Wiktionary
n. A type of hotel with a number of very small "rooms" (capsules).
Wikipedia
A is a type of hotel developed in Japan that features a large number of extremely small "rooms" (capsules) intended to provide cheap, basic overnight accommodation for guests who do not require the services offered by more conventional hotels.
Usage examples of "capsule hotel".
The crewman quietly and efficiently guided Martin through the ship, to a pale green corridor lined with hatches like those of a capsule hotel.
He had missed the earlier flight by ten minutes and hadspent three hours trying to sleep, in a kind of capsule hotel atKennedy, before taking off, smoothly but dramatically, in the still centre of Hurricane Lulu.
Yamazaki indicates what he takes to be another door, like the entrance to a hutch, curtained with a soiled square of melon-yellow, foam-cored blanket, the sort of blanket one finds in a capsule hotel.