Around 60 firefighters in 10 fire engines tackled the blaze at the hotel next to Junction 10 of the M6 in Walsall on Friday, with crews set to remain at the site all weekend investigating the cause.
Most of the building has been devastated and much of it has collapsed.
Video taken at the scene showed how the fire spread from a small area to the rest of the two-storey hotel, ripping through room after room in the process.
Nobody has been injured and guests have been directed to other nearby hotels.
It is believed the blaze started in the sauna in the ground floor of the building on Wolverhampton Road West.
Emergency services were called shortly before 4pm and flames were still visible until after 7pm.
Police and paramedics remained at the scene alongside the fire service late into the evening.
A spokesman for Holiday Inn Walsall said: “The safety and well-being of our guests and colleagues is our highest priority. We can confirm everyone has been accounted for and no-one has been injured.”
WATCH: Start of major fire at Holiday Inn
Footage courtesy of John Greenhouse
Thick black smoke was visible for miles around the Black Country and was directly over the M6 during rush hour, but Highways England said there were no added delays as a result of the fire.
A West Midlands Fire Service spokesman said: "Firefighters are tackling a fire at a hotel near Junction 10 of the M6 near Walsall.
"Our first crews were on the scene in under five minutes and we now have 10 fire engines and two aerial platforms there.
Interactive map of the area:
"Fire crews at the scene have described the hotel fire as 'severe'.
"Please keep doors and windows closed as a precaution if you're nearby, avoid the area if possible and take extra care if you're driving on the M6 near Junction 10."
West Midlands Fire group commander Nigel Sowden said crews were initially sent into the building but had to withdraw because of the severity of the blaze.
He said: "We were mobilised to a sauna fire at the hotel.
"Firefighters went into the building but by the time they got in the fire had grip of the building so they had to withdraw.
"We had 10 fire engines which is more than 50 firefighters.
"We advised nearby houses to keep windows and doors closed.
"The fire investigation will be going on over the weekend."
Hotel staff and neighbours gathered to watch the incident unfold next to a cordon at the junction of Wolverhampton Road West and the access road to the hotel.
Traffic was still able to flow along Wolverhampton Road West towards Junction 10.
A West Midlands Ambulance Service spokesman said: "We were called at 4.31pm by the fire service, although there were no reports of injury, we have sent a paramedic officer as a precaution."
Reporter Jordan Reynolds was at the scene:
West Midlands Fire Service group commander Nigel Sowden said they were called at 3.54pm and 60 firefighters are in attendance. The fire started in the sauna area— Jordan Reynolds (@jreynolds_star) August 2, 2019