Service Quality and Customer Loyalty in China’s Hotels

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What are the aim and objectives of your study?

The primary aim of the proposed study is to critically analyze how service quality affects customer loyalty and customer repeat intentions in hotel settings in China. The proposed study attempts to cover the following set of objectives:

To critically analyze the effects of service quality on behavioral orientations and perceptions leading up to loyalty development;
To critically evaluate how hotel service quality in China influences customer repeat Intentions;
To explicate service quality factors that are more likely to result in the internalization of loyalty and repeat intentions among customers, and;
To formulate conclusions and recommendations on how the hotel industry in China can take advantage of service quality characteristics to spur customer loyalty and repeat
intentions.

A brief review of relevant literature and rationale for study: list references of approximately 6 publications that you view to be key publications focusing on your research topic. On this list, include a minimum of 4 key methodology references. This list should be alphabetized and stapled to the back of the proposal form.

Most of the organizations in the hotel and hospitality industry are operating today in an environment of swift and wide-ranging change, where competitiveness and indeed survival depends sorely on making the right choice (Nightingale 2005). Equally thrilling is the rapid growth of the service sector, which now accounts for approximately two-thirds of GDP in developed economies and is contributing on a greater level than ever before in the developing world (Narayan et al 2009). Extant literature demonstrates that as the number of tourists and international business travelers in China grows in line with China’s economy, the country’s rapidly maturing hotel industry is among the key beneficiaries (Lee 2002), implying that hotels will now be forced to avail more choices and superior-quality services to their customers to remain relevant in the competition (Yu & Smith 2007).

Arguably, most international and domestic hotels in China are today expending huge financial resources and investments to ensure their service offerings remain above board, to benefit from heightened demand triggered by factors such as increased business travel, global conferences and exhibitions held in China, competitive packages priced for leisure visitors, and more direct flights between source markets and destinations (Lee 2002). Tourism, which feeds the hotel sector, has been growing at a phenomenal rate since China opened up its markets to international investors in the 1990s. Between 2004 and 2005, for example, inbound tourist arrivals grew “…by 10.3 percent from 109 million arrivals to 120.3 million; domestic travel jumped by 10 percent from 1.1 billion to 1.2 billion person-trips; and Chinese outbound travel grew from 28.9 million to 31 million tourists, up 7.5 percent” (Yu & Smith 2007 p. 16).

But scholars report that many hotels in China, especially in the low and middle-level cadre, are yet to adopt modern service practices that will assist them to not only satisfy their customers but also to retain them in their quest to remain above the competition (Lee 2002). This is against that standard practice, which requires businesses operating in a globalizing world to expand their market share and competitiveness through the adoption of the industry’s best service practices (Emir & Kozak, 2011). Additionally, extant literature demonstrates that it is far more costly to look for new customers than to retain existing ones (Kattara, Waheba & El-Said 2008). Consequently, the proposed study attempts to bridge the knowledge gap that exists in service quality research by illuminating how Chinese hotels can use the service quality construct to spur customer loyalty and repeat intentions, thus remaining competitive and profitable. Gaining and maintaining loyal customers has important ramifications for the survival of hotels in China. This brings us to the all-important question of how service quality affects customer loyalty and repeat intentions within the hotel industry in China.

Zeithaml (1988) cited in Malik et al (2011, p. 622) defined service quality as “…the judgment of customers about the overall superiority of a product or service.” Gronroos (2001) cited in Akbar & Parvez (2009) acknowledged that service quality can only be conceptualized as the distinction between customer expectations regarding a service to be received and perceptions of the service being received; that is, the extent to which a particular service meets customers’ needs or expectations. A mass of evidence, from anecdotes to systematic studies, exists to demonstrate that the consumer of a particular service seeks to gratify a set of needs or wants which to a large extent related to the essential purpose such as having a meal at the hotel or an overnight stay at a lodging facility (Huiquin & Xin n.d.; Nightingale 2005; Akbar & Parvez 2009). Crotts & Ford (2008) think that the ultimate key to the realization of quality service within the hotel setting is the individual employee who delivers the service to the customer, yet he is characteristically the one with the least seniority, the lowest level of pay, least experienced, and least identification with the longer-term aims and objectives of the entity.

