Crossword Genius

Canned outside hotel and diluted (7)

Ross

I believe the answer is:

thinned

'diluted' is the definition.
('thinned' can be similar in meaning to 'diluted')

'canned outside hotel' is the wordplay.
'canned' becomes 'tinned' ('tin' can be a synonym of 'can').
'outside' means one lot of letters goes inside another.
'hotel' becomes 'h' (phonetic alphabet: alpha, bravo, charlie etc.).
'tinned' going around 'h' is 'THINNED'.

'and' acts as a link.

(Other definitions for thinned that I've seen before include "Reduced" , "Made less thick" , "Diluted" .)

I've seen this clue in The Telegraph.
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