The blast in the town of Mandera, which is on the border with Somalia, was caused by an improvised explosive device that had been planted at the hotel and was detonated as a crowd of people sat down to eat breakfast, police said.
Mandera police chief Samwel Mutunga said that two of those wounded were in critical condition and would be flown to the capital, Nairobi.
Investigators have blamed East Africa-based extremist group al-Shabab for the attack. The group, which hasn't claimed responsibility for the explosion, has staged major attacks in Kenya and neighboring Somalia.
The latest attack followed another one on Sunday in coastal Kenya’s Lamu County, where two police reservists were killed.
The area has a forest, which has often been the site of security operations because it's a known hideout of al-Shabab militants.
During a police operation in Garissa County on Sunday, officers recovered materials to make IEDs, an AK-47 rifle and two magazines. Three people escaped during the raid.
The area is near the Kenya-Somalia border, from where militants have in the past infiltrated and launched attacks.
The Kenyan government had last year announced plans to reopen the border with Somalia, but later postponed the reopening because of extremist attacks.
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