The al Qaeda-linked al Shabaab group has claimed responsibility for the attack, according to a translation by the SITE Intelligence Group, which monitors jihadist group statements.
The group has been fighting to topple the Somalian government for over a decade, and establish its own rule based on a strict interpretation of Islamic law instead.
According to news reports, the attackers struck the Hayat Hotel on Friday evening with two car bombs, before entering the facility while firing their guns and seizing control.
“So far we have confirmed 12 people, mostly civilians, died,” an intelligence offer who identified himself only as Mohammed said on Saturday, adding that the ongoing operation “is about to be concluded”.
Gunfire could still be heard early on Saturday morning as security forces tried to contain the last gunmen, who are believed to be holed up on the top floor of the hotel.
It is unclear how many militants currently remain inside the hotel.
Sounds of explosions and gunfire were heard through Friday night as government forces and security personnel tried to regain control of the hotel, witnesses said.
Abdullahi Hussein, who was at the hotel when the attack began, said: “We were having tea near the hotel lobby when we heard the first blast followed by gunfire. I immediately rushed toward hotel rooms on the ground floor, and I locked [it}.”
“The militants went straight upstairs and started shooting. I was inside the room until the security forces arrived and rescued me,” he continued, addding that he saw “several bodies lying on the ground outside hotel reception”.
Large sections of the hotel, which is a popular venue with Somalian lawmakers, were destroyed by the fighting, as per witness statements.
There is no word on whether any government officials have been caught up in the attack, as the identities of the victims remain unclear at this time.
Additional inputs by agencies