A masked man threw a device into the reception in Derry last night.
The Everglades Hotel, in the Prehen area of the city, was evacuated after the attack around 11.15 pm on Thursday.
The device exploded a short time later when army experts were working to make it safe.
No-one was injured in the explosion but the reception was extensively damaged.
A PSNI spokesperson praised the action of the hotel staff and police officers in quickly evacuating the hotel, and said they had “undoubtedly prevented a tragedy”.
Around 30 hotel guests were transported to alternative accommodation in Derry.
Victoria Road has now reopened but police said motorists may face delays.