This uses charade (joining word parts) combined with letter manipulation. Look for words that can be broken into parts, then modified according to an indicator.
Take the word 'motel' and apply the 'twist' instruction to its 'tail' (the last two letters). Then add the final letter from 'story' to complete the answer.
Answer: MOTLEY | Take MOT-EL, apply 'twist' to switch the order of the tail letters E and L to get MOTLE, then add Y (end of story) = MOTLEY