JERUSALEM: Israeli forces shot and killed an American man who opened fire in a seaside hotel packed with tourists on Friday, killing one person, a police spokesman said.

Police surrounded the hotel the Red Sea resort city of Eilat after the man "grabbed a weapon from a security guard and shot a hotel worker", who died of his injuries, spokesman Micky Rosenfeld said.

The gunman barricaded himself in the hotel kitchen, shooting back at law enforcement officers. He was shot dead by members of a military counter-terrorism squad, a military source said.

Rosenfeld said the motive for the attack was unclear, but suggested a criminal - rather than political - reason seemed possible as he had once been employed at the hotel.

Eilat, on the border with Egypt and Jordan, has been a target of militant attacks in the past, and has come under rocket fire from Egypt's Sinai in the past several months. The city is currently crowded with both foreign tourists and Israelis on a seven-day Jewish religious holiday.