Factors That Influence the Loyalty of a Hotel Customer
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Kandampully (2000) defines tourism as a unique product as it is composite in nature, an amalgam of the tangible and intangible which includes everything that tourist's experience.
Tourism is a fast-growing industry, which now had become one of the industries that playing an important role in financial status of a country. The number of the tourist is growing from year to years. According to Inskeep(1996), Tourism is a fast expanding sector, which brings an important contribution to the foreign exchange earnings of some country nowadays. Tourism industry not only related with government, but public and non government sector also playing a rarely important role in it.
The figure above shows that the country and the total international tourism receipts for the countries from year 2006 to year 2008. As we can see from the figure, the income of the tourism sector of the country is increasing from time to time.
Tourism is particularly adapted to highlight the nature of the upheavals implied by the development of Information and Communication Technologies (ICT) in service activities. With roughly 11 % of the world total employment or Gross Domestic Product (GDP), tourism is often presented as the first worldwide industry. Europe is by far the first tourist continent. This economic strength of tourism, associated to a strong potential of growth, has induced deep competitive processes and significant industrial reorganization. Information Communication Technologies (ICTs) have been changing the global tourism industry rapidly. The implications of the Internet and other growing interactive multimedia platforms for tourism promotion are far reaching and alter the structure of the industry.The tourism does not follow the usual rules of economic theory, or of any other theory; besides, many authors are used to make reference about the "indiscipline of tourism" (Leiper, 2000, Tribe, 1997, Tremblay, 1999).
Tourism is not just a great industry to work in, but it is also a key for a country's economy. The tourism industry in the UK is more than 4 % of the UK's Gross Domestic Product, which is worth around £76 billion. It employs 2.1 million people, or almost 7.5% of the working population and approximately 1 in 5 of all new jobs created will be in tourism industry. So the government for UK had invested a huge budget available for tourism promotion and quality development. Tourism industry not only affects public sector management, but also influences business of private sector and it is an income creation for a company.
Tourist can be people from oversea and it can be people from this country as well, but they does not intend to stay permanently. Tourist taking time to visit the places that they don't normally see.Tourism gathers all the activities dedicated to the satisfaction of the needs of the tourists, and borrows to a multitude of other activities. Tourist products are complex and heterogeneous products, combination of elements separated in time and space (Caccomo and Solonandrasana, 2001). Tourist products also often pre-defined packages assembling interrelated products and services (transport, accommodation services, leisure services). Contrary to the traditional good sectors, tourists have to go to the resources where resources are transformed to be delivered to the customers: whatever their intrinsic qualities, the resources acquire an economic value only with the organization of the traveling of the tourists and development of the activity (Spizzichino, 1991). Tourist products and services are often experience goods, the quality or utility are not known ex ante by the consumers; a system of advices and critics is thus necessary to the formalization of choices (Gensollen, 2003).
The World Tourism Organization predicts that by 2020 tourist arrivals around the world would increase over 200%. Tourism has become a highly competitive business for tourism destination over the world. Competitive advantage in tourism industry it no longer depends only to what we provide to the customer, but it is now increasingly driven by science, information technology and innovation. The volatility of changes in the external and international environment also influences the performance of other business in tourism industry, such as hotel business, restaurant business and many more. An economic upswing or downturn will have an almost immediate impact on its performance.
Tourism industry in Malaysia
Service sector had become an important sector in Malaysia where it contributes approximately 50% of the nation's real Gross Domestic Product (GDP). Tourism industry had been paying enough attention by the government since the Tourism Development Corporation (TDC) was established in year 1972. The Tourism Development Corporation is build to further expand the tourism through its marketing program and publicity campaigns to both locally and abroad. But the TDC only stand for 20 years and then replaced by Malaysian Tourism Promotion Board with the objective to stimulate and entice the number of visitor and tourist that visit to the country.
The growth of total amount world tourism and Malaysia is one of the potential tourism destinations. It had contributed to the changes and focus in the tourism sector in the country. To enhance the tourism industry in Malaysia, the VMY campaign had been introduced.
The fist Visit Malaysia Year (VMY) campaign was launch by year 1990 and tourism industry had become Malaysia's third major foreign income exchange earner. But there's was some downturn in worldwide travel in year 1991 because of the Gulf War and this had causes the number of tourist had decreased moderately. The second Visit Malaysia Year (VMY) campaign was launch on year 1994. The growth rate remained far behind the first campaign despite of an increase of tourist in Malaysia about 10.7% in year 1994.
The overall of the tourism industry in Malaysia showed an upward trend until the happening of the global financial crisis in year 1997.
The total amount of the tourism receipts in year 1995 amounting to Ringgit Malaysia (RM) 9.2 billion had surpassed the target for the year 2000 in the National Tourism Plan which in about RM8.36 billion. Therefore, the investment approved for hotel and tourism-related projects has increased from RM8.801 billion to spur the growth of the tourism industry during the Sixth Malaysian Plan period to RM18.2 billion during the Seventh Malaysia Plan period (Economic Planning Unit, 2001).
In an effort to succeed the tourism industry, Tourism Malaysia had signed a £2 million deal with Manchester United in an effort to promote the visit Malaysia Year 2007 in September 2006. Besides that, Tourism Malaysia also signs a deal with Chelsea Football Club to promote the tourism industry in Malaysia and to succeed the VMY plan.
Hospitality industry is major service sector in world economy and the industry encompasses an extensive variety of service such as food service, tourism and hotels. The hospitality industry can be divided into two parts. One is entertainment part like bar, pub, clubs; another one is accommodation such as resorts, public house, hotels, motels, inn, apartment and motels. Tourism support commercial activities such as travel agents and airline cabin staff are included in hospitality as well.
