Firefighters were called to the Balmoral Hotel in Walliscote Road at 12.40am after a first floor store room, which was being used as a linen cupboard, caught fire.
The alarm system had alerted residents and more than 20 had evacuated the building before the fire crews arrived.
As the first floor was smoke-logged, firefighters were sent in to check if there were any more people stuck inside while their colleagues fought the blaze.
Two men in their 40s-50s were discovered asleep in their bedrooms and were woken up and led to safety.
The cause of the hotel fire is currently under investigation.