The hotel industry contributes significantly to Ghana’s development. However, they face the challenge of
meeting and exceeding their customers’ expectations through high quality service delivery in order to ensure
customer loyalty which is the bedrock of any business. The study investigates how service quality impacts
customer loyalty in Golden Tulip, a 4-star hotel; Miklin Hotel, a 3-star hotel and Lizzie’s Hotel, a 2-star hotel in
Kumasi, a leading city in Ghana. 50 customers seeking lodging and boarding services were randomly selected
and 5 staff members were purposively selected from each hotel for the study. By use of the SERVQUAL model
through survey questionnaire and interviews, the study reveals that customer satisfaction is not based solely on
the rankings/classification of the hotels but on service quality that gives value for money which in turn produces
customer loyalty. Miklin Hotel produced most satisfied and loyal customers, followed by Golden Tulip Hotel
and then Lizzie’s Hotel contrary to the classification order. In addition to “responsiveness” service quality
variable for Miklin, “empathy” and “assurance” variables made significant impact on customer loyalty for
guests from Miklin and Golden Tulip hotels, while “reliability” accounts for the loyalty of guests from Lizzie’s
Hotel. This confirms the direct relationship between customer satisfaction and loyalty. “Tangibility” does not
play any significant role in developing customer loyalty for all the hotels because the guests were least satisfied
with it and are likely to take it for granted in their quest for change. The study recommends that hotel
classification should not be based mainly on the tangible factors alone but rather on comprehensive service that
provide value for money and impact on customer loyalty.