The early evidence of the existence of hotels and the hospitality industry has been recorded as far back as biblical times when Mary and Joseph arrived in Bethlehem during the census, which is during 4 Before Christ (B.C.) of the Julian calendar, where Joseph went to Bethlehem, because he was of the house and lineage of David (Luke 2:1-4). People have start traveled for religion, family, needs, immigration, commerce, education, health, and recreation, since the beginning of time. As a result, hotels and inns had begun catering to the pleasure traveler in an effort to encourage visitors with the influence of the Roman Empire. It was recorded that the first inn located in America was in the year 1607. It leads the way with many other firsts in the hospitality industry (searchandgo.com). The first modern hotel (the Tremont) opened in Boston in year 1809. The first ever publicly held hotel (the City Hotel) was opened in New York in year 1792 and the first business hotel (the Buffalo Statler) opened in year 1908. Following that, a surge of hotels flooded America and the rest of the world with prominent names such as Radisson, Marriot and Hilton.
According to the precious previous research, hotels, which also mean "home away from home" for the travelers and tourist, provide four types of service and product which had accommodation, foods, drinks, leisure or entertainment (Wood, 1997; Knowles, 1998). The hospitality industry is one of the fastest growing industries in the worldwide. The hospitality industry began to utilize information technology (IT) more than three decades ago (Berchiolly, 1997; Hensdill, 1998), well before many other industries. Hotels nowadays are much more than just a place to sleep, as many tourists view them as an integral part of a getaway experience. Spiffed-up budget properties, and novelty accommodations, travelers can choose a hotel that is as much a selling point as the destination itself with the recent boom of boutique hotels (Yashroy, 2008). The industry surge with expansions and new entrants in times of economic growth, with the tourism sector is growing as well.
The hospitality industry was thus as early as the 1960s and 1970s in adopting operational information systems where a room management application was installed at the New York Hilton in 1963 (Sayles, 1963) and a property management system was installed at the Waikiki Sheraton in 1970. But according to Worcester (1997), he found that the main drawback of hospitality information systems was lack of accurate and timely information caused by the need to rekey information from various reports, instead of having access to integrated information managed in one consolidated database. The statement was support by Hensdill (1998), saying that the experts believe that in terms of IT the hospitality industry is about 2 years behind other industries.
To survive in competitive advantage among the hotels, there are some factors that playing a fairly important role in it, such as brand image of the hotel, through the promotions and many more.
Brand image plays a very important role in retaining customer loyalty and fulfill customer's satisfaction in hotel industry to repurchasing the service again. According to the previous research by Zeithaml and Bitner (1996), image is also considered as a factor that can influence customer's perception of the services and goods that been provide and also requires the ability to be communicated effectively and consistently to consumers. As a result, information and useful data such as the importance of maintaining a good image to retain loyal customers and also increase the corporate profit will be provide to hotel organization. As mentioned by Chaudhuri and Holbrook (2001), higher customer loyalty entails a higher market share and an ability to demand relatively higher prices compared to competitors. Consequently, the hotel organization would need to focus on customer loyalty in order for hotel organizations to survive. The statement is similar with the previous research by Aaker (1997). With reference to Aaker (1997), increased customer loyalty has many advantages such as reduce marketing costs, solicit more customers, and successfully operate trading leverage. Hence, with factors involving Zeithaml et al. (1996), loyalty factors are crucial to an organization as it is the most reliable success indicators. Besides that, a favorable and famous brand image also helps to reduce the uncertainty of the product's quality and increase the probability of consumers' decision to purchase the product. According to Dick and Basu (1994), loyal customers encourage positive word-of-mouth promotion and challenge their competitors' strategies. Thus, in regards to Fornell and Wernerfelt (1998) and Reichheld et al. (1996), increased customer loyalty will result in generating higher corporate profits.
Strong brands are important to the hospitality industry. There are several issues in developing a brand, one of them is customer's trust. And it has been suggested that service quality has a direct effect on organizations' profits since it is positively related with customer retention and customer loyalty (Baker and Crompton, 2000; Zeithaml and Britner, 2000).
Product or individual's public perception will be evaluating through market research to stresses the importance of modern public relations. After collect the data and challenges are identified, the process of counting and solution will be presented will be presented in a campaign strategy to met goals. Though techniques may different from campaign to campaign but there's some standard tools used are implemented in forms of press releases, press kits, satellite feeds, pod casts, web casts, wire service distribution of information and internet placement. Besides the technique mention above, other technique which include entertainment product placement (television, events, celebrity), product launches, press conferences, media seminars, producing events, speechwriting, establishing partnerships and more is often required, in which the perception obtain from the public through such means will result in positive views as a goal.
Most of the hotels have different facilities for their customer. According to the research by Bauer et. Al (1993), he examined that the tourist from Asian and Non-Asian countries have different demand and differences for the facilities in hotel. Asian travelers appeared to looking for more entertainment facilities, such as karaoke, while for the Non-Asian travelers, they looking for more concern in health facilities, such as gym and swimming pool. And with the references to previous research, facilities are one of the factors that influence the satisfaction of the customer.
Most of the hotel customers decide on which hotel to stay based on the reason below. Many customers repurchase the service after experience it and satisfied with the service they provide. Other factors such as brand image, service quality, public relations perception, service innovation and facilities also should take into consideration before making their decision.
Thus, the main research problem of this study is to examine the factors that influence the loyalty of a hotel customer in Malaysia. To accomplish the study purpose, the following questions need to be responded:
- What are the critical factors that influence the loyalty of the hotel customer in Malaysia?
- Are there any interaction between the critical factors and hotel customer in Malaysia?
- How does the critical factor have an affect on the loyalty of hotel customer in Malaysia?
Objectives of Study
The overall goal or the general objectives of this research is determined and identify the critical factors that influence the loyalty of a hotel customer in Malaysia.
The following specific objectives are established to aid accomplishing the goal of this research:
- To determine the critical factors (brand image, service quality, public relations perception, service innovation and facilities) that influences the loyalty of the hotel customer in Malaysia.
