Today, service organizations are shifting their focus from “transactional exchange” to “relational exchange” for developing mutually satisfying relationship with customers. Extended relationships are reported to have a significant impact on transaction cost and profitability, and customer lifetime value. Serving the customers, in true sense, is the need of the hour as the customer was, is and will remain the central focus of all organizational activities. The hotel industry, especially the luxury segment hotels needs to be purely customer-centric and focus on the customer needs and duly full fill them. Customers will not blindly accept poor service quality from a luxury hotel. They expect high quality of service in return for the money, they spend in luxury hotels. This paper is an attempt to explain the dark side of Customer Relationship Management in the luxury segment of the hotel industry with the help of the ‘Gap Model’ referred to in literature which suggests that gaps in service occur at various instances. The author explains that the GAP Customer Relationship Management is a useful tool to explain the dark side partly.