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Service Quality in the Hotel Industry
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Changes to Assignment 1
‘Defining service quality is problematic due to the intangible element of
services, but approaches have been made to define the concept of service
quality’ to 3.1 Defining Service Quality
‘Because heterogeneity refers more the people producing the service rather
than those consuming it, gives the service firm less managerial control over
service quality as the customer can affect the process (Parasaruman et al,
1985)’ in 3.2 Heterogeneity
‘This characteristic also makes mistakes difficult to hide and the way that a
service provider acts to fix a problem will influence the service evaluation from
the customer’ in 3.2 Inseparability
‘This has implications on quality control because it alters expenses and costs
required in the service, for example, a party booking at the restaurant requires
a free table, and more consumable goods available’ in 3.2 Perishability
‘A key attribute in attitude is disconfirmation, as shown in Figure 2, which
constructs attitudes based on past service experiences’ in 4 Attitude para 1
‘If customer perceptions meet the service experience, this will give a positive
evaluation and construct their attitudes towards that service encounter, as
shown in Figure 2’ in 4 Attitude para 2
‘..and the service characteristics’ in 4 Attitude para 4
‘Often a problem in hotels is the leap between service delivery and perceived
service, because of the heterogeneity characteristic of services, and because
many customers are using hotels for different uses (Ryglova et al, 2011). For
example, a leisure stay will include relaxing and using the bar area of a hotel,
the customer may enjoy a disco night there, whereas a business trip will require
the customer to rise early and any noise would be a nuisance’ in 5.1 Gap 3
‘Ryglova et al (2011) have found in their studies that the most negatively
evaluated elements of a hotel service which fall into this gap is the hotel’s ability
to meet deadlines and the staff’s ability to help the guest at all times’ in 5.1 Gap
4
‘Although the model is used extensively, limitations of the model have led to
further work on evaluating service quality, notably the Servperf Model (Cronin
and Taylor, 1992)’ in 5.1 final para
‘..characteristics such as intangibility, heterogeneity and perishability can make
it difficult to identify the issues in the service (Lusch and Vargo, 2004)’ in 6
Summary para 1
Word Count: 2943
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Service Quality in the Hotel Industry
1. Introduction
This report will explore evaluating service quality in the hotel industry, using examples
from chain hotels such as Premier Inn and premium hotels such as The Midland. A
hotel offers many different services for different customer needs and this makes an
interesting case to identify how customers evaluate service quality in different hotels.
This report shall explore what challenges are in defining service quality; to what extent
expectation contributes to evaluating quality; and what the different approaches are
for measuring service quality.
2. Background
With the UK hotel market forecast to make £66.3m by 2021 (Mintel, 2016), it is
imperative to managers that they make sure their hotels offer a high service. Karwan
et al (2003) states that quality measurement and customer satisfaction are extremely
important to service firms who are competing against other firms. The issue with this
is that service quality is an elusive and indistinct construct not easily articulated by
customers (Parasuraman et al, 1985). The reason for service quality being a difficult
construct in contrast to physical goods, is that goods quality can be measured by
indicators that are objective and precise, such as defects or durability (Gronroos, 1990;
Smith, 1999). Measuring service quality can be difficult because of the intangibility of
services, which makes it more complex than justifying the quality of goods (Palmer,
2011). However, it is of great significance in the contemporary service sector as
Anderson and Zeithaml (1984) demonstrated that quality contributed to market share
and return on investment in their research on service quality and business
performance. Studies further support this theory that businesses that offer higher
quality perform better on market share and return on investment (Karwan et al, 2003).