- To examine interaction between the critical factors (brand image, service quality, public relations perception, service innovation and facilities) and hotel customer in Malaysia
- To determine the critical factor (brand image, service quality, public relations perception, service innovation and facilities) have an affect on the loyalty of hotel customer in Malaysia.
Scope of Study
The focus of this study is in hotel industry. This is because the tourism sector had been increase highly and playing an important role in the financial status in a country nowadays. And the number of tourist is increasing from years to years and tourism industry had becoming one of the major industries in Malaysia. The research will be done by the tourist, especially which is having a visit in Malaysia currently.
This study is going to be focused on customers both male and female who patronize hotels in Malacca. The age range would be targeted on customers ranging from the age of 20 until 50. The mentioned age group was chosen as a majority as they are the ones who have a stable job and earn their own income. They are the category of customers who are able to afford to patronize hotels and hold a valuable link to the study. A questionnaire was handed out to the customers to obtain their opinions and views regarding issues that influence their loyalty and satisfaction towards certain hotel brands. The study also focuses on the perceptive viewpoint of the aforementioned age group in which, their loyalty and awareness towards the particular line of hotel brand is measured to determine the effectiveness of brand advertising and public relation media.
Definition of Terms
Customer Satisfaction: A customer's emotional response react after the usage of a product or service (Oliver 1981). Customer satisfaction is more likely complex human process that involves the cognitive and affective processes and it also involve other psychological and physiological influence (Oh and Parks, 1997).
Customer Loyalty: The loyalty business model assumes the philosophical validity of pursuit of self-interest. True customer loyalty can be defined as customers' resistance to competitors' offerings (Gundlach et al., 1995) and the persuasive tactics to attract new customers (Dick and Basu, 1994).
Service Quality: Parasuraman et al. (1985) that views quality as the customer's perception of service excellence, i.e. quality is defined by the customer's impression of the service provided.
Brand Image: Brand image is considered to have the ability to influence customers' perceptions of the goods and services offered (Zeithaml and Bitner, 1996).
Public Relations Perception: Cultip et al., (1985) definition of public relations perception is "the management function that identifies, establishes and maintains mutually beneficial relationships between an organization and the various public on whom its successes or failure depends."
Structure of Project
The present study is organized into five chapters.
Chapter 1: Introduction
This chapter shows and details the intention and reason for the carrying out of this research. This chapter also consists of sub-topics such as research background, research questions, research objectives, importance of study, scope of study and definition of terms which are aimed to increase reader's understanding of this whole research.
Chapter 2: Literature Review
This chapter contains more detailed information on the e-commerce and tourism industry. This chapter also detailed information about evaluation of the relationship of service quality, brand image and public relations perception on customer loyalty. The early and present day history of hotel organizations is also included in this chapter. Besides that, this chapter also contains the discussion on the various variables and its validity which will be tested in this study. The findings of previous researchers on these variables are also taken into account.
Chapter 3: Methodology
This chapter entails the methods and approaches that are selected for the testing of variables in this study. This chapter also consists of further discussion on sub-topics such as sources of data, questionnaire design, measurement, sampling method, sample size, data analysis techniques and unit of analysis. The findings from previous studies are also considered in the further understanding of the approaches used.
Chapter 4: Data Analysis
This chapter involves the incorporation of the interpretation of the collected data from respondents via quantitative method. The determination of the acceptance or rejection of the stated hypotheses will also be tested. A software called Statistical Package for Social Science (SPSS) will be used in this research to measure the results.
Chapter 5: Discussions and Conclusions
This chapter explains the outcomes of the testing of the hypotheses determined from Chapter 4: Data Analysis. The acceptance or rejection of the hypothesis is discussed as well. Additionally, the concluded results of the hypothesis testing from this study are compared with results from previous researches to identify the differences and similarities.
Chapter 2: Literature Review
The purpose of this research is to determined and to identify the critical factors that influence the loyalty of a hotel customer in Malaysia.
Due to an increase in travel expenditure, the tourism industry has also seen an evident growth over the recent years. Goeldner and Ritchie (2003) have predicted that by 2011, global travel and tourism are expected to generate US$7.0 trillion in economic activity and offer 260 million jobs. Ongoing globalization, in addition to permeable borders and easier transfers between countries has promoted a growth in tourism. They have more varieties of services to choose from In line with the abundant services offered to customers. Therefore, competition among competitors to provide the best services possible is created among the tourism organizations.
Hotel Industry in Malaysia
The hotel nowadays is not only just a place for travelers to sleep, but an integral part of a getaway experience. According to Yashroy(2008), travelers can choose a hotel that is a much a selling point as the destination itself, With the recent boom of boutique hotels, spiffed-up budget properties, and novelty accommodations. As tourism industry is playing an important role in financial status of a country, the hospitality industry in Malaysia too has seen an increase in contributing to the country's GDP. The example of the Genting Group which represented Malaysia in the hotel, restaurants and leisure industry and was ranked at 1198th position in the Forbes Global 2000 ranking in 2008 ("The Global 2000", Forbes) has shown to the public that the hospitality industry is beginning to emerge as one of the important service sub-sectors in Malaysia.
The table above illustrates the contribution of various sectors to Malaysia's GDP from year 2002 to 2007. As we can see from the table, the private service industry's GDP had increased from 44.7% in year 2002 to 46.4% in year 2007. The private service sector which includes restaurant, hotels, wholesale and retail trade, finance, insurance, real estates and business services sub-sectors. This shows that the services industry is one of the sectors concentrated by the government for improvement as it is gradually contributing a big portion to the country's GDP. Besides that, Malaysian Association of Hotels (MAH) (hotels.org.my), has recorded that there has been evident growth in the hospitality sector, with average hotel occupancy rates having risen throughout 2007, from the mid-60% range at the beginning of the year to over 70% in 3Q 2007.
