What is the difference between a "hotel" and a "restaurant"?

In India, we don't really maintain a distinction between the two. We refer to any place where we eat as a hotel. It's not uncommon to hear people say, "Let's go to the hotel and have a cup of coffee". Native speakers of English usually confine the word "hotel" to a place where one stays when one is away on business or on vacation. It's usually a place where you pay to have a room to sleep in. 

The place where one eats is usually called a restaurant. A hotel may have a restaurant or several restaurants within it. But not every restaurant needs to be part of a hotel. Most of the Udipi joints where we have our "dosas" and "puris" should be called restaurants. So is it wrong to call them "hotels"? As long as the stuff they dish out tastes good, who cares! By the way, the word "hotel" has the stress on the second syllable.