The purpose of this study is to analyze the factors that measure the preferences of customers for domestic and international hotels operating in Pakistan. A questionnaire derived from previous studies was completed by 200 hotel-customers in Pakistan. Data is analyzed using SPSS software by employing factor analysis with VERIMEX rotation and multiple regressions The results indicate that international hotels have more attributes and are preferred by customers as compare to domestic hotels. The study reinforces and refines the body of knowledge relating the service innovation and customer choices for hotel industry in Pakistan. The study also tries to highlight the relative importance of tangible and intangible factors in the hotel sector It may establish useful base for future empirical work in this field, at least in developing countries.