The need for proximal positioning for effective performance has been highlighted in this study which sought to examine the relationship between proximity and performance of Hotels in Port Harcourt. The study was guided by six hypotheses stating that there is no significant relationship between proximity (dimensioned by proximity to customers and proximity to staff) and performance (measured with patronage, customer retention and employee turnover). A sample of ninety managers was drawn from hotels in Port Harcourt using the cluster sampling technique. Pearson’s product moment correlation (r) was used in testing the hypotheses at 95% level of confidence. The findings indicated that proximity to customers related significantly with patronage, customer retention and and employee turnover. While proximity to staff did not relate significantly with patronage and customer retention; but with employee turnover. Based on these, it was concluded that to a large extent, proximity is a good predictor of performance of hotels in Port Harcourt. Hence, hotels need to reposition and/or re-strategize so as to mitigate the locational challenges of proximity to customers and employees that are capable of impeding their performance. Consequently, the study recommended among other things that hotels should be located in such a way that they are easily accessible by customers and employees so as to enhance economic activities. Where this is not the case, hotel management should collaborate with transport service providers to address the issue of proximity and easy access to and fro their facilities.