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This study was aimed to test the effect of service quality and competitive advantage on business performance also explained a relationship between competitive advantage and business performance due to service differentiation as a moderator. The number of samples in this study were 100 people who had visited provinces that were declared as halal tourist destinations in Indonesia. To test the empirical model, Partial Least Square Structural Equation Modeling (PLS-SEM) analysis was used. The results indicated that service quality has an effect on competitive advantage. The essence of halal tourism emphasizes Moslem principles in managing tourism through polite and friendly services also service differentiation for all tourists and the surrounding environment. Therefore, to maintain Indonesia as the first worlds halal tourism, which has good business performance, the development strategy is directed at fulfilling the tourism competitiveness index as its main indicators, especially improving the service quality of tourism business.