An 88-acre chunk of downtown where city planners want to encourage the development of hotels and apartment buildings rather than office buildings was designated a "hotel incentive zone" by the D.C. Zoning Commission last week.

In the new zone, which straddles Massachusetts Avenue NW for about a mile from North Capitol Street to Thomas Circle and includes the area adjacent to the D.C. convention center now under construction, developers will be given extra square footage and height allowances only if they build hotels and apartment buildings.

City planning officials foresee a thriving hotel section that will help generate jobs, retail business and tax revenue in an area now filled with parking lots, deteriorating rowhouses and small stores. Without the new zoning, officials predicted, office buildings would dominate the area.

Although city officials say the new zoning eventually will result in a net increase of housing in the area, community activists, testifying in public hearings last fall, disagreed.

According to Jay Clark, president of the 300-member Ward Two Tenants Council, approximately 1,400 of the present dwellings will be lost because of the ruling, and there will be no incentive to build apartments because profits on hotels would be greater.

"It's really almost fraudulent to contend that any housing is going to result from this," said Clark.

But Alfredo D. Echeverria, assistant director of planning for the city, predicted, "There will not be a Chinese wall of hotels in the area. The market will demand apartments, and apartments will be built."

Last week's action, subject to review by the National Capital Planning Commission, set up an "overlay" zone, which means the current zoning is intact for buildings other than hotels or apartments. The area includes commercial, apartment-house and special-purpose zones, which allow both housing and offices for professionals and nonprofit organizations. The maximum building height in the commercial zones is 90 feet. Under the new incentive zoning, a hotel in the same area could be 110 feet high. It could also have total square footage 8.5 times the area of its building lot, as opposed to 6.5 times the site area -- the rule for an office building.

However, on narrow streets within the new zone, building heights still will be limited by a 1910 federal law to 80-100 feet.

To qualify for the zoning bonus, a bulding need not be all hotel or apartment space. Under the incentive plan, a builder could put up a complex in which nine stories were devoted to office use and two stories put to residential use.

"What we're going to see a lot of office buildings with hotel rooms stuck on top," said Tom Lodge of the Citizens Planning Coalition, which opposed the new zoning.

Echeverria, however, dismissed that idea as "unrealistic."

During last fall's hearings, two developers said they planned to build hotels within the zone. John Simpson said he would build a 300-room hotel on Massachusetts Avenue between Fourth and Fifth streets NW, and Charles Wilkes said he and a partner planned to convert the 77-unit Tudor Hall apartment building, at 10th Street and Massachussets Avenue NW, into a "small, European-style hotel."

In a telephone interview, Wilkes said that he would have dropped plans for the hotel if the incentive zoning had not been approved. Without the extra height and square footage, he said, the building would not have been profitable and he would have had to receive special permission from the Board of Zoning Adjustment to build bigger -- meaning a costly delay. He added that he is considering building another hotel in the zone.

The new zone was conceived after the Zoning Commission, responding to pressure from residents' groups, restricted hotel development in residential zones.Although the new zone was intended to attract hotel builders to the area around the convention center, the commissioners hinted they might, at some future time, consider applying the special zoning to other areas, such as 16th Street or Connecticut Avenue.