Hand quits novelty hotel (3)
I believe the answer is:
inn
'hotel' is the definition.
(inn is a kind of hotel)
'hand quits novelty' is the wordplay.
'hand' becomes 'ovation' (both can mean applause).
'quits' suggests deleting specific letters.
'novelty' becomes 'innovation' (I've seen this before).
'innovation' with 'ovation' taken away is 'INN'.
(Other definitions for inn that I've seen before include "pubs?" , "bar" , "Pub with lodging" , "Local" , "Old hostelry for travellers" .)