The primary objective of this study was to investigate the Applicability of Customer Profitability Analysis as a strategic decision-making technique in a hospitality environment. The study commenced with a review of literature in the fields of Yield Management, Customer Profitability Analysis (CPA) and Activity-Based Costing (ABC), with ABC being identified as an appropriate method of costing to use in CPA. Issues arising from the implementation of an Activity-Based CPA including the purpose of the system, the selection of software and the identification of activities and drivers are considered both in the context of a literature review and are later considered in the context of the primary research undertaken by the author. The primary research involved the development of an Activity-Based CPA and its implementation in a hotel environment. The test site chosen for the implementation of the system was a three star, medium-sized hotel property located in the centre of Dublin city. The time taken to conduct the study at the site was thirteen months. Findings indicate that the concept of CPA, using ABC, is applicable in the hotel environment. Findings also suggest that is technically feasible to apply an Activity-Based CPA in a hotel organisation with results of the analysis at the site providing valuable information to management for decision-making. One of the significant findings of the analysis was that 38% of revenue generated at the site is contributing to 137% of total profits. The study has resulted in the availability of cost and revenue data by customer group, data that was previously inaccessible by management at the site. Management anticipate maintaining the system at the site in order to use the customer profitability information generated by the system in long-term customer-related decisions.