After a comprehensive review of service quality studies, Akbar & Parvez (2009) identifies five dimensions of service quality, namely: reliability, responsiveness, assurance, empathy, and tangibility. These dimensions, according to the authors, link explicit service characteristics to the aspirations and expectations of the customer. While tangibility encompasses the physical facilities, equipment, and appearance of personnel in a particular service setting, empathy denotes the caring, individualized attention, and assurance implies the knowledge and courtesy of staff members and their capacity to convey trust and confidence. The reliability characteristic encompasses the capacity to perform the promised service dependably and accurately, and responsiveness means the willingness to assist customers and provide prompt service (Akbar & Parvez 2009). It is however important to acknowledge that service quality is not objectively evaluated according to some rigorous technical principles but is subjectively perceived by customers and evaluated relative to customer-determined principles (Sohail et al 2007).

Customer loyalty has been defined idiosyncratically by scholars and practitioners depending on the user context. Oliver (1999) cited in Emir and Kozak (2011, p. 132-133) defined loyalty as “…a promise about repurchasing the product in the future and becoming loyal customers.” Roostika (2011), on his part, postulates that loyalty covers all the behavioral and attitudinal aspects of customers, and can be expressed in varied dimensions depending on the products/services and situations. In yet another study, Crotts & Ford (2008, p. 234) argue that “…building loyalty starts with a commitment to deliver excellence at every moment of truth and must extend from upper management to every frontline employee.” Service quality, according to Huiquin & Xin (n.d.), not only enhances satisfaction and loyalty behaviors among customers but also influences their repurchase intentions and leads to positive word-of-mouth.

Another strand of literature (e.g., Malik et al 2011; Hur & Kang 2012) equates customer loyalty with commitment and suggests that customers remain committed to a specific service setting for different reasons, namely: because they want to be (affective commitment), because they feel they ought to be (normative commitment), and because they feel they have to be (continuance commitment). For all these reasons, however, service quality has been illuminated as critical in encouraging and reinforcing loyalty/commitment behaviors (Hur & Kang 2012).

Researchers have undertaken systematic studies to identify the reasons that inform customer repeat intentions. While Emir and Kozak (2011) found that both service quality and customer satisfaction have a direct and positive impact upon customers’ repeat intentions, Han (2000) found the emotional response to being a strong predictor of repeat intention and brand attitude. In service research, Ng (2001) found that the dining environment, service quality, customer satisfaction, and competency of employees are powerful predictors of intention to revisit. A study by Roostika (2011) demonstrates that business activities that are considered to be influential in developing and sustaining customer repeat intentions in the hotel industry include service quality, customer satisfaction, business image and reputation, friendly and knowledgeable staff, physical location, and servicescape, and food quality. In yet another study by Crotts & Ford (2008), customer satisfaction and service quality were found to be the mediating factors of repeat intentions, and all the three constructs were found to reinforce loyalty behavior. It is important to evaluate these constructs in hotel settings in China since most of the studies to date have been undertaken in Western contexts (Lee 2002).

The justification for the proposed study arises from the fact that hotels must now adopt customer-oriented services and offerings to not only retain customers but also to stay ahead of the competition (Lee 2002). Second, while many variables are involved in reinforcing loyalty and repeat intentions immediately after the consumption or experience process has been complete, the researcher feels that knowing the extent of service quality dimensions in the creation of customer loyalty and repeat intentions will play a fundamental role in enhancing competitiveness and profitability in the hotel industry in China. These prepositions inform the justification for the proposed study.

Outline of study design and methods

Sample: Please provide a detailed description of the study sample, covering selection, number, age, and if appropriate, inclusion, and exclusion criteria.

The target population for the proposed study will comprise employees and customers of 3 pre-determined middle-level (3-star) hotels doing business in China. These hotels include City Hotel Beijing, Holiday Inn Express Beijing Shangdi, and Hotel Ibis Beijing Dongdaqiao. As postulated by Cohen (2007), a population entails the larger group from which the subjects are chosen to take part in a study. The study will utilize probability sampling, where sample members (hotel employees and customers) will be drawn with a random selection mechanism and each population member will have a known, non-zero opportunity of inclusion. The justification for using probability sampling is that it will assist the researcher to achieve fairness and objective data as selection for inclusion will not be subject to any controls or manipulation (Lohr 2010).