3. What are the challenges in defining service quality?
3.1. Defining Service Quality
Defining service quality is problematic due to the intangible element of services, but
approaches have been made to define the concept of service quality. Crosby (1984)
proposed one of the earliest definitions of service quality being a business establishing
requirements and working within the specifications of the requirements, but it was not
clear whether these requirements were based on how the company perceived quality
or how the customer perceived quality (Palmer, 2011). Booms and Lewis (1983) had
a simpler version: a measure of how well the service level that was delivered meets
the customer’s expectations. To counter this definition, Juran (1982) proposed that
service quality is defined by fitness for use, meaning the feasibility of satisfying
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customer’s needs. This definition does not explain how different customers may have
different perceptions of quality, and so Kandampully (2002) divided quality from two
perspectives: management and customer. Applying this to the hotel industry, from the
management’s standpoint, service quality is operation-oriented and defined by
standards such as the stars of a hotel, and from the customer standpoint, service
quality is defined by guest satisfaction (Luo and Qu, 2016). A customer’s expectations
will greatly define the service quality because their expectations are generated from
what they think a service is willing and able to provide for them (Samplson, 2001).
3.2. Characteristics of Services
To understand what service quality is, there are three characteristics of services that
must be explored: intangibility, heterogeneity and separability (Parasuraman et al,
1985). These features occur frequently in literature across the scope of service
quality, but Palmer (2011) also includes two more characteristics: perishability and
ownership, to define a service.
Intangibility refers to the way that services are performances rather than physical
objects (Lovelock, 1981), and, because of this intangibility, firms may find it hard to
understand how customers perceive service quality (Zeithaml, 1981). In support of
these points, Palmer (2011) states that the level of tangibility derives from three
sources: tangible goods, which are offered by the services and consumed by the
customers such as the bedroom in a hotel; physical environment, in which the service
takes place such as the hotel building; and tangible evidence of service performance,
such as seeing the hotel porter carry bags to the room. There are many discussions
on the intangibility of services and how they differ from physical goods, which provides
obstacles for customers to evaluate service quality and how variations of tangibility
give different types of value to customers (Lusch and Vargo, 2004).
Heterogeneity refers to the way that a service will differ from person to person. A
customer may require a hotel for a business trip and may prioritise cheaper price,
simple facilities and comfort at a Travelodge, whereas another may prioritise on quality
of the room, room service and spa facilities at The Midland for a romantic weekend
away. This could contain risks to service quality because it is difficult to assure
consistency of behaviour from service employees (Booms and Bitner, 1981). In
support of this, Palmer (2011) proposes that because the customer is usually involved
in the production process service at the same time as they consume it, maintaining
control to produce consistent standards can be difficult. Because heterogeneity refers
more the people producing the service rather than those consuming it, gives the
service firm less managerial control over service quality as the customer can affect the
process (Parasaruman et al, 1985). However, Lovelock and Wirtz (2017) argue that if
a customer perceives that they have high control over the situation, they will have a
higher satisfaction of the service.
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Inseparability refers to the way that production and consumption happens at the same
time in a service compared with physical goods where the product is made in a factory
and consumed after purchase (Palmer, 2011). In many services, the interaction
between customer and service provider is high (Fang et al, 2008), in turn making the
customer a co-producer of the service experience (Normann and Ramirez, 1993).
Some customer service interactions are high-contact, such as having surgery, but the
hotel industry is low-contact, because much of the elements of service can be carried
out without the direct involvement of the customer, such as bringing up luggage to
their room or washing bed sheets in preparation for a customer (Palmer, 2011). Bolton
et al (2007) supports the theory that the relationship between customer and seller in
services is more important than in physical goods, because a strong relationship
means a long-term and trusting co-production. This characteristic also makes
mistakes difficult to hide and the way that a service provider acts to fix a problem will
influence the service evaluation from the customer.
Some customers may know their service providers, such as the family doctor, but in
terms of hotel chains, the customer may choose the same hotel chain based on past
positive experiences but not know the individual service providers. This is called a
pseudorelationship (Wayland and Cole, 1997), and even a different service provider
in the same service brand can make the customer feel familiarity (Gutek et al, 1999).
