“Four attackers are inside the building,” an official at the National Directorate of Security (NDS) spy agency told AFP.
They are “shooting at guests”, he said.
A guest hiding in a room told AFP he could hear gunfire inside the 1960s hilltop hotel where dozens of people attending an information technology conference on Sunday were staying.
“I don’t know if the attackers are inside the hotel but I can hear gunfire from somewhere near the first floor,” the man, who did not want to be named, said by telephone.
“We are hiding in our rooms. I beg the security forces to rescue us as soon as possible before they reach and kill us.”
His phone was switched off when AFP tried to contact him again.
It is not clear how many people are inside the hotel.
Another official said the attackers were armed with small weapons and rocket-propelled grenades when they blasted their way into the hotel, which often hosts weddings, conferences and political gatherings.
“Seven wounded people have been taken to hospital,” interior ministry deputy spokesman Nasrat Rahimi told AFP, adding two attackers have been killed.
“Some other guests have been rescued. We will be able to release casualty figures once the operation ends.”
Rahimi said the first and second floors of the hotel have been secured by Afghan forces, who are now trying to clear the fourth and fifth floors.
Special forces were being lowered by helicopters onto the rooftop of the state-owned hotel, he added.
Afghan media is reporting multiple casualties in the attack, which comes days after a UN Security Council delegation visited Kabul for a close-up view of the conflict.
The fourth floor of the hotel, which boasts several restaurants and an outdoor swimming pool, had been set on fire during the raid, the NDS official said.
“The operation will soon end and the attackers will be killed,” interior ministry spokesman Najib Danish told AFP.
– Security questioned –
The last major attack on a high-end hotel in Kabul was in March 2014 when four teenage gunmen raided the Serena, killing nine people including an AFP journalist.
The Intercontinental was targeted in June 2011 when a suicide attack claimed by the Taliban killed 21 people, including 10 civilians.
Even before Saturday’s attack was over, authorities were questioning how the assailants got past the hotel’s security, which was taken over by a private company two weeks ago, Danish said.
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