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The quality of the services that budget hotels offer

As the hospitality industry has developed, the quality of the services that budget hotels offer have become one of the most significant factors that accounts for their success. It is, therefore, important for hotels to increase their customer return ratio and attract more clients (Yu, 1999).

However, according to Baines, Fill and Page (2008), the traditional 4Ps marketing mix of price, product, place and promotion is limited in terms of its ability to participate in whole marketing activities. Therefore, the framework involved for services (e.g. purchasing holidays) is different from that for products (e.g. buying a glass). Services are not like physical items, for example, in terms of the differences in the warranties for products, spas or massages. Therefore, Booms and Bitner (1981) as cited by Baines, Fill and Page (2008), state that a further 3Ps have been incorporated into the marketing mix for services. These are physical evidence, process and people.

Furthermore, according the observation and industry report, a list has been made by the researcher shows the weight of each factor in budget hotel as below.

Product:

Rooms -------------------------------- ---40%

Facilities ---------------------------------40%

Services ------------------------------ ---20%

Price:

Food ---------------------------------------25%

Operation fee-----------------------------5%

Price for Room or Personal-----------70%

Place:

Customer service system-------------10%

Location----------------------------------80%

Channels---------------------------------10%

Promotion:

Brand image-----------------------------80%

Advertisements-------------------------12%

Logo-----------------------------------------3%

Sale promotion activities---------------5%

People:

Staffs---------------------------------------90%

Training system-------------------------10%

Physical evidence:

Uniform-----------------------------------10%

Building-----------------------------------40%

Facilities-----------------------------------40%

Employee---------------------------------10%

Process:

Reservation system--------------------90%

Counter-----------------------------------10%

The 7Ps marketing mix will be discussed as follows:

Product — Product is used to address customers’ needs and it can be tangible or intangible in nature. As Mintel (2009) mentions, many hotels extend their rooms and open new ones to supply market demand. For example, Travelodge has snapped up twelve new hotels and has sixteen more under construction across the UK. These developments will add 1,560 rooms to their portfolio during the next two years (Sharkey, 2009).

Price — Price is a judgement, which is made by customers. Customers perceive the quality of services and decide if they are prepared to purchase it to meet their needs. Therefore, Travelodge, which prices at £20 per night per room is attractive to customers, because its accords with their purchasing power at this time.

Place — According to Baines, Fill and Page (2008), there is two issues that refer to service place. One is the reservation and information system, which is necessary to support the service proposition. The other one is the interaction between production and consumption. According to Mintel (2009), some hotels use the Internet and mobile technology, for example, Travelodge launched an iphone application called iBooker, which allows customers to search for information about the location of their hotels and their prices at any time. It is assumed that customers are able book their rooms more easily compared to other to other hotels that do not offer these facilities.

Promotion — Hotels use sales promotion and Logo design to capture a customer’s attention and build up a positive reputation, which includes trust, reliability and a quality image for the company. Mintel (2009) quotes, as an example of image building, that Premier Inn opened a new green hotel. The company claims that it will reduce energy costs by 80%. The hotel uses eco-friendly systems for heating, cooling, lighting, ventilation and water sources. This might be attractive to customers, especially those who are concern about green issues and the environment.

People — People are an extremely important element for the service industry. Customers will perceive that the quality of the service is representative of the service itself. Travel Weekly (2008) argues that if staff is happy to serving customers, customers will also be happy for patronise. Moreover, Premier Inn empowers front line staff to solve customer disputes immediately (Brotherton, 2004).

Physical Evidence — Physical evidence is the image that a hotel presents to the people they target and position, for example, buildings, facilities, beds, seats, and staff uniform. All of these can provide clues about a hotel’s attitudes and attention. As Brotherton (2004) points out that the crucial elements could be starred as being both operational and strategic in importance.”

Process — Process includes tasks, schedules and routines. They include all the activities that a hotel undertakes until a customer leaves (Brains, Fill and Page, 2008). For example, the customer receiving information about the hotel, making a reservation, arriving, checking in, living in the hotel, servicing by the staff, checking out and leaving. Although it is a straightforward process, hotels should consider every step in the procedure, for example, what is well done and what makes them feel welcome and warm, in order to ensure that they will return for a second stay.

