Competitiveness is a term which we can hear almost every day. All businesses in different niche markets strive to be as competitive as possible. In this paper we will analyse the competitiveness in the service industry among hotels. In the town of Karlovac there are three well known hotels: Hotel Carlstadt, Hotel Korana-Srakovčić and Hotel Europa. These are increasingly successful hotels that have been operating for a long period of time. Hotels Korana-Srakovčić and Carlstadt have been open for more than a hundred years, since the beginning of last century. With time passing, the hotels themselves have been renovated and have further improved their offer. Hotel Korana-Srakovčić is the bearer of the award for “The best small hotel of the continental part of Croatia” 2008 – 2011. Hotel Europa is a newer hotel in Karlovac and was built in 2004. It was renewed and expanded in 2018. In the tourism season of 2015 – 2017 the hotel got recognition for achieving executive results in the category of “The best hotel”. Since hotels Korana-Srakovčić and Europa both have four stars, they outperform Hotel Carlstadt with three stars. Because of that, only hotels with four stars are compared. There are many factors that affect competitiveness and it is very important for the company to satisfy the customers’ needs. Every company is obliged to improve their business and offers so they can catch up with the competition or even be ahead of it for the sake of development of said competition. Hotel Europa did exactly that. In 2018 the hotel management and administration extended their services and in that way they provided a competitive advantage for themselves in regards to other hotels in town which do not offer as many services.