In research on customer satisfaction, quality of service has often been mentioned as animportant determinant. This study assesses the relationship between perceived servicequality and customer satisfaction in Penang hotels, from international tourists’perspective. The SERVQUAL model by Parasuraman et al. (1985) was adopted in thisresearch to measure the differences between customer expectations and perceptionsacross five main dimensions. By considering this concept it tried to evaluate the level ofcustomer satisfaction, which is a highly controversial issue in the Penang hotels.Furthermore, the service quality gap (gap 5) was investigated between customers’expectations and the actual service performance of the service.Data was collected using questionnaires from 200 international tourists who visitedPenang and stayed at hotels. The samples are used to analysis the hypothesis. By usingSPSS software version 16.0, factor analysis as well as reliability and regression analysis,were conducted. Results indicated that across five dimensions of service quality, four ofthem; reliability, responsiveness, empathy and tangibility were positively supported.