Sources in the hotel, situated close to the heavily-fortified presidential palace, said there were around 70 members of a Turkish delegation in the hotel at the time, but none of them was hurt by the blast.
There was no immediate claim of responsibility, although Al-Qaeda-affiliated Shebab rebels -- who are fighting to overthrow the country's internationally-backed government -- have carried out a string of attacks against high-profile targets in Mogadishu.
"Five people were killed in the attack, among them three security guards," police official Mohamed Adan said.
"The attacker drove a car loaded with explosives aiming at the gate of the hotel but could not manage to reach inside. The explosion destroyed the perimeter partially."
Witnesses said they saw a car speeding towards the gate of the hotel.
"I saw the speeding along the main road and the driver turned into the Hotel SYL gate. There was huge explosion, smoke and shrapnel. Several people were down on the ground," said Abdukadir Munin.
The attack comes even though Mogadishu, and particularly the area around the presidential palace, has been placed under extra-tight security ahead of Erdogan's visit.
Many of the Turkish officials inside the hotel were security personnel preparing for his arrival and businessmen, Somali sources said.
Speaking in Davos, Turkish Prime Minister Ahmet Davutoglu told reporters the visit, during which Erdogan is due to meet his counterpart Hassan Sheik Mohamud, would not be cancelled despite the fact that Somalia was a country with "high security" risks.
The Turkish foreign ministry also said there were no casualties among the Turkish delegation in the hotel aside from some minor cuts from flying glass.
"There could be casualties among Somalis but there was no casualty on the Turkish side. One might have been lightly injured because of the smashed windows of the hotel, and Somalia authorities have raised the security level," the ministry said.
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