With a company such as Premier Inn, a customer will make expectations based on
past interactions with that company (Gutek et al, 1999). Lovelock and Wirtz (2017)
add that customers assess attributes and risks related to what the service is offering,
and they will have a low tolerance for if those attributes, which based the expectation,
changes. For example, in a hotel, if a customer pays more for an en-suite bathroom
but the facilities break, and they must use the shared bathroom, this will not be
accepted lightly.
Services cannot be stored like physical goods; therefore, perishability is a
characteristic of services. This has implications on quality control because it alters
expenses and costs required in the service, for example, a party booking at the
restaurant requires a free table, and more consumable goods available. Demand is
rarely a constant pattern, as food bars may be busier at lunchtime on a daily variation;
taxi services may be in more demand on a weekend evening on a weekly variation;
shops may be busier near Christmas at a seasonal variation; mortgages are paid at a
cyclical variation; and emergency building repair services after a natural disaster are
at an unpredictable pattern of demand (Palmer, 2011). Hotels may experience
seasonal variation depending on their location, or they may experience a peak influx
of bookings on a weekly variation as people are more likely to have a weekend trip
away.
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Lovelock and Gunneson (2004) propose that the concept of ownership defines a
service, because when a service is being offered there is no transfer of ownership,
compared with when a goods product is purchased, the buyer becomes the owner.
The lack of ownership raises the issue of the transient nature of the purchase, that the
purchase is an experience, a memory, and so negative experiences will influence the
complete memory of the experience (Brunner-Sperdin, 2009). For instance, the hotel
being located next to a noisy building site.
4. To what extent does expectation contribute to evaluating quality?
Attitude can be defined as forming an opinion based on information already acquired
before the service experience (Fishbein and Ajzen, 1975) and is constantly evolving
over time due to responses and feeling from multiple service experiences
(Sureshchander et al, 2002; Lee et al, 2007). A key attribute in attitude is
disconfirmation, as shown in Figure 2, which constructs attitudes based on past
service experiences.
These attitudes are the origin of service expectations, which can be formed from word
of mouth referrals, advertising and price point, but they can also be formed by industry
standards such as the number of stars of a hotel (Luo and Qu, 2016). Studies have
shown that the star rating of a hotel has positively influenced customer satisfaction
(Haversjo, 2000; Lee et al, 2007; Mak, 2011), although other studies have critically
theorised that a hotel’s star rating does not influence a firm’s performance (Rahman,
2001; Singels et al, 2001; Martínez-Costa et al, 2009; Lo et al, 2011). If customer
perceptions meet the service experience, this will give a positive evaluation and
construct their attitudes towards that service encounter, as shown in Figure 2.
Lovelock and Wirtz (2017) state that expectations are formed during the search and
decision-making process, basing them on online reviews such as Trivago, word of
mouth from family who booked a hotel for a holiday in the same country as the
customer is planning, or a previous experience at the same hotel. In terms of a hotel
chain with a consistent brand image across its hotels, a positive brand image has been
found to strongly influence a customer’s decision-making process by creating a mental
shortcut when processing purchase data (Gerner and Kotler, 2002).
However, even though expectations are formed before the service experience, it is
difficult to evaluate service quality from both customer and management point of views
because of customer perceptions (Brassington and Pettit, 2013) and the service
characteristics.
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4.1. Customer Perceptions on Quality
One aspect that makes service quality difficult to evaluate is customer perception,
because of the subjective nature of what a customer perceives to be low or high quality
(Palmer, 2011). A customer may be satisfied with the lower quality of bedding at a
Premier Inn because it was a cheaper price and thus expected, but a customer may
expect a room with high-tech facilities at The Midland because it was a high price.
Gronroos (1984) identified two types of quality which customers use in their
perception. Technical quality refers to the quantifiable measures in a service, such as
the cleanliness of a room or how long the wait is for breakfast; and functional quality
refers to how the technical quality is delivered, such as the style of the bedroom and
attitude of staff on reception (Palmer, 2011). These two qualities link with corporate
image, as this also defines customer’s perceptions of quality.