The hotel industry nowadays has been recognized as a global industry since the development in the industry had been growing rapidly and steadily. The different lifestyle and culture of the customer have changed over time and the facilities in the hotel such as gym, swimming pool, and restaurant are no longer counted as luxuries but an essential component of their lifestyle. Tourism is a largest global export industry and due to the increasing growth of it, the number of hotels around the world had been increased as well. This had caused the intense competition among the hotels in the marketplace. Strong competition had been faces by the hotel organization to differentiate their organization from others by improve their service and facilities, increased choices, value for their money and also superior levels of service.
As a result, service quality, brand image, public relation perceptions, and innovation of information technology as well as the improvement of the facilities in the hotel are important in catering to customers' needs and as a strategy to retain them.
According to Dick and Basu (1994), the forces of attitude and behavior had been assumed as factors that can influence the customer's loyalty. Oliver (1999, p.35) had defined customer loyalty as:
... a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, thereby causing repetitive same-brand set or same brand-set purchasing despite situational influences and marketing efforts having potential to cause switching behavior.
Although there are many variations about the definition of customer loyalty, but seems there's to be no unanimously agreed of definition for it, according to Jacoby and Chestnut (1978); Dick and Basu (1994); Oliver, (1999).
However, there are instead three popular concepts about customer loyalty as below:
- Loyalty as primarily an attitude that sometimes leads to a relationship with the brand,
- Loyalty mainly expressed in terms of revealed behavior (i.e. the pattern of past purchases); and
- Buying moderated by the individual's own characteristics, circumstances, and/or the purchase situation.
Many authors also had stressed the existence of a relationship between customer loyalty and business performance (Reichheld and Sasser, 1990; Reichheld, 1993; Sheth and Parvatiyar, 1995) and Barroso Castro and Martin Armario (1999) supported the statement by stated that loyal customers is not only increase the value of the business, but it is also an evident in enable the businesses to maintain the costs lower than those related with attracting new customers. Loyal customers not only help to encourage positive word-of-mouth promotion, challenge competitor's strategies (Dick and Basu, 1994), but also generate higher corporate profits (Fornell and Wernerfelt, 1988; Reichheld et al., 2000). Besides that, the increasing of customer loyalty entails an increase in the market share and enables the companies to have the ability to demand relatively higher prices for their products or services than their competitors (Chaudhuri and Holbrook, 2001). This statement is supported by Aaker (1997) by stating that the company with higher customer loyalty can help the companies lower their marketing costs while seek more customers as well as successfully operate trading leverage in the same time.
De Ruyter et al. (1998) stated that early customer loyalty studies also solely focused on the behavioral aspect but later shifted to an attitudinal approach. It was added that the latter approach can be studied by means of dimensions such as word of mouth, complaining behavior and purchase intention. There has also been some disagreement between researchers regarding to the attitudinal aspect of loyalty. The conflict focused on the argument was that the needed to be strong "attitudinal commitment" to a brand in order for true loyalty to exist (Day, 1969; Jacoby and Chestnut, 1978; Foxall and Goldsmith, 1994; Mellens et al., 1996; Reichheld, 1996). Dick and Basu (1994) have explained that these attitudes is measured on maybe by questioning people on how much they like a brand, how much of confidence they have commitment to it, will they recommend it to others, and having positive beliefs and feeling about it, as in comparison to other competing brands.
Other than that, the five-item scale which was adapted by Zeithaml et al. (1996) had been used to measure as customer loyalty by earlier researches. However, Berné (1997) has mentioned that loyalty was measured indirectly by using an attitude scale in another research. He also pointed out that it is the most generally used system of measurement as a result of the complexity that is involved in attaining sequential information about repurchase intentions. In line with this, a seven-point, Likert scale was used in that particular research to measure customer loyalty.
Service quality is defined from the marketing fields which give the values to human interaction between a business and its customers. Service is important in business because services not only help the company to remain its customers' loyalty, but also to enhance the firm's image in the marketplace. In tourism sector, service quality is an important aspect that customers will look into before they decided to engage in purchasing the service. Therefore, those tourism organizations such as hotel organizations face an intense and fierce competition from their competitors to provide the best service and product to their customers.
The term "service" has been defined in several ways. Service had been defined by Grönroos (2002, p.58) as:
"A service is an activity or a series of activities of a more or less intangible nature that normally, but not necessarily, takes place in the interaction between the customer and service employees and/or physical resources or foods and/or systems of the service provider, which are provided as solutions to customer problems."
A definition also adopted by Zeithaml and Britner (1996), which stated by Quinn et al. (1987) whom defined services as:
"... all economic activities whose output is not a physical product or construction, is generally consumed at the time of it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser. "
On the other hand, Horovitz (1986) had identified the three distinctive characteristics of service quality:
- the consumer will perceive all limitations in quality because most of the services are consumed at the same time as they are produced;
- a service is made up of a set of benefits, but it is predominantly an "experience"; and
- a fundamental aspect of service quality is derived from the quality of relationship between the service provider and the consumer.
Parasuraman et al. (1988) defined service quality as "a global judgment or attitude relating to the overall excellence or superiority of the service". Although there are many definitions about service quality, but there's one common definition that accepted by most researchers is the traditional notion provided by Parasuraman et al. (1985). He stated that "views quality as the customer's perception of service excellence, as quality is defined by the customer's impression of the service provided". However, Bergman and Klefsjö (2003) stated service quality as the quality is often related with satisfied or preferably "delighted" customers.
Service quality is important in retaining customer loyalty. Heskett et al. (1994) considered customer loyalty as behavior for increasing the profits and growth of a business. Quality is also the general impression of the relative inferiority or superiority of the organization and its services, according to Bitner and Hubbert (1994). Moreover, when looked at from a tourism organization's perspective, the functional aspects of services for example, is how they are offered, and has a much higher probability in influencing customers' emotional feelings, than the technical aspects, for example, what is offered. Besides this, service literature also claims that the major issue of customer satisfaction is perceived quality (Parasuraman et al., 1988; Bitner, 1990; Carman, 1990). However, there are also some authors that giving the opposite relationship, stated that perceived quality is considered an antecedent of customer satisfaction (Cronin and Taylor, 1992; Anderson and Sullivan, 1993).
