function ajaxcall1(type){

					var parameters = 'hotel_category='+type;
					var argUrl = 'ajax_hotels.php';
					$.ajax({
						url: argUrl,
						type: 'POST',
						data: parameters,
						success: function (str) {
							$(".hc1").html(str);
							//alert(parameters);
						}

					});
				}

 <select name="hotel" id="hotel" onChange="ajaxcall1(this.value)">
			  	<option value="1">-Select-</option>
				<?php

				 $sql = "select category from tbl_category";
					$retval = mysql_query($sql, $conn );
					if(! $retval )
					{
						die('Could not get data: ' . mysql_error());
						echo 'Could not get data: ' . mysql_error();
					}
						while($row = mysql_fetch_assoc($retval,MYSQL_ASSOC)){ $category1= $row['category'];?>
						<option value="<?php echo $category1;?>"><?php echo $category1;?></option>
						<?php } ?>
 </select>
<td>Hotels from selected Category : </td><td id="td12" class="hc1">
             <select name="hotelname" id="hotelname">

			 </select>
                </td>