The sampling technique will be simple random as this will allow every population element an equal opportunity of selection to participate in the study. The technique will be applied to select 30 customers (10 from each hotel), who must have attained the age of 18 years and are of either gender. The same technique will be applied to select 30 front-line employees (10 from each hotel), who must have attained the age of 18 years and demonstrate an adequate understanding of service settings. The two sets of participants must be ready and willing to take part in the study. The random sampling technique has been selected for use due to the following reasons:

ease of assembling the study sample,
fairness in the selection of the sample,
representativeness of the population, and
capacity to achieve unbiased results (Lohr 2010).

The researcher intends to undertake an online pilot study before actual data collection too, among other things:

identify the key issues that may pose a challenge to the data collection exercise,
fine-tune the data collection instrument to ensure its validity and reliability, and
evaluate if the methods earmarked for use will meet the threshold for objective data collection in the field (Creswell 2002).

The piloting study will be conducted on 6 participants (3 hotel employees and 3 customers).

Reference List

Adams, A & Cox, AL 2008, Questionnaires, in-depth interviews and focus groups, Open Research Online. Web.

Akbar, MM & Parvez, N 2009, ‘Impact of service quality, trust, and customer satisfaction on customer loyalty’, ABAC Journal, vol. 29 no. 1, pp. 24-38.

Creswell, JW 2002, Educational research: Planning, conducting, and evaluating quantitative and qualitative approaches to research, Merrill/Pearson Education, Upper Saddle River.

Crotts, JC & Ford, RC 2008, ‘Achieving service excellence by design: The organisational alignment audit’, Business Communication Quarterly, vol. 71 no. 2, pp. 233-240.

Emir, O & Kozak, M 2011, ‘Perceived importance of attributed on hotel guests’ repeat visit intentions’, Tourism, vol. 59 no. 2, pp. 131-143.

Han, H 2000, The impact of emotion on the formation of customers’ repeat visit intentions in the lodging industry. Web.

Huiquin, L & Xin, Z n.d., A literature review and critique on customer satisfaction. Web.

Hur, WM & Kang, S 2012, ‘Interaction effects of the three commitment components on customer loyalty behaviours’, Social Behaviour & Personality, vol. 40 no. 9, pp. 1537-1542.

Kattara, HS, Waheba, D & El-Said, OA 2008, ‘The impact of employee behaviour on customers’ service quality perceptions and overall satisfaction’, Tourism & Hospitality Research, vol. 8 no. 4, pp. 309-323.

Lee, K 2002, ‘China’s hotel boom’, China Business Review, vol. 29 no. 6, pp. 4-9.

Lohr, SL 2010, Sampling: Design and Analysis, Cengage Learning, London.

Malik, ME, Naeem, B & Nasir, AM 2011, ‘Hotel service quality and brand loyalty’, Interdisciplinary Journal of Contemporary Research in Business, vol. 3 no. 8, pp. 621-629.

Narayan, B, Rajendran, C, Sai, LP & Gopalan, R 2009, ‘Dimensions of service quality in tourism – an Indian perspective’, Total Quality Management, vol. 20 no. 1, pp. 61-89.

Ng, YN 2001, A study of customer satisfaction, return intention, and word of mouth endorsement in university dining facilities. Web.

Nightingale, M 2005, ‘The hospitality industry: Defining quality for a quality assurance programme – A study of perceptions’, Service Industries Journal, vol. 5 no. 1, pp. 9-22.

Philips, PP & Starwaski, CA 2008, Data collection: Planning for and collecting all types of data, John Wiley & Sons, London.

Roostika, R 2011, ‘The effect of perceived service quality and trust on loyalty: Customers’ perspectives on mobile internet adoption’, International Journal of Innovation, Management & Technology, vol. 2 no. 4, pp. 286-291.

Saunders, M, Thornhill, A & Lewis, P 2007, Research methods for business students, 2nd edn, Person Education Limited, Essex.

Sohail, MS, Roy, MH, Saeed, M & Ahmed, ZU 2007, ‘Determinants of service quality in the service industry: The case of Malaysian hotels’, Journal of Accounting, Business & Management, vol. 14 no. 2, pp. 64-74.

Yu, L & Smith, G 2007, ‘Hospitality, Chinese style’, China Business Review, vol. 34 no. 1, pp. 16-19.

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Service Quality and Customer Loyalty in China’s Hotels

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