Evaluation of customers’ perception and satisfaction of service quality is widely acknowledged as being a favourable strategy in the hotel industry, especially its significant impact on business performance, corporate image, customer satisfaction, customer loyalty and profitability (Kandampully & Hu, 2007; Ladhari, 2009b; Mohsin & Lockyer, 2010). This research proposal aims to provide an assessment of service quality suggested by Grönroos (1982; 1990) by empirically examining hotel guests’ perception of process quality and outcome quality; and the relationships between the perceived service quality, customer satisfaction, corporate image and customer loyalty in the Malaysian hotel industry. This research proposal contains few different parts to provide a further understanding of the whole research. First, it outlines the background of the study with enclose the information related to the examined industry. It follows by discussions of problem statement, research questions and research objectives and the significance of the study to provide a fundamental understanding of the whole research. The next part of this research proposal is the literature review, proposed theoretical framework, and hypotheses development. The research paper will end with a list of related references.
The hotel industry in Malaysia has experienced successful growth that was brought by the fantastic economic performance from the travel and tourism industry. The hotel industry will continue to offer unlimited commercial opportunities for the country and businesses alike. In 2010, it has been forecasted that approximately 24 million tourists are expected to visit our shores. With this influx of tourists to Malaysia, the potential tourism receipts has been estimated to reach RM54 billion by the end of 2010 (Bernama, 2010). Furthermore, the United Nations World Tourism Organisation (UNWTO) had placed Malaysia in the top ten list in terms of tourist arrivals for 2009 (Bernama, 2010). In line with the growing number of tourists, the hotel industry in Malaysia has also stepped-up its development and upgrade programmes. As of February 2010, the Malaysian Association of Hotels (MAH) recorded a total of 522 hotels with 99,443 hotel rooms to cater for more tourist arrivals. Their commitment towards the industry is very encouraging and has stirred many hotel operators to strive harder in improving their respective standards.
The competitive nature of this industry in achieving service excellence is continuing to lead hotel operators to constantly sort new methods in building strong positive experiences amongst their patrons. The delicate balance between handling the most basic needs while creating pampering and memorable moments is an essential touch which every customer looks for when living away from home. Thus, it is important for hotel operators to keep abreast of the current and future needs of the ever-evolving industry, and respond to the demands of the increasingly sophisticated hotel guests. Innovation and creativity is crucial in maintaining a competitive edge in the hotel industry. Thus, hotel operators need to work with a spirit of originality and ingenuity; especially in creating unique and distinctive service elements to exceed the hotel guests’ expectations; translating their experiences into a favourable corporate image and creating customer loyalty.
Service quality has been a frequently studied topic in the literature of service marketing. Grönroos (1982; 1990) argued that the quality of a service as perceived by customers has two dimensions: process (functional) dimension and outcome (technical) dimension. Reviews of past literature revealed that much of the earlier research in the hospitality service quality have concentrated mainly on the process quality dimension, and consequently on the SERVQUAL instrument (Chitty, Ward & Chua, 2007; Ladhari, 2009a). Less effort has been made to incorporate both process quality and outcome quality in the hospitality industry (Chitty et al., 2007), especially in the Malaysian context. Thus, the literature to date fails to offer much insight on how service process and outcome may be differentially related to various types of service evaluation, such as service quality and customer satisfaction (Dabholkar & Overby, 2005).
Customer satisfaction is a result of comparison of the service performance with expectation. The consequences of customer dissatisfaction are overwhelming and hotel operators should concern themselves with their customer’s level of satisfaction. Therefore, the elements of a truly satisfied customer must be determined, and only then is it possible to implement a programme to attain and maintain a higher level of service quality (O’Neill & Palmer, 2004; Torres & Kline, 2006). However, as noted by Sidin, Rashid and Zainal (2001) there is still misunderstanding between the hotel operators and customers in perceiving the service quality; research revealed that many service organisations develop their own perceptions of what customers want, which often differ from what the customers really want. For the implementation of customer satisfaction measurement to be a success, one must choose the appropriate customer satisfaction model.
