The Customer Satisfaction By Measuring Service Quality Tourism Essay

The measurement and management of service quality are fundamental to the survival and success of service companies Legcevic, 2008. The hotel sector is a large segment of the service industry which provides services and accommodations to a wide range of customers. To make sure that a hotel is satisfying its customers’ needs, it is necessary to measure service quality periodically to identify areas in need of improvement. There are several methodologies used for measuring service quality, but this research study shall employ one of the more popular models – called the SERVQUAL model. This theory was developed by Parasuraman, Zeithaml and Berry. They were early researchers studies about the concept of quality (Jain and Gupta, 2004). The SERVQUAL model was created to measure service quality as perceived by the customer (Parasuraman et al., 1985).

According to Shangri-La Hotels Annual Report of year 2008 and 2009, the occupancy rate of the Shangri-La Hotel, Bangkok has declined continuously (Shangri-La Asia Limited, 2008, Shangri-La Asia Limited, 2009). The most likely cause of this problem is the political instability that hit Thailand recently. On the other hand, it is possible that this decline in the number of customers was a result of a decline in service quality. Even though the Shangri-La Hotel continued to emphasize customer needs and provide excellent service to their customers, it is still crucial to measure service quality to ensure that the customers are satisfied with the hotel’s services and responsiveness to customer needs. The result of measuring service quality also helps management to understand exactly what their customers expect from the hotel and the level to which they are satisfied with their experience at the hotel. This measurement model functions as a tool to promote communication between the hotel management and their customers.

This research was conducted to observe customer perceptions about hotel services by measuring service quality using the SERVQUAL model at the Shangri-La Hotel, Bangkok. The benefits of this research are not just to understand the level of customer satisfaction; but moreover, it can use as a guideline to enhance service quality and promote customer loyalty.

Title of project:

“A Study of Customer Satisfaction by Measuring Service Quality; A Case Study of Shangri-La Hotel, Bangkok”

Statement of research problem:

A continual decline in the number of hotel customers over the past few months has had a direct effect on the hotel’s income. The main factor which is believed to have caused this decline was internal political instability in Thailand. In an effort to transform a crisis into opportunity, this is an appropriate time to observe customer perceptions of service quality in order to help hotel management improve quality and prepare their business for when the situation returns to normal.

Project objectives:

The objectives of this research are as follows:

To measure service quality of Shangri-La hotel, Bangkok by using SERVQUAL model,

To understand the relationship between customer satisfaction and service quality, and

To gain a clearer understanding of customer perceptions of service quality from Shangri-La Hotel, Bangkok in order to improve hotel service quality in the future.

Conceptual framework

Reliability

SERVQUAL Dimensions

Responsiveness

Assurance

Customer Satisfaction

Empathy

Tangibles

Scope of the study:

The scope of this research focuses on measurement of service quality at the Shangri-La Hotel, Bangkok by using the SERVQUAL model which considers service quality from the following five dimensions: a) reliability, b) responsiveness, c) assurance, d) empathy and e) tangibility. The sample population would be a random sample of 100 hotel customers during the period from June to July, 2010. The survey technique would employ the use of questionnaires. This study focuses on the relationship between customer satisfaction and service quality.

Definitions of terms used in the study:

SERVQUAL model: An instrument for measuring service quality comprised of five dimensions such as: a) reliability, b) responsiveness, c) assurance, d) empathy and e) tangibility. Parasuraman summed up that customers perceive service quality by comparing their expectations with the actual organizational performance, and they evaluate service quality in different dimensions (Parasuraman et al., 1988).

Service Quality: A product or outcome of all the staff & managers of the Shangri-La Hotel, Bangkok working together to satisfy their customers. In other words, high-quality service is a service that meets or exceeds customer needs and expectations (Wisniewski, 2001).

Customer Expectation: is prediction service of customer that hotel should be provide to them. Predict service directly influence customer satisfaction evaluation (Zeithaml et al., 1993)

Customer Perception: A feeling or sense possessed by the customer which is derived from their experiences at the hotel.

Customer Satisfaction: The level to which a customer perceives that their expectations were met in the transaction with the hotel (Hallowell, 1996).

Assumptions:

A customer who receives a high level of service quality from the Shangri-La Hotel, Bangkok is more likely to be satisfied with the overall level of service at the hotel.

Limitations:

Size of sample: The political uncertainty in Thailand during the past several months resulted in a decrease in the number of tourists all over Bangkok. Furthermore, the occupancy level at the Shangri-La Hotel, Bangkok has been suppressed due to a reduction in room availability for internal renovations. The limited number of hotel customers may limit the sample size, leading to sample error.

Time frame of data collection: The time frame is a major problem for this research because the research time table is quite short, especially considering that this season is the low season for tourism in Thailand. Since the tourist numbers are much lower than during high season, it could be difficult or impossible to reach the appropriate sample size.

