At least 16* people have been killed in a suicide bomb attack on an Israeli-owned hotel on the Kenyan coast.

As dusk fell, timbers were still burning at the Paradise Hotel, hours after the explosion.

Bomb experts, police and navy officials have cordoned off the area to examine the smoldering remains. The Paradise Hotel is in Kikambala, 30 kilometers from the Kenyan coastal city of Mombasa.

Eyewitness reports say three young men in a four-wheel drive rammed through a barrier at the entrance to the hotel at 8:35 AM. The vehicle exploded, killing the three suicide bombers instantly.

The hotel director, Sulami Yahouda, described what happened when the bomb went off. "The children looking for their parents, parents looking for their children. All over blood," he said. "People running all around trying to run away from this hell."

At about the same time as the explosion, in an apparently coordinated attack, two missiles were fired at an Israeli Arkia airliner, as it was leaving Mombasa International Airport.

The missiles narrowly missed the plane, and it continued safely on its journey to Israel. In a statement, Kenyan police said they believed the attacks were aimed at Israeli interests.

The Paradise Hotel is owned by an Israeli and frequented by Israeli tourists. The hotel signs are written in Hebrew.

A group calling itself the Army of Palestine has claimed responsibility for the attacks. A statement from the group, issued in Beirut, said it wanted to highlight the cause of Palestinian refugees.

Kenyan police say they have arrested two suspects, but there are no further details.

When the bomb went off, a group of Israeli tourists was checking into the hotel. Most of those who died were Kenyan traditional dancers, who were at the hotel reception to welcome the Israeli guests.

Kenya's vice president, Musalia Mudavadi, and several other senior ministers and police officials visited the scene Thursday afternoon.

Kenyans have been deeply shaken by the terrorist attack, the second in their country in four years. In 1998, more than 200 people were killed in a terrorist attack on the U.S. Embassy in Nairobi.

That attack is believed to have been carried out by al-Qaida, which is also blamed for the September 11 attacks on the United States.

*Death toll updated Friday.