Israel's Iron Dome missile defence system has intercepted a rocket allegedly fired by a Sinai-based Islamic militant outfit linked to al-Qaida.
The Iron Dome battery, deployed in Eilat by Israeli Defence Forces (IDF), is said to have successfully intercepted at least one rocket at about midnight.
The rocket was aimed at the inhabited area, targeting local residents, and triggered an air raid siren. It is still unclear whether more rockets were fired.
This is the first successful interception by the Iron Dome anti-missile battery since it was deployed in the region recently.
Local residents say they heard loud explosions.
"People were running from the rooms to the stairs after the siren was activated. The hotel has a shelter in the bottom floor, but it is still relevant as far as response time is concerned. During the siren we heard the explosions," Noi, a hotel employee, told Ynet News.
Ansar Bait al-Maqdis, the al-Qaida-linked militant outfit which operates from Sinai, has claimed responsibility for the attack. The group was believed to have caused the recent temporary closure of the US embassy in Tel Aviv, and been the target of Israel's alleged recent drone strike in Sinai.
They said in a statement on an Islamist website that "the Jews will pay the price for the blood of the jihadists killed" and continued by pledging more attacks.
"This was a response to the latest crimes by the Jews, who used a drone to attack and kill four of our fighters in Sinai. The fighters managed to bomb occupied 'Um Rashrash' [Eilat in Arabic], with Grad missiles. The attack sowed fear among the criminal Jews, who were forced into underground bomb shelters."
The group is widely believed to be the reason behind the recent temporary closure of US embassy in Tel Aviv.
Meir Yitzhak Halevi, the mayor of Eilat, told Times of Israel: "Like other Israeli cities, we have become accustomed to the reality of rockets. We expect the IDF to continue protecting our citizens and find those responsible for the attack."