2. Dr. Bidyut Jyoti Gogoi
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which can lead to the success of the business in the market (Gabbie & O’Neill, 1996).
Delivering a greater value is considered a key factor in the success of a business
(McDougall & Leveque, 2000). There is indeed a strategic link between customer
satisfaction and company performance (Anderson & Fornell, 1994). The simplest
way to discover a customer need is simply to ask what are the services desired by the
customer (Gunderson, Heide, & Olsson, 1996). Offering services that are preferred
by customers is of utmost importance for gaining customer satisfaction. Amin et al
(2013) stressed that for the business to be value-producing entity, the hotel should
give importance to delivering outstanding customer value, especially by providing the
best service, the lowest prices and the best quality. Managing customer satisfaction
helps to attain a higher customer retention rate and boost the company’s profits and
market share (Gilbert & Horsnell, 1998).
Customer satisfaction gives us a measure on how products or services supplied by
a company can meet or surpass a customer’s expectation. Customer satisfaction is
very relevant and important term because it provides marketers and business owners
with a metric which they can use to manage and improve their businesses. It is a
leading indicator of consumer repurchase intentions and loyalty, a point of
differentiation, way to reduce customer churn, increase the customer lifetime value,
increased goodwill and also brand loyalty.
Customer service for a hotel industry maters because it is quite different than
other service providers. It has to deals with the way the staff in the hotel interact with
its customers, ideally leaving them feeling they have been treated as an individual
rather than being part of a process and, genuinely has been taken care of. A satisfied
customer turns out to be a loyal customer.
2. LITERATURE REVIEW
2.1. Dimensions of Service
Poon and Low, (2005) noted that customer satisfaction is generally based on
hospitality of the employees in accommodation, food and beverage, recreation and
entertainment, supplementary services, security and safety, innovation and value
added services, transportation, location, and appearance, as well as on the more basic
concerns of pricing and payment. To differentiate hotel services between good
performance that deserves to get compliments or bad performance by received
complaints, Cadotte and Turgeon (1988) categorized four items into a classification
model that includes criticals, satisfiers, dissatisfiers, and neutrals. Critical attributes
receive compliments for good performance and vice versa. Satisfaction level in room
service, restaurant and breakfast fall within high critical limits in this category.
Satisfaction level at the reception, the friendliness of the employees, the support
facilities in the wellness area are the secondary attributes that impact the customer
satisfaction. Food quality and room quietness fall within this category. Thus, critical
traits at the same time provide opportunities and threats for the management.
Satisfiers refer to the attributes where guests will give compliments for an
extraordinary good performance. Low or average performance will normally not
affect guest dissatisfaction, if it relates only to the maintenance of the hotel lobby or
the amount of food in the restaurant.
Hotel service qualities and physical aspects can have favorable impact on
customer satisfaction (Ekinci, Dawes, & Massey, 2008). It is generally acknowledged
that service quality is antecedent to customer satisfaction (Cronin & Taylor, 1992).
3. Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty
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According to Anderson & Mittal (2000), it is crucial to identify the dimensions of
customer satisfaction and improve the performance on attributes which are important
to customers. The five dimensions selected for this study by the researcher are
satisfaction in reception, satisfaction in friendliness and service, satisfaction in room
service, satisfaction in restaurant and breakfast and satisfaction in the wellness area.
2.2. Drivers of Customer loyalty
Service quality and pricing are the most important factors in the hospitality sector.
Callan (1996), investigated the role of pricing and service quality in the selection of
hotels. Choi & Chu, 2001; Matzler & Pechlaner, 2001; 2002; Baker & Crompton,
2000; Getty & Thompson, 1994; Kandampully & Suhartanto, 2002; researched on the
effect of service quality and pricing in post-purchase behavior and revisit intentions.
Quality of service and satisfaction are termed as the key drivers of financial
performance in hospitality industry. An experienced customer is likely to be more
concerned with the quality of service and may evaluate the services as “key”
attributes (Robinot & Giannelloni, 2010).
Price perception have a direct influence of on customers purchasing behaviour.
Keaveny (1995) finds out that half of the customers switched because of poor price
perception as compared to the competitors. Varki and Colgate (2001) found out that
price perception directly influences customer satisfaction, the likelihood of switching,
and the likelihood of recommendation to others. Monroe & Krishnan, 1985; Rao &
Monroe, 1989; Zeithaml, 1988, sees price as a cue in evaluating quality of an offer.
Pricing doesn’t matter when buyers are familiar with the product or product category
or when other attributes are present (Rao & Monroe, 1989).
Research in consumer satisfaction shows that price or quality cannot be assessed
in an objective manner. They should be measured from the customers’ point of view,
which is a subjective perception and evaluation. Hence, as shown by research, price
as well as quality is required to be measured as perceived by the customers.
