The fire was reported at 5:51 a.m. at the White House Inn at 3030 Monterey Highway, fire Capt. Robert Culbertson said.
Firefighters arrived at the inn at about 5:55 a.m. and found one of the rear units fully involved, Culbertson said. The fire was under control at about 7:10 a.m.
One person who suffered smoke inhalation was treated at the inn and another person was transported to local hospital. No firefighters were injured.
Seven units of the inn were damaged, two severely, but damage estimates have not been released, he said.