Although there are some different approaches to quality improvement that apply equally to both goods and services, but there are some theoretical differences between them. The differences had been researched and identified in detail by Edvardsson et al. (1994), Bergman and Klefsjö (2003) and Gummesson (1991) and the differences had been identified as below:
- As goods are more tangible than services, therefore it can be more difficult to explain, specify, and measure the contents of service.
- For the reason that services are more abstract than goods, services are more subjectively perceived and evaluated.
- The customer often plays an active role in creating a service.
- A service cannot be stored or transported as it is often consumed at the same time it is created.
- After delivery of a service, the customer does not become the owner of a tangible property.
- Services are often made up of a series of consequential activities; therefore this makes it difficult (or impossible) for the consumer to test them before the purchase.
- Services often consist of a system of sub-services, but the customer usually assesses the whole and not the separate parts.
Boulding et al. (1993), Zeithaml et al. (1996), and Liu et al. (2000) had study the circumstances of customer loyalty in their previous research, and it can affect the profitability of a service organization. And the studies had been proven and is supported the contention of improvement in service quality has a positive influence on consumer behavioral intentions and fulfill the customer's satisfaction. However, to achieve superior levels of service quality, the cost-effective manners should be undertaken nicely. The relationship between service quality and business performance in the service industries had been showed by previous researches and many examples can be seen in those researches. One particular example had been illustrated by Gummesson (1987), which it related to the turnaround of the Scandinavian Airlines Systems (SAS) by its CEO Jan Carlson in the early 1980s. Carlson, who treated service quality as a major factor for achieving commercial success, had turned around the $8 million a year loss making airline into a $71 million a year profitable business. This had proves that service quality is playing an important role and do have a significant impact on the business performance of a company.
"There is no agreement as to which measurement scales are the most appropriate to measure service quality despite considerable work undertaken in the service quality area", according to Morrison (2004). Many authors have also stated the difficulties in analyzing the differences between expectations and perceptions of customers. Sureshchandar et al. (2001) stated that the present scale is not sufficiently comprehensive had also been expressed by some other authors. On the other hand, Zeithaml et al. (1990) had developed the five dimensions of service quality utilizes for the purpose to evaluate service quality. The five dimensions include:
- Tangibles - refers to physical facilities, equipment, appearance of personnel, user interface which describe how the service is offered to customer, etc.;
- Reliability - the ability to perform the promised service dependably and accurately, timely delivery of goods, accurate information and correct links;
- Responsiveness - willingness to help customers and provide prompt service and also the speed of the company's response to the customer;
- Assurance - knowledge and courtesy of employees and their ability to convey trust and confidence, safety of online transaction and the policy for using personal information by the company;
- Empathy - caring, individualized attention provided to customer and also degree of customization of communications based on customer's personal needs.
According to the research by Parasuraman et al. (1985), these five dimensions were derived from ten overlapping dimensions, which were regarded as an essential to service quality. Although the SERVQUAL instrument has been criticised by some researchers (e.g. Cronin and Taylor, 1992; Teas, 1993), it is still regarded as a leading measure of service quality. These five sub-scales are measured by using the Likert-type scales since the SERVQUAL scale however has received scholarly criticism (Buttle, 1996; Cronin and Taylor, 1992; Mangold and Babakus, 1991; Peter and Churchill, 1986). Carman (1990) stated that "the use of different items for many services had become the main focus of the criticism, which produces diverse dimensions of perceived service quality in adapting them to the service being studied".
Besides, in a previous research on evaluating service quality in a UK hotel chain by Antony, Antony and Ghosh (2004), their research showed that "responsiveness" was the most important dimension for service quality while empathy was perceived to be the least important dimension and Zeithaml and Bitner (2000) had supported the result of the research by stated that "reliability" has been consistently shown to be the most important dimension in service quality. However, the statement had been rejected by some authors where they argued that the importance of the various dimensions of service quality may be different depending on the type of service provided. For example, the "reliability" dimension might be more significant to patients visiting a doctor, but the "tangibles" dimension might be more valued by customers visiting a restaurant.
Besides that, there was another research shows that service quality dimensions are important in inbound tourism which was a case study in a peripheral location. The researchers also found that "reliability" was the most frequently mentioned dimension. Following by that was the "tangibles" dimension. And after that was "responsiveness" dimension. Juwaheer and Ross (2003) were using a modified version of SERVQUAL to measure the service quality in the hotel industry in Mauritius, where they identified nine dimensions of service quality there. And as a result, "assurance", "reliability", and "responsiveness" were found to be the main determinants of service quality. The assurance factor is included the security and safety of guests, and effective handling of complaints and problems by hotel staff, while reliability factors included hotels perform tasks that have been promised to guests and resolving problems encountered by guests.
On the other hands, there have also been many debates and arguing results regarding causal order between customer satisfaction and perceived service quality and their influence on purchase intentions. Boulding et al. (1993) had found a positive relationship between service qualities and the repurchase intentions and willingness of customers to recommend to others. Service quality has been linked to customer satisfaction and linked to customer loyalty and this provide a further explains that customers who have experienced great service quality and are satisfied with the service would be loyal to the service that they purchased. Rust and Zahorik (1993) argued that "satisfied customers would tend to be more loyal to a firm compared to an unsatisfied customer of the service through their research". Therefore, service quality is one of the factor that influencing customer's loyalty in hotel sector.
Building and to sustain a positive brand image is very important for a company to retain their customer's loyalty and to attract the new customers. The existence of a competitive marketplace and the variety of choices available to customers has made it somewhat difficult for companies like hotel organizations, restaurant, Flight Company, and local entrepreneur to distinguish themselves from their competitors. Bitner (1990) has identified that corporate image as an important factor in the overall evaluation of a firm. However, Nguyen (2006) had argued about the statement that corporate image is to be the first thought of a customer when they heard the name of a company or the goods from the company. Berry et al. (1988) insists that the characteristic of image is consisting of colors, symbols, words and slogans that present a clear, consistent message and not simply reflect the name only. Brand image is a strong, favorable and unique brand association in memory, which would result in perceived quality, positive attitude and overall positive affect (Keller, 1993). The author also stated that brand awareness was an important condition in creating a brand image.
