Small area with a capital hotel (6)
I believe the answer is:
parish
'small area' is the definition.
'parish' can be an answer for 'area' (I have seen 'Ecclesiastical area' mean 'parish' so perhaps 'area' could also mean 'parish'). I am not sure about the 'small' bit.
'with a capital hotel' is the wordplay.
'with' means one lot of letters go next to another.
'a capital' becomes 'Paris' (capital of France).
'hotel' becomes 'h' (phonetic alphabet: alpha, bravo, charlie etc.).
'paris' next to 'h' is 'PARISH'.
Can you help me to learn more?
(Other definitions for parish that I've seen before include "Local church community" , "In Louisiana a county" , "District with own church and clergyman" , "administrative district" , "Diocesan subdivision" .)