SERVQUAL

According to Antony and Gosh (2004), SERVQUAL means service quality. It is a disconfirmation model, which was developed by Parasuraman, Zeithaml and Berry (1988). It is based on Total Quality Management Theory (Total Quality Management, TQM), and it has been adopted as a new service quality assessment system by the industry. This theory suggests that employee service mindedness and caring actions could improve customer perceptions and, therefore, lead to improvements in the image of a hotel (Little and Dean, 2006). Furthermore, the SERVQUAL model is based on the difference between customers’ expectations of service and the quality they actually receive. Moreover, it is divided into five dimensions and each one has been broken down into a number of issues. These five dimensions are:

Reliability — it means a hotel can perform its service commitment dependably and accurately

Responsiveness —the willingness and helpfulness of employees to assist customers and provide prompt service

Assurance — the knowledge and courtesy of employees and their ability to convey trust and confidence

Empathy — the caring and individualised attention provided to customer

Tangible — refers to the hotel’s physical facilities, equipment, appearance of employees, etc.

The researcher developed a map to present an overview of the process.

Figure 3.1 SERVQUAL model

External Communication

Demand

Experience

Brand

Perceived service quality

ES<PS (amazing quality)

ES=PS (Satisfied quality)

ES>PS (Unacceptable quality)

Expectation

Five dimensions

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Perception

Figure 3.1 shows that customers’ expectations and perceptions are link to the quality of the service they receive, which can also measure the business performance of the hotel. A satisfied consumer is more likely to be loyal to a hotel and their return ratio will increase its sales, therefore, a hotel with high quality services could not only increase their consumer loyalty but also raise their business performance. Bacon and Pugh (2004) have presented evidence that the Ritz Carlton clearly communicates their firm's service superiority by highlighting their excellent staff. To the Ritz Carlton’s customers including external and internal are critical not only to the firm's success but also to maintain a superior service image in the market.

For a hotel, conveying the highest quality of service and customer satisfaction are the most important elements with which it needs to be concerned as these two factors are the primary prerequisites that engender customer loyalty (Kandampully and Hu, 2007).

Therefore, this project will investigate the association between service quality and business presentation through an evaluation of the former variable within the UK budget hotel industry. The wording of the five dimensions will be modified so that the research participants understand them better. The questions to be put to the participants were adapted from a previous report, which was analysed by the SERVQUAL of the hotel industry in Northern Ireland (Gabbie and O'Neill, 1996).

Customer decision making process

The consumer decision-making process identifies the sequence of steps that involve a customer’s thinking and activities that range from problems of recognition to a product choice that meets their needs (Peter and Olson, 2005). The five steps of the consumer decision-making process in tourism are as follows.

Felt need/ travel desire

Information collection and image evaluation

Travel decision (choice between alternative)

)

Travel preparation and experiences

Travel satisfaction outcome and evaluation

Figure 3.2 The Mathieson and Wall Travel-Buying Behaviour Model

Source: Mathieson and Wall (1982) as cited by Swarbrooke and Horner (1999) Reprinted by permission of Addison Wesley Longman Ltd

Problem recognition

The first stage in the consumer decision process is problem recognition. This is when a consumer comprehends the problem, researches and solves it. The customer perceives that he/she has a desire to have a holiday and needs to choose their accommodation. The customer will then compare the actual situation and the idealised one in his/her mind. The consumer will be motivated by internal and external stimulation. Examples of the former include relaxation, hunger, need and demand and for the latter, the herd instinct and the power of trendy styles.

Search information

Following the motivation of a consumer to purchase, they search for information to help them to make a reasonable decision. According to Solomon et al. (2010), the information search can be separated into two parts, namely, internal and external searches. Memory is internal search. Consumers can use their memory to search for relevant information to solve problems. Hoyer and Macinnis (2007) pointed out that, a consumer’s memory is finite, because their memorial ability is not limitless. An external search include retailer, media, interpersonal, independent and experiential searches (Hoyer and Macinnis, 2007).

