The Spanish slump in hotel industry initially requires capital (8)
I believe the answer is:
helsinki
'capital' is the definition.
(Helsinki is an example)
'the spanish slump in hotel industry initially' is the wordplay.
'the spanish' becomes 'el'.
'slump' becomes 'sink' ('sink' can be a synonym of 'slump'**).
'in' means one lot of letters goes inside another.
'initially' says to take the initial letters.
The first letters of 'hotel industry' is 'hi'.
'el'+'sink'='elsink'
'elsink' inserted into 'hi' is 'HELSINKI'.
'requires' is the link.
(Other definitions for helsinki that I've seen before include "Foreign city" , "foreign capital" , "port" , "Main city of Finland" , "European capital, venue for the 1952 Olympics" .)