APN's The Western Star and Surat Basin News have shared photos online of the 93-year-old hotel basically decimated.

The Surat Basin News said a machine in the kitchen was believed to have started the fire late this afternoon, engulfing the entire building.

Everyone escaped unharmed, but employee and backpacker Erica Atwood said all her possessions had gone up in flames.

"I was sitting on the roof and I heard a yell and the flames started coming and I just got everyone out," she said.

"All I have is what's on me right now."

Local commentators have indicated the fire spread swiftly.

Only a few hours before the hotel had advertised to patrons via social media it would be showing the Australia versus New Zealand rugby league game, typically a popular event in Queensland's western downs.

Local fire services reported four crews in attendance at 6.30pm Saturday and said the hotel structure had been heavily affected.

They are conducting protective exercises to limit exposure to nearby buildings and residents and are advising people to keep well away from the area on McDowall Street.

A spokesperson for Queensland Fire and Emergency Services said the cause of the fire and damage to adjoining buildings was yet to be officially confirmed.

The Royal Hotel had been purchased in recent years by brothers Nick and Sam Ingham-Myers, who had gained acclaim as restauranteurs at the Emporium precinct in Brisbane's Fortitude Valley.

It is believed, aside from personal effects, that the hotel contained many items of local and sporting memorabilia.

More to follow.