The Pearl Continental, part of Pakistan's largest five-star hotel chain, is the only luxury hotel in Gwadar, frequented by foreign and Pakistani business delegations as well as diplomats. The reports also claimed that the armed terrorists still holed up in one of the floors.
The report further said that additional police force, ATF (anti-terrorism force) and army have been called in to handle the situation.
The military said a security guard was shot dead at the entrance when three gunmen stormed the hotel but all guests had been removed to safety.
One official, who spoke on condition of anonymity because he was not authorised to talk to the media, told Reuters most guests had been evacuated.
The Chinese embassy in Pakistan said: "We appreciate the courageous steps taken by Pakistan Army and security agencies".
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At least three security guards and two hotel personnel were killed and four wounded as the attackers battled members of the security forces on Saturday evening.
UN Deputy Spokesman Farhan Haq in a statement issued, here today, said the world body deplores all such attacks and reiterates that there can be no justification for terrorist acts. "Such attempts, especially in Balochistan are an effort to sabotage our economic projects and prosperity", he said.
The country's military forces released a statement on Sunday clarifying that there were only three gunmen involved and not four as previously thought.
Pakistani officials have said the security forces were on alert for attacks during the Muslim fasting month of Ramadan, which began in early May.
The Baloch Liberation Army (BLA), an ethnic Baloch separatist group fighting for independence for Balochistan province, claimed responsibility for the attack.
Gwadar, on the Balochistan seacoast, is the hub of a multibillion-dollar Chinese infrastructure project in Pakistan and a high-security priority for the government.
The region has been hit by low-level insurgent separatists who demand a greater share of the province's natural gas and mineral resources.