Customer satisfaction is a result of comparison of the service performance with expectation. In general, most scholars (e.g., Oliver, 1997; Bowen & Shoemaker, 1998; Gustafsson & Johnson, 2004) testify that satisfaction is a necessary step towards customer loyalty. However, it is interesting to know that customer satisfaction does not always translate into customer loyalty in the hospitality industry. Studies conducted by several researchers in the hotel industry (e.g., Bowen & Chen, 2001; Skogland & Siguaw, 2004) revealed that customer satisfaction may not always lead to customer loyalty. Results of the study did not support customer satisfaction as an indicator of customer loyalty (Olsen, 2002). The diversity has led to a gap which needs to be studied.
The findings of previous research (e.g. Faullant, Matzler, & Füller, 2008; Kandampully & Suhartanto, 2003, 2007; Kandampully & Hu, 2007) revealed that image in addition to overall satisfaction executes a strong impact on loyalty intention; and the inclusion of image and customer satisfaction in a research model provides a better explanation for customer loyalty. While a number of studies address the significant role of corporate image in determining consumer perception and consequent behaviour in hospitality literature (e.g. Back, 2006; Faullant et al., 2008; Kandampully & Suhartanto 2000, 2003; Kandampully & Hu, 2007; Nguyen & Leblanc, 2002); there is little empirical evidence to support the mediating role of corporate image for customer satisfaction and customer loyalty especially in the Malaysian hotel industry. As such, this research attempts to evaluate the mediating role of corporate image on customer satisfaction and customer loyalty; at the same time to further examine the relationships between (1) customer satisfaction and customer loyalty, (2) customer satisfaction and corporate image; and (3) corporate image and customer loyalty within the hotel industry in Malaysia.
In response to the research problems, this study would explore the research questions as stated below:
Do process quality (consists of reliability, assurance, tangible, empathy and responsiveness) and outcome quality affect the overall guests’ perceived service quality of hotels in Malaysia?
What is the relationship between the overall guests’ perceived service quality and their satisfaction level with the hotels in Malaysia?
What is the relationship between guests’ satisfaction and customer loyalty with the hotels in Malaysia?
What is the relationship between guests’ satisfaction and corporate image with the hotels in Malaysia?
What is the mediating effect of image on hotel guests’ satisfaction and their loyalty with the hotels in Malaysia?
This research aims to provide an assessment of service quality by empirically examining hotel guests’ perception of process quality and outcome quality; and the relationships between the perceived service quality, customer satisfaction, corporate image and customer loyalty in the Malaysian hotel industry. In order to achieve the aim, a number of research objectives have been designed. These objectives are stated as below:
To assess the influence of process and outcome service quality dimensions on the hotel guests’ perceived service quality in the Malaysian hotel industry.
To evaluate the relationship between the hotel guests’ perceived service quality and their satisfaction level with the hotels in Malaysia.
To explore the impact of hotel guests’ satisfaction level on their loyalty with the hotels in Malaysia.
To evaluate the influence of hotel guests’ satisfaction level on corporate image in the Malaysian hotel industry.
To identify the influence of corporate image on customer loyalty with the hotel in Malaysia.
To examine the mediating role of image on customer satisfaction and customer loyalty in the hotel industry in Malaysia.
Overall, this proposed research attempts to contribute to several fields of study relating to the objectives. In terms of theoretical contribution, this research seeks to further develop this construct (i.e. hotel outcome quality), in order to contribute to the service quality body of knowledge by providing insight on the effect of process quality and outcome quality on hotel guests’ perceptions of service quality; and to examine the relationships between the perceived service quality, customer satisfaction, corporate image and customer loyalty of hotel industry in Malaysia. For managerial contribution, this research will determine aspects of hotel services which are important to customers, and to suggest ways to improve the hotel service quality, customer satisfaction, corporate image and customer loyalty. At the same time, to address practical implications by recommending relevant and effective micro-marketing strategies for the hotel industry in Malaysia. This knowledge is useful for benchmarking better practices in hotel service concept among hotel operators in Malaysia.
