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Waukegan firefighters arrived to the old Ramada Inn in the 200-block Green Bay Road around 4:30 p.m.
It took firefighters five hours to get the fire under control, the Waukegan Fire Department said.
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WFD said the building has a history of squatters, and are investigating it as possible arson.
One firefighter was treated for exhaustion at the scene.
No other injuries were reported.