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The main goal of innovation is to improve customer service and products and also customer satisfaction. Taking into account the four types of innovation recognized by organization for economic co-operation and development, the purpose of this research is to understand how innovation can influence customer satisfaction, specifically in the hotel industry.

The data collection was done through qualitative (interview) and quantitative methods (questionnaire). For the quantitative data processing, the Statistical Package for Social Science software was used through statistical inference methods.

The results show the influence of the four dimensions of innovation on customer satisfaction. These results confirm previous studies on the influence of service, marketing and process innovation on customer satisfaction. However, the results also show the positive relation between customer satisfaction and organizational innovation as well as the relationship between organizational innovation and the other types of innovation.

The results of this study were based only on one hotel unit. The extension to other cases may strengthen the results.

The confirmation that customer satisfaction is associated with innovation, in its four dimensions, can contribute to better decision-making, not only for the hotel in the study but also for the sector.

Focusing on understanding the relation between the rate of innovation and its impact on customer satisfaction, the study expands the knowledge about the importance of services innovation on a specific hotel in Madeira.