The aim of this study was to identify the effect of service quality dimensions on customer satisfaction in medium level hotels of Debre Markos town. In this study, the customers’ perceptions of the seven service quality dimensions were examined to determine the level of customers’ satisfaction of hotels. To achieve the objectives of this study, the data were collected through standardized close ended questionnaire from a sample of 5 hotels out of the total of 15 medium level hotels in Debre Markos town. In order to select the sample size of hotels, the researcher used simple random sampling techniques using lottery method on account of the hotels’ homogenous characteristics. The data was collected from 305 respondents using self- administered questionnaires and the respondents were selected using convenience sampling method that was available to the researcher by virtue of its accessibility. The final response rate was 80?, and based on this, the analysis was made. In this study, both descriptive and explanatory research design was used. Descriptive statistical tools such as (frequency, mean, standard deviation) and inferential statistics (correlation and multiple linear regression analysis) were used by applying SERVPERF model. The result of this study indicates that the five service quality dimensions (tangibility, assurance, responsiveness, core hotel benefits and corporate image) have positive and significant relationship with customer satisfaction except empathy and reliability. Based on the findings, the researcher recommended that hotels should hire self-motivated, enthusiastic employees who are capable of handling customers and solve complaints in an effective manner, provide continuous training to the employees on ways of rendering service in hotels, give due attention for their employees by providing the required uniforms, develop their core competencies and prepare service quality standard plans.
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