A fire broke out last evening in a hotel at Kohankhan locality of Dalgate, a tourist hub of the city, and spread to the adjoining hotel, they said.
Fire tenders rushed to the scene and the blaze was put off after several hours, the police said, adding, no one was hurt in the incident.
While Hotel Malabar was gutted, Hotel Kashmir was partially damaged.
A case has been registered and investigations are on to determine the cause of the fire, the police added.