After 30 years war, as a country Sri Lanka has a great opportunity to develop tourism industry and there are lot of tourists visit to spend holidays in Sri Lanka from around the world. In tourism industry Hotels play a major role. Therefore the hotels should be provided excellent services quality for their customers. Services quality is considered substantial when it comes to define organizational success. The winning strategy is to deliver best services quality to customers. Today, need to improve services quality in Sri Lankan hotel industry have come under limelight due to stiff competition where hotels are trying to attain competitive advantage through the human factor. Excellent quality service not only results in a profit strategy but also it is energizing for employees to perform to their potential to meet challenges. By providing quality service, hotels can sustain customers " confidence and gain competitive advantages over their competitors. This study studies the relationship between Services Quality and Customer Satisfaction in Sri Lankan hotel industry. In this research paper, quantitative methods were used. The data were collected through questionnaire which contained five point likert scale Statements. Results of different correlations, T-test and hypotheses testing revealed a great deal of existing services with customer satisfaction. In order to generate the results employed confirmatory factor analysis by using Smart PLS. Mainly courtesy of attendants, comfort in guestroom, cleanliness and environment of hotel have played vital role in creating serenity and subsequent contentment among customers. This study confirms direct relationship between Service Quality and customer satisfaction. It seems judicious to believe that understanding of customer satisfaction role is extremely significant as it appears key factor in the success of modern organization specially hotels.