In policy contribution, the intended outcomes of this research is important to provide more empirical evidence and guidelines for the Ministry of Culture, Arts and Tourism in drafting relevant policies for the hotel industry in Malaysia to identify the effective ways to improve service quality, and more importantly how the perceived service quality translates into customer satisfaction, corporate image and customer loyalty among hotel operators in the country. For methodological contribution on the other hand, this research will examine and validate service quality suggested by Grönroos (1982; 1990) by empirically examining hotel guests’ perception on process quality and outcome quality. Evaluation of the customer’s perception of hotel service quality and their level of satisfaction are essential to ascertain effective strategies for hotel operators, more importantly to improve customer loyalty and to strengthen corporate image.
Service quality incorporates the concept of meeting and exceeding the expectations of the customer, and has been a frequently studied topic in the service marketing literature since its inception in the late 1970s (Antony, Antony & Ghosh, 2004). During the past few decades service quality has become a main area of attention among practitioners, managers and researchers due to its significant impact on business performance, lower cost, customer satisfaction, customer loyalty and profitability (Seth, Deshmukh & Vrat, 2005). According to Atilgan, Akinci and Aksay (2003), in both domestic and international markets, the importance of service concept is increasingly recognised in parallel with economic development and increasing standards of living. The hospitality industry, especially hotels, is not exception to this rule (Claver, Tarí & Pereira, 2006; Ladhari, 2009b; Mohsin & Lockyer, 2010). Evaluation of customers’ perception and satisfaction of service quality is widely acknowledged as being a favourable strategy in the hotel industry. Consequently, hotel operators are now directing their efforts to understanding how guests perceive the quality of services, and more importantly how these perceptions translate into customer satisfaction and customer loyalty (Ekinci, Dawes & Massey, 2008; Kandampully & Hu, 2007; Ladhari, 2009b; Olorunniwo, Hsu & Udo, 2006).
It is now more than 20 years since the SERVQUAL instrument was first introduced in the service marketing literature by Parasuraman, Zeithaml and Berry (1985). From that time on, its structure and conceptualisation have been replicated, modified and refuted by many scholars (Seth et al., 2005). The previous research using the SERVQUAL instrument has enhanced our understanding in the measurement of service quality. However, one common criticism of SERVQUAL has been the point that the instrument highly emphasises the process quality or service delivery process (Grönroos, 1990; Mongold & Babakus, 1991; Richard & Allaway, 1993). Although, there is no agreement in general as to the basis or content of the service quality dimensions (Brady & Cronin, 2001). Nevertheless, there is a general viewpoint that service quality should be a multidimensional or multi-attribute construct (Cronin & Taylor, 1992; Ekinci et al., 1998; Grönroos, 1990; Kang & James, 2004; Parasuraman et al., 1985, 1988). Richard and Allaway (1993) argued that utilising only process quality attributes to explain and/or predict consumer’s behaviour might be a misspecification of service quality and have low predictive validity.
To this respect, Ekinci et al. (1998) noted that service quality theories which are dominated by multidimensional structures can be formed under two schools of thought, namely the American or European perspective; researchers generally adopt one conceptualisation in their research, (Brady & Cronin, 2001; Ladhari, 2009a; Kang & James, 2004). The focus on process quality attributes is referred to as the American perspective of service quality. Whereas, the European perspective suggests that service quality considers both process quality and outcome quality components. Process quality focuses on “how”, and dictates how the service and its concurrent production and consumption process are received and experienced by customers. Whereas, outcome quality focuses on “what”, and considers issues as after the completion of the service production process when the interactions between providers and their customers have ceased (Chitty et al., 2007; Kang, 2006). Reviews of the past literatures indicate that much of the earlier research in hotel service quality has concentrated on the SERVQUAL instrument, and consequently, on the process quality dimension (Kang & James, 2004). Less effort has been made to the service quality dimensions suggested by Grönroos (1982; 1990) (Ekinci et al., 1998; Kang & James, 2004, Kumar, Smart, Maddern & Maull, 2008), especially in the Malaysian hotel industry.
