"Seventeen people are no more, they died because of suffocation, not fire," said deputy fire chief Virendra Singh, adding that 35 people had been rescued.
The dead also included a woman and a child who attempted to escape by jumping from a fifth-floor window of the hotel in the shopping district of Karol Bagh. Broadcast news showed images of flames leaping from the top floor.
Despite frequent raids by civic authorities to enforce building codes, fire safety measures and evacuation procedures have failed to curb violations in a rapidly expanding city of more than 18 million people.
Some of the 65 rooms had been booked by a wedding party. Most of the victims were sleeping when the fire broke out, believed to have been caused by a short circuit, media outlets said. Those staying in the hotel included a group of tourists from Myanmar, NDTV said, adding that authorities were trying to determine their whereabouts.
Authorities appeared to have been negligent in enforcing building laws in the surrounding area, Delhi's Urban Development Minister Satyendar Jain said.
"There is a clear case of negligence here," he added.
Jain said hotel guests tried to flee through the hotel's narrow corridors, paneled in wood. Some were unable to break through the windows of their rooms.
Even though the law limits construction only to four floors, the hotel had a fifth floor, like some other nearby structures, Jain said, adding that a kitchen and dining area on its top floor constituted another violation.
Reuters could not immediately reach hotel officials for comment.