The main objective of this study was to assess the practices and challenges of hotel tourism marketing in Gondar City Administration. Descriptive survey research was used in the study. Both qualitative and quantitative research approaches (mixed) were used in this study. From the ten star hotels and resorts, Hailie Resort was selected randomly for the pilot. The remaining nine hotels and resorts were included for the main study. There were a total of 222 employees and 9 managers. All of them were taken, as the number was manageable. To collect data, both semistructured questionnaire and interview were used. The reliability of items in the questionnaire was checked using alpha Cronbach. And the reliability index was 0.71 which was accepted to be high in reliability. Data was analyzed using both descriptive and inferential statistics. The results of the study revealed that although the hotels and resorts had practiced quality services and employees work towards customer satisfaction in terms of customer cares; knowing who the customers are; and staffs’ willingness to resolve complaints, the practice still needs some improvements. These areas of service quality that need serious improvements were found to be inadequacy an inaccessibility of trainings, the presence of limited ways of communication such as only internet and telephone, limited ways of assessing customer satisfaction (only suggestion box), imbalances of work distribution; unfairness of the payment; lack of access to exchange information with the hotel/resort manager; and lack of recognition. Again, it was found out that lack of latest marketing techniques; fluctuations in the economy; increasing competition; high turnover of quality workforce; infrastructural bottlenecks; high guest expectations; current security problems, such as civil war, and the rising of cost of living in the country were the common challenges that hinder the performance of hotels and resorts. Eventually, it was found out that understanding competitors, making regular quality service reviews, getting feedbacks from customers, conducting surveys about the needs and interests of the customers, retaining and recognizing skilled and efficient staffs, and making advertisements in social medias were some of the strategies devised for the improvement of hotel and resort business in the study area.