Customers evaluate quality of service by comparing their expectation with their perception (Parasuraman et al., 1988). In this case, customer satisfaction arises when services, as seen by customers, meets or surpass their anticipation (Reid & Bojanic, 2001). Pittsburgh and Salomon (1994) predicted that a hotel which cannot meet customers’ expectations or fail to fulfil customers’ service requirements would be out of business in seven to nine years. Thus, in order to survive, hotel operators need to build appropriate service standards regarding customers’ wishes and desires (Min, Min, & Chung, 2002). Being able to successfully judge customers’ perceptions and meet their satisfaction would provide hotel operators great advantages over competitors; particularly in terms of product differentiation, increasing tourist retention, encouraging repeat and new customers, positive word of mouth promotion, as well as to enhance the firm’s image in the marketplace (Kandampully and Hu, 2007).
Imagery studies have a long tradition in tourism research (Faullant et al., 2008). The concept of corporate image should incorporate an individual’s overall impression of a company versus it counterparts in the same industry (Keller, 2002). The association between corporate image and a hotel’s offering is much more difficult to pinpoint because of the large intangible component of the hotel’s offer. Kandampully and Hu (2007) noted that a hotel’s corporate image is influence by both service quality and customer satisfaction, they strengthen the hotel’s corporate image in gaining customer loyalty. Thus, the main drive to customer loyalty appears to be through favourable image of the hotel as perceived by the guests. Favourable corporate image of a hotel is created by improving service quality and customer satisfaction. In general, previous empirical studies (Faullant et al., 2008; Kandampully and Hu, 2007) have supported the influence of corporate image on a customer’s hotel decision making process. The results of their empirical investigation in the hospitality setting revealed that an organisation’s corporate image has a critical role in forming perceived service quality, customer satisfaction and more importantly behavioural intentions.
Practitioners as well as academic understood the central importance of customer loyalty to business success (Faullant et al,, 2008). With an understanding of what makes customers return to a hotel, managers can develop a strategy to improve service quality and customer loyalty (Schall, 2003). In general, most researchers agreed that customer satisfaction is likely to have a strong influence on customer loyalty in the hospitality industry (e.g. Back, 2005; Faullant et al., 2008; Kandampuly & Hu, 2007; Mason, Manson, Tideswell & Roberts, 2006). However, the relationship between customer satisfaction and customer loyalty does not seem to be linear, researchers have reported doubts about the predictability of loyalty solely due to customer satisfaction ratings which ignore image as predictor of loyalty (Faullant et al., 2008). This indicates that it is not mere cognitive evaluation of service quality and in turn customer satisfaction but also the more emotional perception of the corporate image that drives loyalty. Inclusion of image and customer satisfaction in one model not only serves to highlight the important of image, but also provides a better explanation for customer loyalty (Faullant et al., 2008; Kandampuly & Hu, 2007; Kandampully & Suhartanto; 2003).
With the identified problem statement, research questions and research objectives in mind; the proposed conceptual framework is constructed on theoretical foundations in perceived service quality (consists of process quality and outcome quality), customer satisfaction, corporate image and customer loyalty. The proposed conceptual framework for this study is presented as below:
As noted in the previous discussions, very few hospitality research has been conducted to investigate the service quality dimensions as proposed by Grönroos (1982; 1990), especially in the Malaysian context. Therefore, this research proposal aims to provide an assessment of service quality by empirically examining hotel guests’ perception of process quality and outcome quality. According to Ekinci et al. (2008, p. 36) “despite a long-term interest in the understanding of customer satisfaction, its relationship with service quality and the consumers’ overall attitude to a service firm is still unclear”. Thus, the literature on hotel service quality to date fails to offer much insight on how perceived service quality may be differentially related to various types of service evaluation, such as service quality and customer satisfaction. As such, the first hypothesis for the proposed study is postulated as below:
The relationship between customer satisfaction and customer loyalty has enjoyed a surge of popularity in the service marketing literature; researchers generally testify that satisfaction is an indicator of customer loyalty (Chitty, 2007; Kandampully & Suhartanto, 2000; Olorunniwo et al., 2006; Schall, 2003). In contrast, it is interesting to note that customer satisfaction may not always be the direct impact in generating favourable customer loyalty in the hotel industry (Bowen & Chen, 2001; Olsen, 2002; Skogland & Siguaw, 2004). The diversity has lead to a gap which needs to be studied. As such, the second hypothesis is postulated as below:
