Witnesses said the two-floor hotel in the Qaa al-Qaidhi neighbourhood was completely toppled and bodies are still being retrieved from under the rubble.
They took control of Yemen's capital, Sanaa, in late 2015 and seized large swaths of territory.
Yemen's Houthi rebels have declared an "emergency state" in Sanaa and issued a ban on partisan activities ahead of the 35-year anniversary of the establishment of former president Ali Abdullah Saleh's political party.
More than 8,300 people have been killed and 44,000 wounded since the Saudi-led coalition entered the Yemen war in 2015. It blamed the Saudi-led coalition backing the internationally recognised government for the attack.
The air campaign against the Houthi rebels has intensified in recent months with the total number of airstrikes in 2017 reaching 5,676, compared to 3,936 for all 2016, according to a report by the Protection Cluster in Yemen led by the UNHCR.
More than 10,000 people have been killed and three million displaced from their homes since February 2014, according to the UN.
American officials have said they have tried to find ways to improve Saudi targeting.
Al-Massirah channel reported that Saudi-led warplanes targeted a hotel in Beit Al-Azzi town in Arhab, killing at least 35 people. The Pentagon sent USA military lawyers to train Saudi counterparts on how to ensure the legality of air strikes, and software created to help determine whether certain munitions might cause destruction beyond the target.
It was not clear whether the casualties were civilians or rebel fighters, but witnesses told AFP the hotel was being used to house workers from a Khat farm.
A two-story building was destroyed in the attack, reported the Houthi-controlled local television station Al Maseera, which noted that there had been "over 30" victims.