Stay in a hotel here or relax outside (6)
I believe the answer is:
resort
'stay in a hotel here' is the definition.
(holiday resort)
'or relax outside' is the wordplay.
'relax' becomes 'rest' (to relax is to have a rest).
'outside' is an insertion indicator.
'or' put inside 'rest' is 'RESORT'.
(Other definitions for resort that I've seen before include "Place many go to" , "Place much frequented" , "Place to visit" , "Here we play" , "Holiday town" .)