Customer satisfaction not only helps the firm to sustain loyalty from its customers but, more importantly to enhance the firm’s image in the marketplace. According to Kandampully and Hu (2007) the relationship between customer satisfaction and corporate image was also found to be statically significant in the hotel industry. However, the impact of customer satisfaction on corporate image especially in the hospitality literature becomes rare (e.g. Kandampully and Hu, 2007). As such, the third hypothesis is postulated as below:
In general many researchers have reported that the perception of corporate image has an impact that drives hotel loyalty (e.g. Founllant et al., 2008; Han, Hsu & Lee, 2009; Kandampully and Hu, 2007; Kandampully and Suharhanto, 2000, 2003). However, the relationship between corporate image and customer loyalty does not seem to be linear, and may not directly impact on loyalty (Chi & Qu, 2007; Faullant, et al., 2008). This however is rather derived empirically and is less persuasive from a theoretical perspective. Thus, concerning the relationship between image and loyalty there is little agreement among researchers (Faullant et al., 2008; Ryu, Han and Kim, 2008). As such, the forth hypothesis is postulated as below:
According to Faullant et al. (2008), customer satisfaction is an important driver of loyalty. However, it is not a very reliable and not the only determinant of loyalty. Added to this, some researchers have reported doubts about the predictability of loyalty solely due to customer satisfaction ratings which ignore corporate image as predictor of customer loyalty in the hotel industry (e.g. Kandampully and Hu, 2007; Kandampully and Suharhanto, 2000, 2003; Han et al., 2009). They suggested that both corporate image and customer satisfaction should be included when measuring customer loyalty, as this will provide a better explanation for customer loyalty. In view of that, the fifth hypothesis is postulated as below:
Four constructs consisting of perceived service quality, customer satisfaction, corporate image and customer loyalty are operationalised in order to test the proposed research model. For the research design, descriptive research will be used in the research. Convenience sampling will be adopted in this research because the potential sampling units are drawn from those guests who stayed overnight at the hotels in Malaysia during the survey period. The proposed sample size of 400 potential respondents will be taken for the research. The data will be collected through self-administrated questionnaire with multiple scales of each construct and demographic enquiries. The survey questionnaire contains 49 questions relate to hotel guests’ perceptions of service quality, customer satisfaction, corporate image and customer loyalty toward the hotel that they most recently stayed in Malaysia. Respondents are required to indicate their perceptions on each statements based on a 7-point Likert scales, ranging from 1 (strongly disagree) to 7 (strongly agree). The constructs illustrated in Appendix 1 are operationalised by adapting existing items found within a wide range of research literature.
Before assessing the research model it is necessary to establish the validity and reliability of the modified items developed for this research. In order to have a valid construct, the items comprising a construct must be unidimensional. That is, all scales must be congeneric (i.e. measure one and only one latent construct) even though the latent constructs themselves may be intercorrelated. An initial exploratory factor analysis will be conducted for the variables developed for the purpose of this research using SPSS to ascertain the factor structure of the model relative to the hotel industry and other context under study. Structural Equation Modelling (SEM) will be used to analyse the reliability and validity of data and the hypothesised relationships in the proposed research model.
With the identified problem statement, research questions, research objectives and research hypotheses in mind; this research aims to empirically examine hotel guests’ perception of process quality and outcome quality; and to explore the relationships between hotel guests’ perceived service quality, customer satisfaction, corporate image and customer loyalty in the Malaysian hotel industry as proposed in the research model. Hence, this research will determine aspects of services which are important to customers, and to suggest ways to improve the hotel service quality, customer satisfaction, corporate image and customer loyalty. At the same time, to address some practical implications by recommending relevant micro-marketing strategies for the hotel industry in Malaysia.
This is Preview only. If you need the solution of this assignment, please send us email with the complete assignment title: ProfessorKamranA@gmail.com