On the other hand, Aaker (1997) views brand image as the end result of all the experiences, impressions, beliefs, feelings and knowledge that customers have about a certain company. And because of the difference in image, consumers may distinguish that one brand is more desirable compared to another solely. For example, a consumer may have a preference towards wearing a branded Rolex watch than driving wearing an unwell-known watch such as Seiko. This is because consumers view the Rolex brand to reflect elegance and stylish style compare to another choices which the consumer identifies with their own personality.
In contrast to that, the argument by Grönroos (1984), mentioned that image is extremely important for a service companies and that to a great extent, customer's assessment of the services they received is determined by image. Further definitions of image has been described as subjective knowledge by Boulding (1956) whereas it is described as an attitude by Hirshchman et al., (1978) and lastly, image has been describe as a combination of product characteristics that differ from the physical product but are nevertheless identified with the product offered (Erickson et al., 1984). Normann (1991) also provide a definition of image, factors such as customer's minds through the combined effects of advertising, public relations, physical image, word-of-mouth, and their actual experiences with the goods and services can be influence by the ability like considered image. Besides that, through the evaluation of various other researches regarding service organizations, Gröonroos (1983) had discovered that service quality played an important role and found it to be the most important determinant of image. Nguyen and LeBlanc (1998) also reported that the customers who perceive service quality over repeated service encounters will have an overall positive image of the company. For example, the furniture manufacturing firm IKEA had been successfully creating the customer loyalty through their corporate image by effectively communicating to their customer what the company name, IKEA, stands for, and not merely in words but through their exceptionally innovative and creative democratic design that offer to their customer with functionality, form and price (Edvardsson et al, 2006).
One of the organizations that included in tourism organization, hotel organizations, would have to provide constant superior services to elevate the customer's perceived image of a hotel. In response to that, hotels would have to spend a considerable amount of time, resources and money to advertise the hotel and to promote the products and services to create a strong and impressive brand image to the public. This is because image has been considered to have the power to influence the way customers perceive the goods and services offered, stated by Zeithaml and Bitner (1996). Nguyen (2006) also affirmed that contact personnel and the physical environment are used by many hotels to successfully communicate the benefits, which therefore essentially creates a more concrete and perceivable image to its customers. As a result, brand image is playing an important role in influencing customer's buying behavior. For example, Heung et al. (1996) had established hotel image to be an important factor in their study on hotel brand loyalty in the free independent traveler's market, and it also can help sustain a relatively high score rating among loyal customers. Moreover, Kandampully and Suhartanto (2000, 2003) further acknowledged that hotel image have a direct impact in relation to the performance of housekeeping, reception, food and beverage and are positively correlated to customer loyalty and customer satisfaction. The outcomes of the research also found that hotel image and customer satisfaction are important factors in determining customer's intention to repurchase the good or service, and to recommend and exhibit loyalty. According to Little and Dean (2006), theory also suggests that when employees have service mindedness and thoughtful actions when dealing with customers can enhanced the favorable hotel image.
Contrary to that, various methods have been used by researchers in measuring brand image. A three-item scale that used to measure brand image which was adopted from Park et al., (1986) had been used by one of the researchers, Keller (1993). The three-item scale covered functional benefits, symbolic benefits and experiential benefits. Functional needs are described as the intrinsic features acquired by the product when the solving of purchasing decisions is attempted by consumers while symbolic needs however relates to the consumers' self-concept and the decision on the ability of the product to satisfy self-esteem needs. And lastly, experiential needs relates to the issues of stimulation, sensory pleasure, or novelty that is linked to the products. The results of the research had revealed the corporate image and brand image have the capability of supporting or destroying consumers' belief about the value gained, where the customer attitude and behavior will be indirectly influenced (Abdullah et al., 2000). Mazanec (1995) concluded that in luxury hotels, image is positively linked with customer preference, which is a dimension of customer loyalty and customer satisfaction.
In addition to that, Gröonroos (1984) found that in determining image evaluations, it relates with what the customer receives and the manner in which it is received. Another method that is used to measure brand image is the seven-point Likert scales. The existing scales are used to develop the measurement instrument for constructs such as brand image, brand identity, external communication, employees, service scape, customer satisfaction and customer loyalty have been proven to provide a high validity as a measurement tool (Parasuraman and Zeithaml, 1988; Wakefield and Blodgett, 1996; Price, Arnould and Tierney, 1995; Jones and Taylor, 2007). Although brand image has been measured using different methods by researchers, but most of them have the same opinion. The results show that the measurement should centre around cognitive, and to improve the affective and emotional attributes, personality metaphors are used to portray it (Davies and Chun, 2002, Harris and de Chernatony, 2001). A five point scale had been used by Low and Lamb (2000) to measure brand image and focused on three measures which included customers' overall attitude towards the brand, the perceived quality of the brand and the brand's overall affect on customers. Previous research had shows that the image of the hotel's location, employee attitude, facilities and service quality of a hotel constitute an important factor in determining the customer loyalty (Ostrowsky et al., 1993). As a result, brand image is one of the factor that influencing the customer's loyalty in hotel sector.
Public Relations Perception
Hazelton and Botan (1989, p.13) had defined public relations (PR) as an "emerging" social science discipline. There has been an increasing recognition of the need for strategically managed communications programs in order to effectively achieving corporate and business objectives. In contrary to that, public relations also defined as the "management of communication between an organization and its publics". It also emphasize: "this definition equates public relations and communication management" by Grunig and Hunt (1984, p.6). Cultip et al. (1985) on the other hand stated that public relations are "the management function that identifies, establishes, and maintains mutually beneficial relationships between an organization and the various public on whom its success or failure depends".
