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Total customer satisfaction is one of the most important strategic weapons of best‐practice hotel organizations. However, hotel organizations cannot achieve total customer satisfaction without gaining the knowledge of a hotel’s competitive position in the changing marketplace and realizing the opportunity of continuous service improvement. With this in mind, this paper develops a set of service benchmarks that help hotel managers monitor their service delivery process, identify performance gaps, and take corrective action. In particular, we propose dynamic benchmarking based on the analytic hierarchy process (AHP) that goes beyond traditional service performance measures. Based on the longitudinal surveys of customers who have stayed at first‐class hotels in Korea, this paper illustrates the usefulness of dynamic benchmarking for continuous service improvement.