Human ethics considerations:

This research is being conducted for educational purposes to learn about customer satisfaction at the Shangri-La Hotel, Bangkok. For this reason, the hotel’s management is allowing researchers to collect data from their customers. Therefore, the researchers should not force the customers to complete the questionnaire if they are hesitant. The questionnaire is being designed so that it does not contain sensitive items which would make customers feel uncomfortable.

Practical significance:

Measuring service quality is more difficult than measuring the quality of manufactured goods because the nature of services is intangible (Bergman and Klefsjo, 1994). The SERVQUAL model is an efficient tool to help measure service quality and clarify customer satisfaction. The result of this research would be useful for the Shangri-La Hotel’s management and staff members so that they can better understand their customers’ level of satisfaction with perceptions about the hotel’s services. It will help hotel management in their efforts to maintain and improve hotel service quality. In addition, other hoteliers and organizations within the service industries sector could adapt this research to use as basis for studies into their own organizations.

Background information:

Shangri-La Hotels and Resorts is a well-established Asian hotel chain in major cities throughout Asia, Oceania and The Middle East. The headquarters is located in Hong Kong. Shangri-La Hotel, Bangkok is one property of many properties of Shangri-La Company, located in the Silom district, has a total of 799 rooms including serviced apartments and other facilities such as restaurants, conference rooms, spa, swimming pool and tennis courts (Shangri-La Hotel, 2010).

Shangri-La Hotel, Bangkok is located in a convenient place next to the Chao Phraya River which is the main river of Thailand, and is only half an hour from Suvarnabhumi Airport and 10 minutes away from central business by BTS Skytrain. For these reasons, this hotel has the ability to attract numerous tourists. Furthermore, Shangri-La Hotel, Bangkok is connected to Sathorn Pier, so tourists can take public boats or long tail boats to travel to and visit several kinds of tourist attractions easily – such as the Temple of Dawn, the Grand Palace, the Flower Market and Khaosan Road. There is a high diversity of tourism industries which promote the economy in this district and along this river.

However, in recent years, the Thai economy has experienced difficulty for a variety of reasons. Figures 1 and 2 compare the performance of Shangri-La Hotels and Resorts in the period from 2007 to 2008 with the period from 2008 to 2009.

Figure 1: The Shangri-La Hotel Weighted Average Room Yield 2007-2008

Source: Shangri-La Asia Limited (2008)

Figure 2: The Shangri-La Hotel Weighted Average Room Yields 2008-2009

Source: Shangri-La Asia Limited (2009)

The figures above show that there was a significant decline in the performance of Shangri-La Hotels and Resorts, Thailand in 2008 compared with 2007, and this decline in performance continued into 2009 with a drop on average room occupancy.

According to the 2008 Shangri-La Asia Limited Annual Report, occupancy and RevPAR for Shangri-La Hotels decreased in 2008 by 15 and 10 percentage points respectively (Shangri-La Asia Limited, 2008). Moreover, the overall weighted average RevPAR for Shangri-La Hotel and Resorts’ Thai properties decreased a further 11 percent in 2009 (Shangri-La Asia Limited, 2009). The global financial crisis, the extensive renovations at the Shangri-La Hotel, Bangkok and political uncertainty are cited as the main reasons for this decline.

Literature review:

There are several pieces of literature regarding studies of service quality which say that if a customer had a pleasant service experience, they would probably use that service again and would be likely to invite their friends or tell someone else to utilize those same services. In the same way, if customer had a poor service experience, they generally never forget about it, and many customers will complain and go elsewhere (Assael, 1987, Farrington et al., 2009, Peter and Olson, 1987).

Word of mouth is a powerful communications tool. Customers may tell others whenever they experience poor service quality, and this would have a direct effect on the organization’s image – resulting in an eventual decrease in revenue. The power of this communications tool has always been evident from the past until the present. Consequently, organizations must always ensure that their service quality is the most pleasant and best to generate customers’ satisfaction. This is because the backbone of service organization growth is not just a high quality product or pricing strategy, but it is also the combination with good customer service. “When customers receive good service the outcomes are positive”(Farrington et al., 2009).

Nowadays, companies increasingly emphasize service quality and customer satisfaction throughout, so that they can increase customer loyalty, because it has determined that high customer loyalty is key to success in their market segment(Cronin et al., 2000). Service quality is widely studied and useful in service industries(Carman, 1990, Collier and Bienstock, 2006, Cronin and Taylor, 1992, Cronin et al., 2000, Gronroos, 1984, Parasuraman et al., 1985, Parasuraman et al., 1988). Many scholars have taken an interest in service quality issues because of their intangibility, which makes them very difficult to measure (Bergman and Klefsjo, 1994). For these reasons, several researchers created a model to help clarify the measurement of service quality. The most popular and extensively used models are Gronroos’ Service Quality Model and Parasuraman’s Gap Model (Legcevic, 2008). It could be describes of each model as following;

Gronroos’ Service Quality Model splits customer perceived service into two dimensions: 1) technical quality, and 2) functional quality (Gronroos, 1984).

