"です" is formal. You'd use it for talking to someone you don't know or talking to someone who is superior to you. We don't have anything like it in english. You can write this sentence as "このホテルは小さい。" and it would translate the same.
Kono is an adjectival pre-noun is used to directly modify "hotel"
このホテル "this hotel"
It is like a contraction of これ the stand-alone pronoun "this" and の the possessive/grouping particle, so "the hotel of this (space)"