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International Journal of Management (IJM)
Volume 6, Issue 8, Aug 2015, pp. 31-41, Article ID: IJM_06_08_004
Available online at
http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
___________________________________________________________________________
ANTECEDENTS OF DRIVERS OF
SATISFACTION IN HOTEL INDUSTRY AND
ITS IMPACT ON CUSTOMER LOYALTY
Dr. Bidyut Jyoti Gogoi
IIM Shillong, Meghalaya, India
ABSTRACT
Services have a major impact on National economies and have become
more competitive nowadays. In the buying process for services, quality is
much more difficult to access prior to purchase. Hence consumers mostly try
to perceive the quality based on the price and presentation of the service
provider. Especially in the hotel industry, customer satisfaction comprises of
both price satisfaction and service satisfaction. To increase the customer
loyalty, customer satisfaction should be the topmost priority. In the paper the
researcher tries to find out the impact of price satisfaction and service
satisfaction on customer loyalty. Five dimensions of services are taken to see
their impact on price and service satisfaction. The impact of price and service
satisfaction on customer loyalty are then finally measured. A survey was done
to measure the responses of the respondents about their opinion on the
dimensions of services viz. satisfaction in reception, satisfaction in friendliness
and service, satisfaction in room service, satisfaction in restaurant and
breakfast and satisfaction in wellness area. Responses were also measured
for price and service satisfaction and customer loyalty. A structured
questionnaire was used to measure the responses of the respondents on a five
point Likert’s scale. The findings show that the five dimensions of services
have an impact on price and service satisfaction. Price and service
satisfaction has an impact on customer loyalty.
Key words: Room Service, Wellness Area, Service Satisfaction, Price
Satisfaction, Customer Loyalty
Cite this Article: Dr. Bidyut Jyoti Gogoi. Antecedents of Drivers of
Satisfaction in Hotel Industry and Its Impact on Customer Loyalty.
International Journal of Management, 6(8), 2015, pp. 31-41.
http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8
1. INTRODUCTION
In the highly challenging competitive hospitality industry, every organization is
compelled to run its business in the most possible effective and efficient manner,
Dr. Bidyut Jyoti Gogoi
http://www.iaeme.com/IJM/index.asp 32 editor@iaeme.com
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).
Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty
http://www.iaeme.com/IJM/index.asp 33 editor@iaeme.com
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
Dr. Bidyut Jyoti Gogoi
http://www.iaeme.com/IJM/index.asp 34 editor@iaeme.com
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.
Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty
http://www.iaeme.com/IJM/index.asp 35 editor@iaeme.com
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
Dr. Bidyut Jyoti Gogoi
http://www.iaeme.com/IJM/index.asp 36 editor@iaeme.com
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
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
Dr. Bidyut Jyoti Gogoi
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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
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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[35] Woodruff, R. B. Customer value: The next source for competitive advantage,
Journal of the Academy of Marketing Science, 25 Spring, 1997, pp. 139–153.
[36] Yeung, M. C. H. & Ennew, C. T., From customer satisfaction to profitability,
Journal of Strategic Marketing, 8, 2000 pp. 313–326.
[37] Zeithaml, V. A. Consumer perceptions of price, quality, and value: A means-end
model and synthesis of evidence, Journal of Marketing, 52 July 1988a pp. 2–22.
[38] K. Senthil. Strategies for Service Characteristics of Star Hotel in Chennai.
International Journal of Management, 1(2), 2010, pp. 31-41.