1) Technical quality or outcome quality is what customer receives as outcome of the process in the resources.

Functional quality is how customer receives from technical outcome (Legcevic, 2008).

Parasuraman’s Gap Model indicates that five gaps exist between management and customers during the service delivery process (Parasuraman et al., 1985). For my research, I will employ the SERVQUAL scale by using gap scores to help measure service quality.

Service Quality:

Today quality become recognized as a strategic tool to enhance and improved business actual performance both of goods sector and service sector. The key factor to success in service industry is service quality. The purpose of service quality is to satisfy the customer. Hence, service quality and customer satisfaction influence each other. As mentioned in the beginning, service quality is defined as a product or outcome resulting from all members in the organization trying to satisfy their customers (Wisniewski, 2001). Service quality also could be defined as crucial decision-making criteria for service consumers (Cronin et al., 2000). Customers evaluate service quality by comparing organizational performance with their expectations (Zeithaml et al., 1993). However, Parasuraman proved and indicated that there is a problem with customer perception of service, because five gaps exist between the customer and the service provider during service delivery. The figure below illustrates the Service Quality Gap Model by Parasuraman.

Figure 4: The Service Quality Gap Model

Source: Parasuraman, Zeithaml, and Berry (1985)

According to figure as above, it could be describes each gap as following;

Gap1: Service provider not knowing what the customers expect

Gap2: Service provider not selecting the right service design

Gap3: Service provider not delivering to service standard

Gap4: Service provider not matching performance to promises

Gap5: The difference between customer expectations and customer perceived service (Legcevic, 2008)

A gap which may occur between customer expectation and customer perception is not the only measurement of service quality. However, it is a determinant of customer satisfaction or dissatisfaction. If the service provider’s response to customer needs is below their expectations, the customer would estimate that the quality is low. “Measuring the gap between expected and perceived service is a routine method of utilizing customer feedback”(Pizam and Ellis, 1999).

SERVQUAL Scale:

The main benefit of the SERVQUAL instrument is that it helps management to measure the quality of service by comparing customers’ expectation of service and customer perceived service which categorizing each problem facet into five dimensions. It lets them classify the problems into dimensions, helping management to focus on the problems and improve service quality in the right way when some elements of service are found to be lacking. The SERVQUAL model was created by Parasuraman, Zeithaml and Berry in 1985. The 1985 version consisted of ten dimensions. The model was further developed, and in 1988 it was refined into five dimensions. The SERVQUAL model has been widely used as an efficient instrument for measuring service quality in many service industries (Asubonteng et al., 1996). The five dimensions are: 1) reliability, 2) responsiveness, 3) assurance, 4) empathy and 5) tangible. According to Parasuraman, Zeithaml and Berry (1985), they defined each dimensions as follows:

Reliability:

Ability to perform the promised service dependably and accurately

Responsiveness:

Willingness to help customers and provide prompt service

Assurance:

Knowledge and courtesy of employees and their ability to inspire trust and confidence

Empathy:

Caring, individualized attention the firm provides its customers

Tangible:

Physical facilities, equipment, and appearance of personnel

The most important dimension that the customer used to evaluate service quality is the reliability dimension (Legcevic, 2008). Parasuraman developed a set of questionnaires using 22 parallel questions to measure customers’ expectation of service and customer perception of service in the five dimensions. The measurement uses a Likert Scale with seven levels ranging from strongly agree to strongly disagree. The service quality measurement of each pair of questions uses performance minus expectation. A positive score represents positive service quality (Parasuraman et al., 1988).

Quality = Performance – Expectation

Nevertheless, there are numerous of academic studies which do not support these five dimensions. These studies determined that problems occur with this measurement method. Chen (2008) argued that SERVQUAL should add more dimensions to give the result more validity and credibility (Chen, 2008). Carman (1990) argued that each dimension should not be general because each service industry is different. Therefore, this model could not be used in the same format across industries (Carman, 1990). Although, there are weak points existing in SERVQUAL model, the concept of dimensions is still useful and when anyone interested in service quality issue, one choice which remind is SERVQUAL scale because its great to demonstrative power (Jain and Gupta, 2004). Then, it is used frequently today.

