|In Kenya, tourism has been recognized as one of the key drivers of economic growth and poverty reduction. This is because tourism has a great multiplier effect that is able to catalyze growth in all sectors of the economy. The sector has been performing well and it was anticipated that international arrivals would reach the 2 million mark by the end of 2012. However, there was a decrease by 0.3% from 1.785million in 2011 to 1.780million in 2012 and 1.5 million in 2013. The decline could be attributed to the euro zone crisis coupled with perceived insecurity in the country. Kenya is ranked 135 out of 140 countries globally by the Travel and Tourism Competitive Index on safety and security concerns. Therefore, the purpose of this study was to examine the effects of insecurity on performance of the hotels. The study was guided by the following specific objectives: to determine the indicators of vulnerability of the hotel facilities towards insecurity; to find out the current hotel standards of security within the hotel facilities; to evaluate the effects of insecurity on the hotels‟ performance; to profile crime trends and security threats in the hotel industry. The study employed both quantitative and qualitative methods of data collection. The study used questionnaires and interviews to collect data. The study adopted a cross-sectional analysis using a sample of 160 respondents. Nairobi hotels were less vulnerable than hotels in Mombasa. This implied that investors have more confidence in Nairobi than Mombasa due to favorable conditions such as safety and security of guests; The age of the hotel did not affect security levels of the establishments; security is a multiplicity of factors interaction and not a single consideration; The quality, security, age and occupancy rate of hotel are potential factors affecting the costs for operating and maintaining the hotel There was significant difference in training across the two regions with Mombasa doing it more frequent compared to Nairobi (p value<0.001).There was a gap between the training and the application of the security procedures. On the cost of security expenditure, Nairobi had invested more than Mombasa. The increase of security costs has led to increase of recovery rates. Nairobi and Mombasa regions had a positive correlation between occupancy and security investment. As the hotel invested more in security devices, there was an increase in the occupancy rate. However, this was not statistically significant, as there was an inverse correlation in some of the hotels for the two regions. For instance, higher stars (4 &5) had a negative relationship of -0.87 and 0.05 respectively. The higher the occupancy rate the lower the investment of security in the hotel industry; none of the factors significantly explained the security investment among the hotels (p value > 0.05). The three factors (occupancy, star rating and region) explained only 17% of the total security investment in the hotels, leaving 83% of the investment unaccounted for. This indicates that investment in security among the hotels is explained by factors other than occupancy, star rating or region. The study recommends that hotel staff needs to have specialized training on security matters at higher levels to be able to respond to different threats in hotel industry. Training should commensurate to the needs of the hotel industry. There is need to capacitate the security guards, so that they will be able to expand their scope of security within the hotel industry. There is also need to continually develop security strategies to meet the evolution of security challenges in the hotel industry. At the same time there should be uniform platform of security procedures in the hotel industry to be consistent with internationally security standards.