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The AEC was launched in 2012, consisting of 10 countries in South East Asia. One benefit in the tourism sector for all members is visa free travel between Asian member states, so hotel entrepreneurs have to prepare for this situation in areas such as new competitors, price wars, and providing the offer of new services. For entrepreneur to survive in the high competition world of the hotel industry .That is the problem which hotel entrepreneurs have to overcome. To build service innovations for the service sector is interesting issue. The purpose of this study is to evaluate the relationship between alliance orientation and service innovation that has a positive affected on business performance in the service sector with specific focus on SMEs Hotel in Phitsanulok Thailand. Due to the SMEs Hotel have limited of manpower, specific expertise and funding so make it necessary for the entrepreneurs to find new service strategies to meet their consumer needs. Hence, the alliance orientation as the answer of small and medium-sized hotel entrepreneur will survive in the present situation. And the three dimension of alliance orientation based on alliance scanning, alliance coordinator and alliance learning. The methodology of this paper is divided into 2 stages. The first one is based on analyses from review literature from related research and documents of domestic and foreign literature. The paper will describe the development of the theories, and then review previous literature that provides empirical evidence on factors affecting marketers and entrepreneurs to plan for marketing strategies. The second one uses the qualitative research was conducted by in-depth interviews with 5 SMEs hotel entrepreneur in order to investigate the importance of service innovation as the key success factor for the hotel industry. From this study was found that alliance orientation and service innovation has a positive effect on firm performance. And also show that the entrepreneurs focused on the business partners in the same business category first because it directly impacts the firm performance which show that alliance with business partners in the same industry must be trusted and must have a good relationship with each other. Then they will share the customer information with each other through the technology platfrom. And in the part of the different industry’s business partner are often based on customer needs and cause service innovation in the hotel and moreover the entrepreneur also focus on alliance scanning first to create new service innovations.