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About 1.50am crews from the Wilmot Fire Service were alerted to a fire at popular accommodation venue Cradle Forest Inn, TFS Regional Fire Investigator Anthony Goss said.

"Holidaymakers staying here from Queensland awoke to what they described as the sound of fire," he said.

"His actions were pivotal in notifying all the people that were staying here last night of this incident.

"His partner then notified triple 000."

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Upon arrival, firefighters found the venue's restaurant and reception building engulfed in flames reaching heights of "about 10 metres".

The accommodation units were not involved in the fire, and no injuries occurred.

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Mr Goss said fortunately there were also no people in the top floor of the structure, which contained three bedrooms.

Crews from Devonport, Sheffield, Wilmot, Forth Valley and Claude Road all attended the scene.

"The firies managed to get the fire under control in approximately a 30-minute window... but firefighting activities continued right through the morning until approximately 5am," Mr Goss said.

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The cause of the fire is still being investigated, with damage estimated to be around the $1 million mark.

Investigators have begun excavating the scene to reach the source of the fire.

A regular performer at the venue, Tassie musician Scott Haigh said it was clear from the moment you stepped foot in the inn that it was a special place.

"I first played there in 2017," he said. "I just instantly built a rapport with the staff, they were so lovely and welcoming.

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"I always made sure to play well to them, and have a chat afterwards.

"To think that's not all there anymore, to see it burnt to the ground, was heartbreaking."

Mr Haigh said he, and many others, wished the owner, their family and the team, all the best in the recovery.

"It's just a place that's got so many fond memories; it's more than just a building."

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