Evaluation of alternatives

After the consumer has searched for information, the next step is to evaluate the available alternatives. When evaluating product information, its characteristics and benefits are the main aspects of evaluative criteria for most consumers (Williams and Slama 1995). Moreover, before consumers make a decision, they will consider several alternatives ways to evaluate the benefit of the product (Hawkins and Best, 1998).

Product choice

Compensatory and non-compensatory decision rules are the two categories by which consumers give more thought to their choice (Solomon et al. 2010). The first one is compensatory. Consumers will objectively compare the advantages and disadvantages of the products on the market. One product’s strength can be used to compensate for the shortcomings or weaknesses of another, such as, a great service quality may balance poor accommodation, conversely, a wonderful room may counter poor service in a customers’ mind. According to Peter and Olson (2005), consumers used non-compensatory decision rules when they have a particular need for a product that is not easy to substitute. If a customer has an extreme preference in their mind, it is difficult to influence that decision.

Outcome and post-evaluation

As noted by Hanna and Wozniak (2001), if the product or service meets the consumers’ needs, it will make them feel pleased and satisfied. Conversely, if the product or service does not prove good enough for the consumer, there will be feelings of disappointment and dissatisfaction. They will probably not purchase the product or service next time. Consequently, any consumer can act as an informal reference group within society. For this reason a consumer’s experience is post-evaluated by marketers to monitor his/hers experience. In addition, Kandampully and Hu (2007) found that the impact of consumer satisfaction directly affects customer loyalty towards hotels.

3.4 Research Method

This project will use a primary research methodology to examine the critical factors that customers use during their decision-making processes and how the process is affected by the economic downturn and how budget hotels address customers’ budgets and needs by their service marketing mix. A questionnaire based upon the current market conditions for UK budget hotels will be constructed and its questions will be used to investigate how service marketing affects consumer consumption patterns during the recession. Furthermore, the researcher will use this questionnaire to identify and explain the key elements that customers use to come to a purchase decision about staying in a budget hotel.

The researcher will use one hundred online questionnaires to complete the primary research using the online software Survey Monkey. The data will be analysed and the research information will be supported by packages, such as, SPSS software and MS office.

After data collection, the results will be analysed to determine whether the findings support the theories previously identified during the research. The hotel groups that are used in this study are the most popular ones in the UK budget hotel market and cater for a variety of visitors of all ages and that range from commercial to leisure guests.

Firstly, the service marketing mix will be analysed, which will include frequency tables. In addition, the questionnaire will explore customers’ attitudes towards each factor in the service marketing mix. The researcher will look to examine the reasons why customers choose budget hotels and to discover if their expectations (that is, their reasons for choice) have been satisfied. Moreover, by using Chi square test and Correlation it is hoped to understand what promotional strategy proves the most attractive and which channel of marketing communication customers’ best perceive.

After that, the project continues to use a Likert scale to examine variables, such as, how customers perceive the quality of service in budget hotels. This was carried out to analyse the relationship between their expectation and perception towards customer loyalty. The purpose of this section is to understand how the four gaps within the SERVQUAL Model affect business performance. Statistical correlation was used to demonstrate any significance between customer’s satisfaction and their future consumption. If the correlation demonstrated a positive dependence, then it implied that when customers are satisfied with the quality of service, they would continue to patronise the hotel (Hill, Brierley and MacDougall, 2003). It also means that a good quality of service could persuade customers to purchase again, as SERVQUAL theory mentioned previously.

Finally, the crucial elements involved in consumer making decisions will be examined. The researcher will use Frequency analysis to discover the most used channel by which customers search for their information and make their decisions. This analysis will reveal every variable and whether or not they could influence customer decisions taking into account age, gender and income in order to discover any differences between them (i.e. independent variables).

The statistical significance between customer satisfaction and customer loyalty in terms of repurchase intentions and a willingness to recommend will be tested by correlation. In addition, customer loyalty will use correlation to identify the preferences of customers and the most popular hotel on the budget market.

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