Abstract
This paper analyses and quantifies the main interrelationships between service quality and the competitiveness of hotels, distinguishing between external and internal effects. The external effects were evaluated according to customer satisfaction, its influence on the sales volume and the client's willingness to pay. The internal effects of quality on competitiveness were estimated using average direct costs. The sign and value of the estimated coefficients were used to examine a set of hypotheses for improving the competitiveness of hotels. The direct, positive effect of high service quality on competitiveness is a particularly important finding.
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