they needed additional resources to contain the fire.
"Our firefighters worked extremely well in arduous and complex conditions to extinguish the fire and stop it from spreading to the main hotel.”
Managing director Justin Baird-Murray said: “We have had quite a dramatic evening. At about 6.15pm the fire alarms went off. There was only me and Judy here. I went to investigate, our fire panel, tells me where to go. I went to the lower ground floor and sure enough there was a fire.
“It turned out to be quite a serious fire. I phoned the fire brigade, an incredibly swift reaction. Llandrindod Wells were first on site within 10 minutes. They have done a fantastic job.
"I think we had Llandrindod Wells, Builth Wells, Talgarth, Llanwrtyd and maybe Knighton as well and the firemen and women that have been here have been amazing.
“The fire was contained very quickly. The fire was not that significant. The main problem is going to be sorting out the smoke because it went through the whole hotel, so that is pretty awful but we can manage that.
“So it’s all been quite dramatic but I can assure everyone that its not the end of the world. Fortunately and most importantly, no-one was hurt, and in good time we will be back open again and welcoming people back there.”
Mr Baird-Murray thanked everyone for their support and goodwill messages and said they were much appreciated. Many people took to social media to offer words of support to Mr and Mrs Baird-Murray
The hotel closed its doors in December and had been planning to re-open as soon as Welsh Government Covid restrictions allow.
The Metropole Hotel has always been a family affair with its current owners Justin Baird-Murray and his sister Sarah Hill being the fifth generation still at the helm.