This paper develops a conceptual framework that describes the impact of information technology (IT) on service management and transaction costs in full service hotel firms. It details how IT would help such firms to lower operations-related transaction costs. Further, the underpinnings of how IT would impact service management in full service hotel firms is discussed more specifically from a customer satisfaction point of view while focusing on two aspects, i.e. managing customer delight and the customer's role as a co-producer. Propositions are developed and a discussion on the impact of IT on firm profitability from a transaction cost perspective ensues while concluding with managerial implications.