This study is concerned with benchmarking the hotel industry in the Sultanate of Oman besides identifying the environmental factors that influence the operational efficiency of hotels. The benchmarking analysis is carried out through data envelopment analysis (DEA), used essentially to evaluate the efficiency ratios of a selected sample of 58 hotels. Although less than 23% of the hotels are found efficient, the average efficiency score of 83%indicates a reasonable efficiency in resource management for most of the hotels. Regarding the contextual effects, hotel Size, Star rating and cultural attractions are found to have the most significant effect on hotel efficiency in Oman. The positive effect of cultural attractions can inform policy makers on the necessity to preserve and promote cultural heritage as an important key factor of attraction.