Figure 1. Model of Consumer’s Perception of Technical and Functional Quality applied
to the hotel industry (Source: Adu-Brobbey, 2012:online)
Although tangible elements may be easy to measure and evaluate, intangible
elements are subjective and so difficult to identify from a management point of view
(Brassington and Pettit, 2013). A hotel manager may be able to identify that the sheets
were not to the high standard specified, but they may not be able to identify how the
style or atmosphere of a room dissatisfied a customer.
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4.2. Customer Expectations and Satisfaction
The Expectancy-Disconfirmation Model of Satisfaction (Oliver and Sharpe, 2010)
shows that customer satisfaction is determined on the customer’s expectation before
consumption, and the perceived performance after consumption (Lovelock and Wirtz,
2017). Studies have found that customers base their evaluation of perceived
performance on their expectations (Anderson and Sullivan, 1993; Oliver et al, 1994).
During and after the service, customers judge the performance and compare it to their
expectations. If performance perceptions are worse than the customer expected, this
is called negative disconfirmation, but if performance perceptions are better than
expected, this is called positive disconfirmation, and if perceptions met expectations it
is called confirmation of expectations (Oliver and Sharpe, 2010). If performance meets
expectations or above, staying within the tolerance levels, then this will result in repeat
visits and customer loyalty (Fang et al, 2008). A customer’s tolerance levels may be a
noisy street, particularly if they are staying at a hotel for a business trip and have a
meeting early in the morning, so they feel negative disconfirmation.
Figure 2. The Expectancy-Disconfirmation Model of Satisfaction (Source: Hoffman et
al, 2010:online)
Dissatisfaction can also happen when management thinks they know what customers
expect, but the service doesn’t meet the expectations or needs of the customer (Blesic
et al, 2011). However, dissatisfaction scores could show that customers aren’t
concerned with that area of service (Karwan et al, 2003).
5. What are the different approaches for measuring service quality?
5.1. Servqual
One of the most influential models is the Servqual Model (Parasuraman et al, 1985),
used by companies to better understand the expectations and perceptions of their
customers (Palmer, 2011). It is an example of a ‘soft’ measurement system, meaning
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that the results cannot be observed so must be collected from customers (Lovelock
and Wirtz, 2017).
Servqual is based on a 22-item questionnaire designed to cover five broad areas of
service quality: tangibles (appearance of physical elements); reliability (dependability,
accurate performance); responsiveness (promptness and helpfulness); assurance
(competence, courtesy, credibility, security); and empathy (easy access, good
communications, customer understanding). Customers are asked to rate the 22 items
relating to their expectations and perceptions of service delivery (Palmer, 2011). Using
this model to evaluate service quality, the expectation score is subtracted from the
perception score, and this result shows whether the customer’s expectations are
exceeded which is very important to companies (Brassington and Pettitt, 2013).
Moreover, the model identifies gaps between company activities and the obstacles in
the way of achieving a satisfactory level of service quality (Shahin et al, 2010).
Figure 3. SERVQUAL Gaps Model (Source: Pakdil, 2005:online)
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Gap 1: Gap between consumer expectations and management perception.
Management think they know what customers expect but this may be very different to
what customers expect (Blesic et al, 2011). Veljkovic (2009) states that not
understanding customer expectations can result from bad management of customer’s
complaints. Management may think that customers want to stay in a modern unique
hotel, so they install a high-tech shower with many different options, but the customer
is expecting a comfortable room to stay in on a business trip.
Gap 2: Gap between management perception and service quality specification.
Management may understand what customers expect but fail to set appropriate
service quality specifications (Palmer, 2011). Reasons for this may be cost or
feasibility-based (Lovelock and Wirtz, 2017). Management install the high-tech shower
with its many different settings.