Price and quality influences customer perceived value, customer satisfaction and
customer behaviour. Companies should orient their strategies towards delivering
superior customer value as it is a strong driver of customer satisfaction, retention and
profitability (Woodruff, 1997; Slater, 1997). Bolton & Drew, 1991; Ralston, 2003,
believes price and quality perceptions influence value perceptions. This means that
price perceptions have an important influence on customer value. Fornell et al.
(1996), investigated various industry sectors to find out the impact of price and
perceived quality on overall satisfaction. Findings showed that price played an
important role in all the sectors. It was also found in two of the cases that price was
more important than perceived quality.
Voss, Parasuraman, and Grewal (1998) studied the role of price in service industry
and found that perceived performance has a stronger impact on satisfaction when
there is price performance consistency. Whereas in case of price performance
inconsistency price has a greater impact. Varki and Colgate (2001) insisted that price
perceptions have a stronger influence on value than quality. This shows that price
satisfaction may have a stronger influence on loyalty than service quality satisfaction.
Price is a stronger driver of customer value than quality. Price being an extrinsic cue
can be observed and compared in comparison with quality an intrinsic cue which is
more difficult to evaluate. The researcher in this paper has taken price satisfaction
and service satisfaction as the drivers of customer loyalty. The researcher tries to find
4. Dr. Bidyut Jyoti Gogoi
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the relationship between the dimensions of service quality and the drivers of
Customer Loyalty. The hypotheses developed are as follows.
H1A: Satisfaction in reception, satisfaction in friendliness and service of the staff,
satisfaction in room service, satisfaction in restaurant and breakfast, satisfaction in the
wellness area has a positive impact on price satisfaction.
H2A: Satisfaction in reception, satisfaction in friendliness and service of the staff,
satisfaction in room service, satisfaction in restaurant and breakfast, satisfaction in the
wellness area has a positive impact on service satisfaction.
2.3. Customer Loyalty
Jones and Suh (2000) supports the idea of ‘overall satisfaction'. It was also found that
this ‘overall satisfaction' was relatively stable over time. Research also shows that
loyalty, satisfaction and service quality is closely linked. Presbury et al. (2005) said
hospitality companies such as hotels and cruise lines can use loyalty as a competitive
advantage if they can display distinct levels of superior service over the competition.
Reichheld (1996) found that there is a positive linear relationship between loyalty and
profitability for hospitality companies. Monroe (1990) stated that "Buyers' perception
of value represents a trade-off between the qualities of benefits they perceive in the
product relative to the sacrifice they perceive by paying the price". Williams et al.
(2003) states that the factors that influence guest’s expectations are word of mouth,
personal needs, external communications, and past experiences. These factors alone
of course make it difficult for a hospitality company to fully understand what the
individual guest expectations are. It is particularly difficult to gauge what new guests
expect as one cannot possibly know what the specific expectations are of each first-
time guest (Williams et al., 2003, p. 63).
Empirical studies show a positive customer satisfaction and profitability
relationship (Anderson et al., 1994; Fornell, 1992; Yeung & Ennew, 2000). Customer
satisfaction also increases the shareholders’ value (Anderson et al., 2004; Matzler et
al., 2005).
Prices or values which are important factors influencing and assisting the
development of satisfaction can also measure customer satisfaction (Getty &
Thompson, 1994). The most important challenges facing the service industry is
excellent quality of service and high customer satisfaction. The true measure of a
company’s success in today’s hospitality environment lies in its ability to satisfy
customer’s needs continually and consistently. Customers have consistently demand
more over the value for money in terms of both the price and the quality of
product/service being offered. The researcher in this paper tries to find the
relationship of price satisfaction and service satisfaction on Customer loyalty. The
hypotheses developed are as follows.
H3A: Price satisfaction has an impact on customer loyalty.
H4A: Service satisfaction has an impact on customer loyalty.
For the study the researcher adopted the model developed and by Kurt Matzler,
Birgit Renzl & Sandra Rothenberger, in their paper, ‘Measuring the Relative
Importance of Service Dimensions in the Formation of Price Satisfaction and Service
Satisfaction: A Case Study in the Hotel Industry', Scandinavian Journal of Hospitality
and Tourism. The model under study is as follows.
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Dimensions of service Drivers of customer loyalty Loyalty
2.4. Objectives
1. To find out the relationship between dimensions of service and drivers of customer
loyalty.
2. To find out the relationship between drivers of customer loyalty and customer loyalty.
3. METHODOLOGY
A primary research was conducted using a structured questionnaire which consisted
of the dimensions of services like satisfaction in reception, satisfaction in friendliness
and service, satisfaction in room service, satisfaction in restaurant and breakfast,
satisfaction in wellness area; the drivers of customer loyalty i.e. price satisfaction and
service satisfaction; and customer loyalty. A descriptive research was undertaken
with a sample size of 672. The respondents were customers who used
accommodation in hotels in Pune area. The sampling method adopted was
nonprobability convenience sampling.
