The five-star Randolph Hotel in the centre of Oxford has been damaged by fire.
Thick black smoke could be seen coming from the 150-year-old gothic building on Beaumont Street, which caught fire at about 16:30 BST.
The street was closed both ways to allow firefighters and other emergency services access to the building.
The fire service said the blaze, which started in the ground floor kitchen, was not thought to be suspicious.
Anabel Bacon told the BBC smoke "came erupting out of the hotel". Police said no casualties had been reported.
Fire crews will remain on the scene until the morning damping down, and the road will remain closed.
Assistant chief fire officer Simon Furlong said: "It's been a significant fire. At the moment there has been no lateral spread of fire through the building, so we've managed to protect that area inside.
"This is iconic property within Oxfordshire so we've managed to protect that.
"It's been a good job by the firefighters and I'd also like to praise the hotel on their quick evacuation processes that saw in excess of 80 persons quickly removed from the building."
The fire spread to another two floors and the cause remains unknown.
Ms Bacon, who was on the roof terrace of the Ashmolean Museum opposite the hotel, said the smoke "stopped very quickly so we thought it was over, and then all of a sudden it resumed again with just as much force".
"The fire service was there very quickly after the second plume erupted, within five minutes," she said.
"Everyone was surprised… no-one knew what was going on."
Tom Scott was driving past the hotel when he saw smoke burst from within.
He said: "I turned into Beaumont Street from Worcester Street and you just couldn't miss it.
"It was a very thick ball of smoke. I parked up and told the porter what I could see.
"Then another plume came out and he must have realised what was going on. He shouted to phone the fire brigade as soon as he saw it.
"There were still people sat down drinking tea in the restaurant."
Leo Wilkins was staying in the hotel with his wife and was among the guests forced to flee the building.
"While walking down from the second floor I could smell smoke in the building," he explained.
"It's not looking very good. I'm just hoping there's no water damage in the upper bedrooms.
"It'll be nice to get the clothes that I'm going to wear to a wedding tomorrow.
"Obviously, everyone's safe and that's what's important."
On the scene, Helen Catt - BBC News
I've just seen a lot of tiles tumble down from the roof all the way down into the street below.
What we're left with is quite a shocking sight - people arriving at the cordon now have been shocked by what they can see.
The entire top peak of the top tower in the middle of the Randolph Hotel has been almost completely destroyed.
Where the tiles were you can now see the sky and blackened beams.
Hundreds of onlookers gathered at the scene, with about 15 fire engines on site.
Thames Valley Police and South Central Ambulance Service (SCAS) were also at the scene.
An SCAS spokesman said its hazardous area response team was also called. It said three people were medically assessed after inhaling smoke.
A police spokesman said: "The hotel and other buildings adjoining it have been evacuated as a precaution and there have been no reported casualties, nor has anybody needed to be rescued.
"All of the floors and rooms in the hotel have been searched and it is not believed that anyone remains inside the building.
"There will be severe traffic disruption and motorists are asked to avoid the area."
A spokesman for Macdonald Hotels said: "Our immediate priority was to conduct the safe evacuation of all our guests and staff within the property.
"An investigation has already begun to establish the cause of the incident."
The hotel was a regular feature in the TV series Inspector Morse, where it featured as one of the detective's favourite haunts.