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

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Ijm 06 08_004

  • 1. http://www.iaeme.com/IJM/index.asp 31 editor@iaeme.com International Journal of Management (IJM) Volume 6, Issue 8, Aug 2015, pp. 31-41, Article ID: IJM_06_08_004 Available online at http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8 ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication ___________________________________________________________________________ ANTECEDENTS OF DRIVERS OF SATISFACTION IN HOTEL INDUSTRY AND ITS IMPACT ON CUSTOMER LOYALTY Dr. Bidyut Jyoti Gogoi IIM Shillong, Meghalaya, India ABSTRACT Services have a major impact on National economies and have become more competitive nowadays. In the buying process for services, quality is much more difficult to access prior to purchase. Hence consumers mostly try to perceive the quality based on the price and presentation of the service provider. Especially in the hotel industry, customer satisfaction comprises of both price satisfaction and service satisfaction. To increase the customer loyalty, customer satisfaction should be the topmost priority. In the paper the researcher tries to find out the impact of price satisfaction and service satisfaction on customer loyalty. Five dimensions of services are taken to see their impact on price and service satisfaction. The impact of price and service satisfaction on customer loyalty are then finally measured. A survey was done to measure the responses of the respondents about their opinion on the dimensions of services viz. satisfaction in reception, satisfaction in friendliness and service, satisfaction in room service, satisfaction in restaurant and breakfast and satisfaction in wellness area. Responses were also measured for price and service satisfaction and customer loyalty. A structured questionnaire was used to measure the responses of the respondents on a five point Likert’s scale. The findings show that the five dimensions of services have an impact on price and service satisfaction. Price and service satisfaction has an impact on customer loyalty. Key words: Room Service, Wellness Area, Service Satisfaction, Price Satisfaction, Customer Loyalty Cite this Article: Dr. Bidyut Jyoti Gogoi. Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty. International Journal of Management, 6(8), 2015, pp. 31-41. http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=8 1. INTRODUCTION In the highly challenging competitive hospitality industry, every organization is compelled to run its business in the most possible effective and efficient manner,
  • 2. Dr. Bidyut Jyoti Gogoi http://www.iaeme.com/IJM/index.asp 32 editor@iaeme.com 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 http://www.iaeme.com/IJM/index.asp 33 editor@iaeme.com 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 http://www.iaeme.com/IJM/index.asp 34 editor@iaeme.com 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.
  • 5. Antecedents of Drivers of Satisfaction in Hotel Industry and Its Impact on Customer Loyalty http://www.iaeme.com/IJM/index.asp 35 editor@iaeme.com 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
  • 6. Dr. Bidyut Jyoti Gogoi http://www.iaeme.com/IJM/index.asp 36 editor@iaeme.com 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 http://www.iaeme.com/IJM/index.asp 37 editor@iaeme.com 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
  • 8. Dr. Bidyut Jyoti Gogoi http://www.iaeme.com/IJM/index.asp 38 editor@iaeme.com 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 http://www.iaeme.com/IJM/index.asp 39 editor@iaeme.com 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. REFERENCES [1] Amin, M., Yahya, Z., Ismayatim, W. F. A., Nasharuddin, S. Z., & Kassim, E., Service quality dimension and customer satisfaction: an empirical study in the Malaysian hotel industry, Services Marketing Quarterly, 34(2), 2013, pp.115- 125. [2] Anderson, E. W. & Mittal, V., Strengthening the satisfaction-profit chain, Journal of Service Research, 3(2), 2000, pp. 107–120. [3] Anderson, E. W., Fornell, C. & Lehmann, D. R. Customer satisfaction, market share and profitability: Findings from Sweden, Journal of Marketing, 58(2), 1994, pp. 112–122. [4] Anderson, E. W., Fornell, C. & Mazvancheryl, S. K. Customer satisfaction and shareholder value, Journal of Marketing, 68(4), 2004, pp. 172–185. [5] Anderson, E. W., Fornell, C., & Lehmann, D. R. Customer satisfaction, market share, and profitability: Findings from Sweden, The Journal of Marketing, 1994, pp.53-66. [6] Baker, D. A. & Crompton, J. L. Quality, satisfaction and behavioral intentions, Annals of Tourism Research, 27(3), 2000, pp. 785–804. [7] Bolton, R. N. & Drew, J. H. A multistage model of customers’ assessments of service quality and value, Journal of Consumer Research, 1991 17March, pp. 375–384. [8] Cadotte, E. R., & Turgeon, N. Dissatisfiers and satisfiers: suggestions from consumer complaints and compliments, Journal of consumer satisfaction, Dissatisfaction and Complaining Behavior, 1(1), 1988, pp.74-79. [9] Callan, R. J. An appraisement of UK business travelers’ perception of important hotel attributes, Hospitality Research Journal, 19(4), 1996, pp. 119–127. [10] Choi, T. Y. & Chu, R. Determinants of hotel guest’s satisfaction and repeat patronage in the Hong Kong hotel industry, Hospitality Management, 20, 2001 pp. 277–279. [11] Cronin Jr, J. J., & Taylor, S. A. Measuring service quality: a reexamination and extension, The Journal of Marketing, 1992, pp. 55-68. [12] Ekinci, Y., Dawes, P. L., & Massey, G. R. An extended model of the antecedents and consequences of consumer satisfaction for hospitality services, European Journal of Marketing, 42(1/2), 2008, pp.35-68. [13] Fornell, C., Johnson, M., Anderson, E. W., Cha, J. & Everitt Bryant, B. The American Customer Satisfaction Index: Nature, purpose, and findings, Journal of Marketing, 60, 1996 October, pp. 7–18.
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