Over the last decade, strategy as practice has generated a substantial knowledge about different aspects, forms and implications of strategizing activities and practices. This study focused mainly on this components and their influence on the performance of hotels. The objective of this study was to establish the influence of service quality on performance of the hotels in Busia Town, Kenya. The study has adopted a correlation research design which sought to determine to what extent or degree the two or more variables are related. The target population consisted of 105 respondents from the 35 food service units. Saturated technique was employed for the study. The study used questionnaire and interview schedules as tools for collecting data. The researcher carried out a pilot study to test the reliability of the data collecting instruments. Validity was achieved through expert judgment by correlating the concepts set out to measure. Reliability by test- re-test technique was done to get the correlation coefficient. The data collected was analyzed by use of descriptive and inferential statistics. The results showed that there is correlation between service quality and performance at r=0.716. Inferential statistics was used to draw conclusions, discussion and recommendations. The study is useful to hotel industry to enhance its performance by suggestions, influence hotel management practices and decisions to improve on productivity, customer satisfaction, Image and sustainability. Karl Pearson’s coefficient showed that strategy options factors if well utilized will bring improvement on performance of the hotel industry.