This study gathered data from 14 four to five-star hotels in South-East Queensland, Australia, in an attempt to examine the nature and degree of influence organisational climate has upon the performance of hotels. Employee perception of customer satisfaction was studied both as an index of performance and as an intervening variable between organisational climate and financial performance as indexed by revenue per available room (REVPAR). The data provided a description of a young, relatively gender balanced, well educated and trained work force which received relatively low levels of financial remuneration and displayed very high levels of turnover. A new instrument was used to measure the dimensions of organisational climate across the hotels. This instrument represented a modification of that presented by Ryder and Southey (1990), which itself was a modification of the 145 item psychological climate questionnaire of Jones and James (1979). The instrument represented a subset of 70 items of the Ryder and Southey instrument. Responses to all items within the instrument were on a 7 point anchored scale. Principal components analysis (PCA) produced results consistent with earlier versions of the instrument, which had been reported elsewhere. This analysis described organisational climate within the sample to be composed of 7 underlying dimensions; Leader facilitation and support, Professional and organisational esprit, Conflict and ambiguity, Regulations, organisation and pressure, Job variety, challenge and autonomy, Workgroup co-operation, friendliness and warmth, and Job standards. These dimensions were judged to be consistent with those reported earlier by Jones and James, and by Ryder and Southey. Poor support was found for the first structural model that proposed that employee demographic variables would affect organisational climate and that organisational climate would affect customer satisfaction (although the latter link was quite strong). The most important finding of the study was the support for a second structural model when it was found that variation in the 7 dimensions of organisational climate accounted for 30% of the variation in Employee Perception of Customer Satisfaction. Furthermore, that Employee Perception of Customer Satisfaction accounted for 23% of the variation in REVPAR between the hotels. Possible extensions of this study using direct measures of customer satisfaction and expanding it to include hotels of different star ratings are discussed.