A powerful blast has killed at least three people and wounded 27 others in a budget hotel packed with wedding guests in the southern Philippines, officials said.

The explosion, suspected to have been caused by a bomb, ignited a fire that gutted the two-story Atilano Pension House in downtown Zamboanga city late on Sunday.

Police said they found traces of chemicals used in making improvised bombs in the Atilano Pension House's ruins hours after the blast.

The explosion, originating in one of the hotel's 35 rooms, was so powerful it caused much of the second floor to collapse, blew off the hotel roof and shattered glass panes and windows from nearby buildings, said Celso Lobregat, mayor of Zamboanga city.

The blast occurred in room 226 on the second floor of the hotel, instantly killing two people staying in two adjacent rooms, which were devastated by the blast. A third body was found dead on Monday on the ground floor, pinned by the cement slabs that collapsed from above.

Lobregat said that initial investigation pointed to a bomb.

"We should not show that we're panicking because that is what these troublemakers relish to see," Lobregat told The Associated Press news agency. "We have good leads; we will get all of them.''

Zamboanga, a bustling city where US counter-terrorism troops are based, has been hit by deadly bombings blamed on al-Qaeda-linked Abu Sayyaf militants in the past.

In late-October, a bomb killed two people in a roadside eatery in Zamboanga.

Al Jazeera