From the marketing perspective, public relations is defined as a publicity function whose main function is seen as providing tactical support for marketing campaigns (Kotler, 1988; Schwartz, 1982; Shimp and Delozier, 1986). This perspective contrasts with the views of other practitioners and academics who consider the more strategic role of public relations, which concerns the managing of relationships between an organization and those which are considered important constituencies for both customer and non-customer, within its environment (Cultip et al., 1994; Grunig and Hunt, 1984). In summary, Ledingham and Bruning (1998) in short defined public relations as "relationship management".
Besides that, customer satisfaction evaluations, behavioral intent and actual behavior had been shown that influence by consumer perception of public relations. Jefkins and Yadin (1998) and Varey (1997) also noted that increasing importance has been placed by businesses on the support and promotion of their corporate name and key pillar brands has been a general acceptance. This has been proven to be accurate in service sectors where often the principle differentiating factor in the minds of targeted customers is brand name (Dibb et al., 2001).
As the precious researches by Ledingham and Bruning (1998), they found that an important factor in determining their loyalty toward the corporation, which in turn would enable the company to increase income, enhance market share, and achieve other corporate objectives is consumer's awareness of organization-customer relationships. Public relations strategy has been known to enhance brand knowledge and brand awareness can be established through recall and recognition by the customer. According to Keller (1993, 1999), it is also assumed that customer loyalty can be elevated as customer loyalty is often viewed as resulting from brand knowledge. In addition to that, the effectiveness of public relations might be affect by the impact of brand image. Beckwith and Lehmann (1976) provided the definition for the first type which mentioned that customer's response towards a particular attribute can affect the customer's general impression of the overall object. And for the second type, they stated that the dominant attribute of the object which is evaluated can manipulate the response to other attributes. For example, customers who have a favorable brand image of a certain product will also have positive opinions over other products or messages related to the brand. This halo effect is described to influence an individual's tendency to maintain their cognitive consistency and to avoid cognitive dissonance (Beckwith and Lehmann, 1976; Holbrook, 1983; Writz and Bateson, 1995). As a result, public relation perception is one of the factor that influencing the customer's loyalty in hotel sector.
March (1991) had related both exploration and exploitation into innovation:
"Adaptive systems that engage in exploration to the exclusion of exploitation are likely to find that they suffer the costs of experimentation without gaining many of its benefits. They exhibit too many underdeveloped new ideas and too little distinctive competence. Conversely, systems that engage in exploitation to the exclusion of exploration are likely to find themselves trapped in sub-optimal stable equilibrium. As a result, maintaining an appropriate balance between exploration and exploitation is a primary factor in systemsurvival and prosperity." (March, 1991, p. 71).
The service quality is always important in hotel industry and hospitality industry. But in order to give the best service to the customers always, service innovation is needed to improve the service provided in the hotel. Innovation plays an important role in the marketing concept because it gives the service firm the ability to stay ahead of its competitors through new market offerings. The benefits of service innovation are apparent. Just like other products, the innovativeness of a new service idea may be defined by the degree of newness it has relative to the firm and to the outside world (Kleinschmidt and Cooper, 1991; Olson et al., 1995), and new service ideas may be dichotomized into incremental and discontinuous innovations (Song and Montoya-Weiss, 1998). Incremental innovations are based on improvements to existing technology, meanwhile discontinuous innovations incorporate substantially different technology into services that satisfy customer needs better than existing services (Chandy and Tellis, 1998).
Service innovation is not only useful to maintain the loyalty and fulfill the staff's satisfaction, but also important for a staff to learn the latest technology and service to give the best service to the customer. The association between innovation and the market-orientation of a firm was determined to be both positive and significant (Agarwal et al., 2003).
In hotel industry, the staff and workers are important in serving their customer but have lesser time to improve their services through attending training or classes. Hence, the development of the information technolgy nowadays such as internet, had enable the staff and the workers in hotel industry to improve their learning and knwoledge through online learning. According to Zhang and Nunamaker(2003), Online learning or e-learning is defined as learning that takes place anytime someone uses electronic means for gathering information either with (synchronous learning) or without another live person (asynchronous learning) present. E-learning or online learning had make the hotel's staff to learn and improve their services from time to time without attending any classes and training. Online learning also provides the context and the potential for "learning regions" to emerge. Florida (2002) stated that competitive advantage can be created by formulating learning. Regional development will be increasingly depends on local communities' capacities for continuous collaborative learning and innovation, it is also depends on the availability of a skilled and flexible workforce networks and entering into interactive learning processes. But according to Collins et al.(2003), e-learning have some disadvantage as well. He stated that the disadvantage is including the operators' initial set-up and access to infrastructure cost; operators may find it too impersonal; and participants need a high level of discipline.
While from a customer's perspective, the hospitality market is perpetually inundated by many similar, often easily substitutable service offerings. And one of the solutions for this is to offer a new or innovative feature to customer. According to Olsen and Connolly (2000), the travelers nowadays are choosing to patronize hotels that offer the best value proposition under existing budgetary constraints. Therefore, hotel managers and marketers must meet the challenge of determining which services are preferred by hotel guests in order to add value to the guests' experience. According to Stahl et al. (1999), customer value can be defined as, "the customer's perception of what they want to have happen in a specific-use situation, with the help of a product and service offering in order to accomplish a desired purpose or goal".
The appearance of "boutique" hotel is one of an perfect example for innovation in hotel industry. The boutique hotel is not only features with contemporary or minimalist decoration, but it also offering many additional lifestyle amenities. Binkley, (1999) stated that Hotel guests tend to perceive boutique hotels as a stylish location for which they are willing to pay premium room rates for. According to Chittium (2004), mid price hotels are beginning to consider the aesthetic appearance of the building decoration and structure rather than put their prior focus on the functionality of the hotel product offering. Amenities being offered will include platform beds with no box springs, wire storage racks rather than dressers, plasma television screens, and complimentary wireless DSL access (Binkley, 2003) and these innovative changes are expected to boost their occupancy rates beyond their rivals (Binkley, 2003).