3.1. Variables
Service dimensions: Reception is measured using three statements R1, R2 & R3.
Friendliness and service is measured using three statements F1, F2 & F3. Room
service is measured using five statements RO1, RO2, RO3, RO4 & RO5. Restaurant
and breakfast is measured using five statements RE1, RE2, RE3, RE4 & RE5.
Wellness area is measured using 3 statements W1, W2 & W3. Price satisfaction is
measured by the statement P. Service satisfaction is measured by the statement SE.
Customer loyalty is measured by the statement L. See Appendix for details.
All the variables were measured on a five point Likert’s scale.
3.2. Data Analysis
Out of 672 respondents, 79% were Male and 21% Female. Of the respondents, 5.5%
were in the age group 19 to 30 years, 64% were in the age group 31 to 40 years,
Reception
Friendliness and
Service
Room Service
Restaurant &
Breakfast
Wellness Area
Price
Satisfaction
Service
Satisfaction
Customer
Loyalty
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17.4% in the age group 41 to 50 years, 9.8% in the age group 51 to 60 years and 3.3%
in the age group above 60 years.
3.3. Factor Analysis
A Preliminary confirmatory factor analysis was done with the five components
(dimensions of service), in which the factor RE5 was found to have dual loadings and
hence the factor was removed. A confirmatory factor analysis was carried out once
again with the five factors under consideration and the analysis is shown as follows.
Table 1
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.842099
Bartlett's Test of Sphericity
Approx. Chi-Square 5397.435
df 153
Sig. 0.0000
Table 2
Compon
ent Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
%
1 5.844 32.466 32.466 5.844 32.466 32.466 3.452 19.18 19.18
2 2.532 14.069 46.536 2.532 14.069 46.536 2.503 13.905 33.085
3 1.616 8.979 55.515 1.616 8.979 55.515 2.251 12.508 45.593
4 1.277 7.093 62.608 1.277 7.093 62.608 2.201 12.227 57.821
5 0.94 5.222 67.83 0.94 5.222 67.83 1.802 10.009 67.83
6 0.818 4.544 72.374
7 0.741 4.114 76.488
8 0.566 3.142 79.63
9 0.539 2.994 82.624
10 0.465 2.582 85.206
11 0.442 2.457 87.663
12 0.424 2.354 90.018
13 0.379 2.104 92.122
14 0.349 1.939 94.061
15 0.335 1.862 95.922
16 0.276 1.531 97.454
17 0.238 1.324 98.777
18 0.22 1.223 100
Extraction Method: Principal Component Analysis.
Total Variance Explained
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
LoadingsInitial Eigenvalues
7. Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty
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Table 3
From Table 1, the KMO measure of sample adequacy shows a moderately high
value of 0.833 which is good for Factor analysis. The Bartlett’s test of sphericity
shows a significance of 0.0001 which is also a good indicator for Factor analysis.
Both the tests of KMO and Bartlett’s test show positive sign to go ahead with the
Factor analysis.
Table 2. shows that the Factor analysis explains 67.83% of the variance in the
factors under consideration which is good enough for predicting the relationship
amongst the variables in the analysis. Factor1 consists of the variables RO1, RO2,
RO3, RO4, and RO5 with high loadings of 0.738, 0.576, 0.816, 0.852, and 0.795. All
these factors comprise of the parameter Room Service. Factor 2 consists of the
variables RE1 RE2, RE3, RE4 with high factor loadings of 0.709, 0,715, 0.797, and
0.807. All these factors comprise of the parameter Restaurant and Breakfast. Factor
3 consists of the variables R1, R2, R3 with high factor loadings of 0.783, 0.814, and
0.711. All these comprises of the parameter Reception. Factor 4 consists of the
variables W1, W2, W3 with high factor loadings of 0.794, 0.803, and 0.782. All these
comprises of the parameter Wellness. Factor 5 consists of the variables F1, F2, F3
with high factor loadings of 0.686, 0.857, and 0.593. All these comprises of the
parameter Friendliness and Service.
Since all the individual components of the variables fall under the same parameter
component, the scale is validated. We can carry out the other hypotheses tests with
the validated scale.
