Runner Head: LOYALTY OF CUSTOMERS

Relationship between Satisfaction and Loyalty of Customers in the Hotel Industry and Impact of Service Quality on Customer Relationship

By

Acknowledgement

I would take this opportunity to express gratitude my research supervisor, family and associates for their support and guidance without which this research would not have been possible.

Abstract

The complex relationship between basic service and service performance meetings, Customer satisfaction and switching barriers in the formation of satisfaction and Switching intentions were examined in this study. Field studies were conducted in the upper-midscale hotels. Results of structural analysis showed that both core services and performance services meeting a significant impact customer satisfaction, and satisfaction completely mediated the effect of service performance switching intentions. In addition, the test results for the metric deviations indicated that the components of switching barriers (Switching costs, Relational investment, and lack of attractiveness of alternatives) moderated the relationship between satisfaction and switching intentions. In particular, the role of satisfaction derived from service performance in reducing guests' intent to move more when they perceive a high switching costs, relational investment, and lack of alternatives attractive. Based on the results of research, theoretical and practical implications identified and discussed.

In this study, we developed a model that explains the formation of switching intention, considering the relationship between service performances, customer satisfaction and switching barriers (moderator). We conducted a survey sent in the upper-midscale hotels. Based on the results of quantitative analysis, we concluded that these variables have an important role in explaining the intention of switching guests.

Table of Contents

1. INTRODUCTION7

2. LITERATURE REVIEW11

Customer Satisfaction12

3. METHODOLOGY14

Data assemblage and sample profile16

4. RESULTS18

Measurement validation18

Testing for the suggested functional model24

Testing for the role of switching barriers28

5. DISCUSSION44

6. REFERENCES51

7. APPENDIX A.65

Chapter # 1: Introduction

The total cost for acquiring new customers / potential Switcher from a competitor to increase rapidly and substantially exceed the costs of maintaining existing customers (Kotler et al., 2003). Given the adverse effects of customer switching (eg, declining sales and market share, reduced profitability, and increased spending on marketing) (Rust et al., 2005), service providers are mainly engaged in customer retention ([Han and back, 2008] and [ Roos, 2009]). In the housing industry, in particular, there is little product / service differences between hotels and the competition is getting harder (Kandampully and Suhartanto, 2000). In addition, low product differentiation and strong competition in the market have made the hotel clients more difficult and demanding in the selection and consumption of the hotel product (Mattilla, 2001). Thus, to maintain their current share of the market has become the most important task for each hotel ([Han and back, 2006] and [Han and back, 2008]). In order to effectively retain their current customers, hoteliers need to understand why customers switch from one provider to another and identifying the determining factors affecting the client's decision to stay / switch in the hospitality industry.

Previous studies, mostly in marketing and consumer behavior, studied switching services from the client perspective (Bansal and Taylor, 2009). By Sambandam and Lord, 2005 R. Sambandam and Lord, KR, Switching behavior in automobile markets: ...