This study examines the effect of business-level strategy on performance. Past literature indicates that few studies were done to examine the effect of business-level strategy in the hotel industry. Specifically, numerous previous researches focused on banking and manufacturing industries in developed countries. For that reason, to explore our understanding in this area, the present study was conducted in the Nigerian hotel industry. The data were collected using a survey designed from 83 owners/managers of hotels in Kano, Northwest of Nigeria, using appropriate sampling techniques. The data were analysed with 58 valid responses using SPSS and partial least square (PLS) techniques. The findings indicate a surprising result that cost leadership is not statistically significant on performance. Moreover, the differentiation strategy is significantly related to hotels’ performance. Based on these findings, theoretical and practical implications and future research suggestions were discussed.