Besides that, information technology is also one of the innovations of service in hotel industry. Reid and Sandler (1992) stated that technological innovations were most beneficial, least beneficial, and had future benefits for hotels and these information technology are includes a wake up system, electronic door locks, in-room pay-per-view, video cassette players, multiple phone lines, video library, personal computers, voice mail, computer modem connections, video check out, electronic in-room safes, and a software library. However, it is impossible for a hotel to have all of the information technology that mentioned above due to lack of operational capabilities and limited resources. Besides the technology that prefer by most of the customer, Namasivayam et al., (2000) the addition of new technological features to a hotel's service concept has distinct phases of adoption and these technology are included:
- customer signaling, such as internet booking and in-room modems;
- Enabling management, such as management email;.
- Enabling employees, such as voice mail;.
- customer service revenue add-ons, such as ATM and interactive TVs;
- Customer service value add-ons, such as internet access and in-room fax machines; and.
- Wireless technology, such as curbside check-in, voice recognition, and smart cards (Namasivayam et al., 2000).
As a result, service innovation are playing an important role and is one of the factor that influencing the customer's loyalty in hotel industry.
Wuest et al. (1996) defined the perceptions of hotel attributes as the degree to which travelers looking for different services and facilities important in promoting their satisfaction with hotel stays and retaining their loyalty. There are many previous review shows that most travellers would consider the hotel contributes when making their decision about the hotel choice. The attributes are included cleanliness of the hotel, the location, room rate, security, service quality and also the reputation of the hotel or chain (Ananth et al, 1992; Atkinson, 1988; Burton, 1990; Cadotte and Turgeon, 1988; Clow et al.,1994; Knutson, 1988; Le Blanc and Nguyen, 1996; Lewis, 1984, 1985; Marshall, 1993; McCleary et al., 1993; Rivers et al.,1991; Weaver and Heung, 1993; Wilensky and Buttle, 1988). Hoon( 1992) mentioned that there are exist a cross-cultural difference in terms of expectations of hotel facilities and its services. Bauer at el. (1993) had examined the difference between Asian and Non Asian travelers in relation to their needs and demand for a wide rang of hotel facilities. They had found that the difference between the demand for these travelers where Asian travelers appeared to looking for more entertainment facilities such as karaoke, casino, while the Non- Asian travelers appeared to be more concerned about hotel's health facilities such as gym, spa and many more.
In previous research, Qu and Li(1997) had investigate the perception and satisfaction levels of travelers from mainland China who visit to Hong Kong. The results shows that travelers from mainland China traveling to Hong Kong had revealed five factors: suffeciency of hotels, the hotel's location, service quality, availability of the facilities and also price. In the meanwhile, Dani Bunja(2003) also stated that the hotel in Croatia are looking for additional investment in entertainment facilities and equipment in order to help to prolong the tourism season in Crotia. He also stated that it is necessary to build smaller hotel facilities that are adaptable to the requirement of individual tourists. While in the previous research by Wai-Chin Poon and Kevin Lock-Teng Low(2005) in Malaysia, they had found that there is high demand for recreational and entertainment facilities for Asian travelers. So in order to capture the potential of the Asia Market, the hoteliers should focus on satisfying the needs of the Asian travelers, such as developing more low rates hotel. The hoteliers also should focus on the facilities of the hotel since the availability of alternatives facilities is regarded as an important attribute assuring the probability of travelers' revisiting the country.
And additional tangibles aspects of safety-related physical design features in the hotel room or public areas in the hotel were recognized as important for the older customers (Murray and Sproats, 1990; Ananth et al., 1992). And the statement had been supported by Ruys and Wei (1998) by saying that "room facilities such as better lighting, safety features in the bathroom, easy to handle door knobs, comfortable, supporting mattresses and chairs were among the main concerns". Therefore, facilities of the hotel is one of the factor that influencing the customer's loyalty in hotel industry.
CHAPTER 3: METHODOLOGY
This chapter discusses the methods that have been occupied in this research study. Investigation in factors that influence the loyalty of a hotel customer in Malaysia is the main purpose for the study. One of the reasons of this study is to provide a better understanding of factors such as service quality, brand image, hotel facilities, service innovation and also public relations perception can influence the loyalty of a hotel customer in Malaysia.
As a result, this chapter contains and explains in details about the conceptual framework established to test the validity of the hypothesis. Each of the hypothesis formulated are listed and will be discuss briefly in this chapter. The explanation of the conceptual framework also included in this chapter as well. Besides that, a summary of the variables also provided along with the research approach intended for this study.
The details on data sources from primary data and secondary data is included in this research and acquired for the purpose of the study. The unit of analysis, sampling methods, study area, sample size and data analysis technique are also discussed in this study.
A theoretical framework is a conceptual model of how one theorizes or makes sense of the relationship among the several factors that have been defined as important to the problem. It is also define as a conceptual framework is used in research to outline the possible courses of action or to present a preferred approach to an idea or thought. This theory flows from the documentation of previous research in the problem area. In the other words, the theoretical framework discusses the relationships and link among the variables that have been found from literature to be integral to the dynamics of the situation being investigated.
From the review of literature in Chapter 2, there are five main factors have been discussed and these factors will influence the customer satisfaction and customer loyalty in hotel industry in Malaysia. The nine independent variables that contribute to customer satisfaction are tangibles, reliability, responsiveness, assurance, empathy, brand image, public relations perception, hotel facilities and service innovation in the country. It can be seen also that the nine variables are related to the dependent variable.
The variables like tangibles, reliability, responsiveness, assurance and empathy are listed under service quality. According to the previous researches, all of these dimensions of service quality will have an impact on customer's perception of the country's tourism organization image and can strongly affect the customer decision in the hotel choosing. As a result, all of the dimensions of service quality play a
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