Hospitality industry is encountering high competitive pressure due to innovations in technology, changing market scenarios and demanding market segments. All hotels are increasing their standards of quality of service to match the demand of specific market segments and achieve higher satisfaction of customers. The current study aims to examine the impact of quality of service on satisfaction of customers and loyalty of customers as well as the impact of satisfaction of customers on loyalty of customers. The study also aims to examine the mediating effects of satisfaction of customers on the relationship of quality of service and loyalty of customers. The study focused on star category hotels of Delhi and NCR. The total sample size taken was 500 customers of star category hotels. The analysis of the data was done using IBM SPSS software. Frequency analysis, correlation analysis and multiple linear regression analysis were used to analyze the relationship between variables. Sobel test was used to detect the mediating effects. The study proved that, there is a direct, positive and significant relationship between quality of service, satisfaction of customers and loyalty of customers. Satisfaction of customers mediates the relationship between quality of service and loyalty of customers. Improving the timeliness and accuracy of the service delivery process is a strategic plan for transforming dissatisfied consumers into loyal customers in hospitality industry. Similar studies can be conducted on other categories of the hotels like budget hotels or standalone properties. Advance research could be conducted by focusing on the needs and demands of customers from different market segments of the society