Gap 3: Gap between service quality specifications and service delivery. Palmer (2011)
states this is where management fail to meet the service quality specifications and it
could be due to the staff not cooperating, malfunction of technology, and a conflict of
interests (Blesic et al, 2011). The customer doesn’t understand how the shower works
and is dissatisfied that they cannot get a simple shower before the meeting in the
morning. Often a problem in hotels is the leap between service delivery and perceived
service, because of the heterogeneity characteristic of services, and because many
customers are using hotels for different uses (Ryglova et al, 2011). For example, a
leisure stay will include relaxing and using the bar area of a hotel, the customer may
enjoy a disco night there, whereas a business trip will require the customer to rise
early and any noise would be a nuisance.
Gap 4: Gap between service delivery and external communications. The customer
may be dissatisfied with the service because of previous communications from the
hotel such as advertising, or online reviews (Palmer, 2011). The hotel was advertised
as a top choice for business trips, but the customer feels that the hotel is not universal
as it didn’t meet their needs. Ryglova et al (2011) have found in their studies that the
most negatively evaluated elements of a hotel service which fall into this gap is the
hotel’s ability to meet deadlines and the staff’s ability to help the guest at all times.
Gap 5: Gap between perceived service and expected service. This is built on the
previous gaps – the difference between the customer’s expectation and the perceived
service received (Ghasemi et al, 2012). The customer now believes that the hotel is
not universal to everyone and may be pretentious with the installation of a shower the
customer could not understand to use.
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From identifying these gaps, management may assume they must change their
operations to meet customer needs, but Karwan et al (2003) states that customers
may be expecting more than is feasibly possible because of costs, and it would be
naïve of managers to change their business. Crowley et al (2005) also states that
benchmarks such as waiting can be part of building anticipation and excitement.
Although the model is used extensively, limitations of the model have led to further
work on evaluating service quality, notably the Servperf Model (Cronin and Taylor,
1992).
5.2. Servperf
Another method of evaluation is to ask customers to rate their experience on service
performance only in the form of survey forms, arguing that customer’s expectations
should be measured before the experience which is not possible (Karwan et al, 2003).
Cronin and Taylor (1992) proposed the created a measurement technique in which
the customer rates from 1 (strongly disagree) to 5 (strongly agree) to simply measure
performance. This eliminates the issue that customer expectations may change when
they experience a service (Cronin and Taylor, 1992; McAlexander et al, 1994).
This measure critiques the Servqual Model, arguing that customers change their
expectations when they experience a service (Palmer, 2011). Although it is true that
the results of the Servqual Model may not be accurate as customers could have
changed their expectations, it is still the most widely used measurement of service
quality in service industries (Lovelock and Wirtz, 2017).
6. Summary
As discussed, the service experience equates to a memory and a more invested
experience from the customer, than purchasing a physical good (Brunner-Sperdin,
2009), and this amplifies the importance of measuring service quality for managers in
the hotel industry. The characteristics of services proves an obstacle, as customers
are part of the service experience (Normann and Ramirez, 1993) and characteristics
such as intangibility, heterogeneity and perishability can make it difficult to identify the
issues in the service (Lusch and Vargo, 2004).
From a management perspective, the Servperf and Servqual Models provide a useful
measurement to score the service experience and compare with customer
expectations. Cronin and Taylor (1992) propose that customer’s expectations change
after the experience and so surveys asking performance-only questions is more
effective, but Parasuraman et al (1985) propose a model that allows managers to see
gaps between customer expectations and service performance. The issue with either
measurement is that all customers are different and have different perceptions
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(Palmer, 2011), but a hotel has a responsibility to give accurate communication in its
advertising as customers build expectations on this (Lovelock and Wirtz, 2017).
Regardless of the complexities of evaluating service quality, managers must set
standards for quality and successfully implement these standards to meet customer
needs (Lovelock and Wirtz, 2017).
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