Knowledge represents a strategic resource of economic and social development today. It is the basis on which businesses can build sustainable operations and gain competitive advantages. Knowledge management (KM) has been embraced by businesses, particularly in the production and service sectors. However, the hotel industry has still not implemented knowledge management-focused activities to their extent. The introduction of a knowledge management strategy in the Egyptian hotel industry is taking place at a very slow pace. There is a growing awareness within the hotel industry of the need to undertake Knowledge management activities, develop a knowledge management strategy and the importance of human resources. Among researchers and managers, there is constant debate concerning the way knowledge management activities. A 54 questionnaire survey sample was selected and its size corresponded to the part of ten hotels in Cairo to determine their level of Knowledge Management and the extent to which Knowledge Management activities and strategies contribute to the development of a hotel's competitive ability. The empirical research shows that the hotel industry agrees with the fact that a developed Knowledge Management strategy and the implementation of Knowledge Management-focused activities significantly contribute to the achievement of hotels objectives and goals such as increasing productivity, developing employees, improving business efficiency and customer relation, improving human resource management and creating the environment that encourages innovations and consequently to the successful business performance. Successful business performance of hotels will help in gaining competitive advantages in the local, regional, and global markets.