SERVPERF Scale

When discuss about SERVQUAL scale, it can not forgot to talks about SERVPERF scale as well. SERVPERF is one of service quality measurement scale. The results of both scale (SERVQUAL and SERVPERF), when compare these method to each other, the result which occurs are quite similar. However, there are differences in measuring process. Moreover, it is difference in reliability. To classify divergence between SERVQUAL scale and SERVPERF could be concise explain as following; SERVQUAL use customers’ expectation of service and customer perceived service to find service quality while SERVPERF use only customers’ perception for consideration. Cronin and Taylor (1992) compare between these two scales a found that SERVPERF is enough for measure service quality. However, the SERVQUAL scale is effective than SERVPERF scale because it provide more pragmatic diagnosis of service quality (Jain and Gupta, 2004).

Customer Satisfaction:

There are plentiful researchers’ studies on customer satisfaction. The definition of customer satisfaction is also diverse. Pizam and Ellis(1999) states that customer satisfaction is a psychological concept relating to a feeling of pleasure and well-being which is a result between needs in mind and an appealing product or service (Pizam and Ellis, 1999). The sense of satisfaction brings about positive attitudes which leads a customer seek that satisfying experience again (Assael, 1987).

Customer satisfaction also has an influence on corporate survival. Naumann (1995) states that in order to attract a new customer, an organization has to pay costs in the form of time and resources equal to approximately five times that which is necessary to retain an existing customer (Naumann, 1995). Therefore, it leads the organization to determine quality as the ability to retain existing customers.

However, not every customer will perceive the same level of satisfaction with the same level of service, because their sense of satisfaction is related to word of mouth communication and their past experiences (Pizam and Ellis, 1999). All people have had different experiences, thus they also have different objectives, needs and expectations. To ensure that the organization provides a high level of service quality, customer satisfaction surveys are necessary. Parasuraman, Zeithaml, and Bery (1994) suggested that product quality, service quality, and price are each factors that encourage satisfaction (Parasuraman et al., 1994). Customer loyalty develops when customers become satisfied with these different factors provided by the organization (Farrington et al., 2009). The following is a conceptual framework showing the connection of each element which involves customer satisfaction.

Figure 3: A Conceptual Framework for the Effects of Perceived Product Quality, Service Quality, and Pricing Fairness on Consumer Satisfaction and Consumer Loyalty

Customer Satisfaction

Product Quality

Perceived Product Quality

Perceived Service Quality

Service Quality

Customer Loyalty

Perceived Price Fairness

Price

Source: (Bei and Chiao, 2001)

Understanding the critical elements described above, how they are related, and how they help the organization is a foundation to success in the service industry.

Data required:

The data required for this study would be based in information collected from Shangri-La Hotel, Bangkok customers. This research also requires the use of SERVQUAL as the main model to help measure service quality. Furthermore, may utilize some other theories from journal articles and textbooks which are related to this research. Other sources of information may include Shangri-La Hotel and Resorts’ information, particularly with regards to general information and occupancy data as required supporting in this research.

Data sources:

This research will utilize the following two types of data:

Primary data: The primary data for this research will be collected from 100 hotel customers who stay at the Shangri-La Hotel, Bangkok for least one night. The guests will be selected by simple random sampling technique, and they will fill out questionnaires regarding hotel service quality. Each questionnaire shall contain three parts: the first part will be general information, the second part will be about the expectations, perceived service quality and third part is level of satisfaction of the customer.

Secondary data: The secondary data will be gathered from literature such as journal articles, textbooks, Shangri-la Hotel, Bangkok data and hotel website sources. The process of data collection shall be conducted from June to July, 2010.

Data collection techniques:

This research would be collects the data from 100 of customers of Shangri-La hotel, Bangkok who stay at the hotel at least one night. The researcher would be select population sample by employ random sampling method and using questionnaire as the tools. The measuring service quality instrument in this research is SERVQUAL. The questionnaire composes of three parts as following;

First part is about demographic data of customers (gender, age, nationality, occupation, reason for stay, how often that they have been stay at Shangri-La hotel, Bangkok and why they selected here as a place to stay).

Second part, it would be focusing on customers’ expectation of service quality (customer’s expectations) and received service quality (customer’s perceptions), in this area customer would answer both of these two aspects into SERVQUAL dimensions. This research would use Likert’s scale to measure into five point scales. Likert’s scale is a instrument to help measure attitude and opinion (Laerhoven et al., 2004). On the customers’ expectation question side would be ask customer to rate ranging from “Very unnecessary” 1,2,3,4,5 “Very necessary”. On the customers’ perceive service question side would be ask customer to rate ranging from “Very poor” 1,2,3,4,5 “Very good”.

Third part would be ask customer one question about their satisfaction of overall hotel service quality. In addition, researcher would leave the area for customer to add any recommendation.

Data analysis:

As for this research would be use SPSS program (Statistic Package for Social Science) to help analyze questionnaire survey.

Timeline:

Researcher has 13 weeks to process this report. This research process began on May 22, 2010. Due date of research proposal is on June 20, 2009. As for research final report is require to be submit on August 15, 2010