1 2 3 4 5
R1 0.228 0.226 0.783 0.024 0.143
R2 0.156 0.163 0.814 0.195 0.207
R3 0.206 0.062 0.711 0.338 0.035
F1 0.341 0.058 0.414 -0.077 0.686
F2 0.242 0.155 0.068 0.029 0.857
F3 0.455 0.095 0.137 0.253 0.593
RO1 0.738 0.158 0.212 0.01 0.05
RO2 0.576 0.036 0.163 -0.013 0.153
RO3 0.816 0.009 0.05 0.132 0.179
RO4 0.852 0.061 0.061 0.053 0.116
RO5 0.795 0 0.166 0.079 0.252
RE1 -0.003 0.709 0.229 0.115 0.161
RE2 0.129 0.715 0.254 0.159 0.11
RE3 -0.012 0.797 -0.029 0.044 0.045
RE4 0.132 0.807 0.048 0.15 -0.026
W1 0.124 0.139 0.085 0.794 0.025
W2 0.042 0.083 0.182 0.803 0.016
W3 0.009 0.168 0.101 0.782 0.059
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 6 iterations.
Rotated Component Matrix(a)
Component
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3.4. Relationship Testing
Table 4 Correlation test
The Correlation test in table 4 shows:
R, F, RO, RE & W are statistically significant with P (Which proves hypothesis H1A)
R, F, RO, RE & W are statistically significant with SE (Which proves hypothesis
H2A)
P is statistically significant with L (Which proves hypothesis H3A)
SE is statistically significant with L (Which proves hypothesis H4A)
Hence the data analysis validates the proposed model for customer loyalty in
Hospitality Industry.
4. CONCLUSION
There is a positive and significant relationship between the dimensions of service
(Reception, Friendliness and Service, Room Service) and drivers of customer loyalty
(Price Satisfaction and Service Satisfaction). Price satisfaction and service satisfaction
are dependent on the services offered by the frontline employees in receiving the
guests and the reception’s service effectiveness, the politeness and efficiency of the
services of the staff and the efficient room services. Guests have over the past decade
come to expect services of a higher standard and superior value (Presbury et al., 2005,
p. 359). With more discerning and demanding guests it is difficult to over longer
periods of time gauge whether satisfaction is increasing or decreasing compared with
expectations. The hospitality industry as a whole has understood this increase in
expectation and forced an increase in service standards, better amenities and lower
price i.e. higher value, which none has necessarily yielded higher profits (Presbury et
al., 2005, p. 360). Repeat guests in particular are believed to be increasingly
demanding as they become more seasoned travelers.
There is also a positive and significant relationship between drivers of customer
loyalty and customer loyalty. The efficiency level seen at the service dimensions
leads to satisfaction in price and service which often determines the particular hotel
the customers will visit or avoid. This shows that the customer satisfaction is
R F RO RE W P SE L
R Pearson Correlation 1 .493**.417**.421**.390**.491**.750**.550**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000
F Pearson Correlation 1 .598**.263**.187**.746**.372**.809**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000
RO Pearson Correlation 1 .186**.178**.488**.351**.591**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000
RE Pearson Correlation 1 .420**.258**.441**.260**
Sig. (2-tailed) 0.000 0.000 0.000 0.000
W Pearson Correlation 1 .105**.396**.161**
Sig. (2-tailed) 0.007 0.000 0.000
P Pearson Correlation 1 .552**.810**
Sig. (2-tailed) 0.000 0.000
SE Pearson Correlation 1 .537**
Sig. (2-tailed) 0.000
L Pearson Correlation 1
Sig. (2-tailed)
**. Correlation is significant at the 0.01 level (2-tailed).
Correlations
9. Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty
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dependent on the satisfaction level of the resources in the service dimensions level
which will increase the loyalty of a customer towards a particular hotel.
In conclusion, the research shows that satisfaction in price and service influences
the customer loyalty which in turn influences selection of a hotel. Poor experience
with the service dimensions has an adverse effect on the satisfaction level and the
overall loyalty of the customer. Hospitality companies need to offer a proportionate
price-value proposition which incorporates a superior service. Research has also
showed that the overall satisfaction of customers is associated with a favorable price
tolerance. This indicates that companies with loyal customer base may charge a
premium for the services they offer.
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APPENDIX
Sl. No. Heading Code Parameters
1 Reception R1 Helpfulness of the staff
R2 Efficiency of the staff
R3 Competency level of the staff
2
Friendliness and
service
F1 Courtesy of the staff
F2 Promptness of the service
F3 Attitude of the staff
3 Room RO1 Size of the room
RO2 Furniture of the room
RO3 Hygiene and cleanliness
RO4 Lighting system
RO5 Ventilation system
4
Restaurant and
Breakfast
RE1 Quality of food
RE2 Staff service
RE3 Hygiene factors
RE4 Promptness of service
RE5 Cuisines available
5 Wellness area W1 Infrastructure of the wellness area
W2 Environment of wellness area
W3 Employee readiness in the wellness area
6 Price satisfaction P Satisfaction with reference to the Hotel prices
7 Service satisfaction SE
Satisfaction level in the overall service of the
Hotel
8 Customer Loyalty L Willingness to visit the Hotel again