1818.Knox, S. (1998), Loyalty‐based segmentation and the customer development process, European Management Journal, Vol. 16 No. 6, pp. 729‐737.

Loyalty Behaviour And Relationship Commitment Towards Hotel Services
Carmen Tideswell, Southern Cross University
Abstract
With the proliferation of four and five star hotels internationally, a common strategy aimed at
developing ongoing relationships and fostering customer loyalty with guests has been to
introduce various frequent-stay points schemes. Within the relationship marketing literature,
however, it is commonly recognised that this type of marketing strategy tends to generate
customer attachment to the points program itself, rather than to the service provider. As the
very term ‘relationship’ marketing suggests, service marketers should focus not just on
encouraging repeat purchase (behavioural loyalty), but more so on developing a truly attached
customer who demonstrates key attitudinal behaviours such as an insensitivity to price
increases; active word of mouth promotion about the service and a desire not to switch to
other service providers unless absolutely necessary. When this attitudinal type of loyalty is
considered, it is often found that not many customers are truly loyal. This study explores the
nature of hotel guest loyalty based on a survey of New Zealand residents. The results suggest
that most repeat-user guests are not truly loyal and are only loyal provided a better price deal
is not available elsewhere. The results imply that, unless the hotel industry provides more than
‘points’ to actively promote loyalty, they are unlikely to increase the proportion of guests who
are emotionally committed to the service.
Keywords: customer loyalty; hotel guests; New Zealand; relationship marketing
Background
Types of Customer Loyalty
Loyalty is a complex construct (Javalgi & Moberg, 1997). Two of the fundamental attitudes a
customer most hold towards an organisation in order to be considered loyal are those of trust
and commitment (Morgan & Hunt, 1994; Lewin & Johnson, 1997). Trust is defined as ‘a
willingness to rely on an exchange partner in whom one has confidence’ (Chow & Holden,
1997:p. 278). In a study designed to investigate the trust and commitment dimensions of
loyalty among buyers and sellers within the restaurant industry, Crotts, Coppage and Andibo
(2001: p.196) defined commitment as ‘the desire to continue the relationship and to work to
ensure its continuance’. A variety of researchers have clearly stated that there is a distinct
difference between repeat purchase behaviour and true brand loyalty (Dick & Basu, 1994;

Bloemer & Kasper, 1995; Riley et al, 2001). While attempts to measure loyalty have focused
on the behavioural aspects of repeat purchase, this approach has been somewhat problematic
(Uncles, Dowling & Hammond, 2003; Garland & Gendall, 2004). It does not differentiate
between customers who continue to purchase a given brand out of habit, or because they are
unaware of alternative brands, from a customer who deliberately chooses to stay with one
brand of good or service due to a variety of positive attitudes held about the service provided
(Backman & Crompton, 1991; Dick & Basu, 1994; Odin et al, 2001; Baloglu, 2002). For a
customer to be classified as a truly loyal customer, it is expected that they will demonstrate
strong attitudes and attachment towards the service provider as well as demonstrating
behavioural loyalty (Backman & Crompton, 1991; Dick & Basu, 1994). The most common
attitudes associated with attitudinal loyalty include promoting the service provider to others
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80
through positive word of mouth; resisting attempts by competitors to switch due to a cheaper
price; and a clear intention to continue to reuse the service in the future (Knox, 1998; Bowen
& Shoemaker, 1998).
When Dick and Basu (1994) proposed that customer loyalty contains both a behavioural and
an attitudinal measure, they suggested that consumers could be classified along a two by two
matrix depending on the extent of their repeat patronage (high versus low) and their relative
attitudinal attachment towards the service (high versus low). The position of a customer in the
resultant matrix would ultimately describe the nature of their loyalty to the organisation,
ranging from True Loyalty, Latent Loyalty, Spurious Loyalty to No Loyalty.
True Loyalty describes those customers who have not only used the service on a frequent
basis, but also possess a range of positive attitudes towards the organisation which results in
them spreading many of the other benefits of customer loyalty, such as positive word of
mouth (Dick & Basu, 1994). Customers who are classified as “Latent Loyals” still possess a
wide range of positive attitudes towards the service provider, however their frequency of
purchase is not so high due to limited use of the service in question. “Spurious Loyals”, on the
other hand, regularly frequent the service provider, but often do so more out of habit than
through any real sense of preference for the brand (Dick & Basu, 1994).

Loyalty in the hotel context
Several studies have previously focused on the issue of loyalty specifically in the hotel
industry. Knutson (1988) investigated the hotel guest’s decision to return to a property, but
they did not investigate other loyalty attitudes such as word of mouth or price sensitivity.
Shoemaker and Lewis (1999) also reviewed a range of loyalty generating strategies used in
the hotel industry and noted that for true loyalty to be achieved, tactics should involve
recognition of customers as individuals through personalised services, emotional ‘rewards’
and tailor-made offers. Bowen & Chen (2001) explored the link between customer
satisfaction and customer loyalty. While they concluded that an incremental change in
satisfaction levels would result in a substantial change in loyalty levels, only two aspects of
loyalty were assessed, being intention to return and willingness to recommend the hotel. Price
sensitivity and switching/complaint behaviour, were not addressed. Kim, Han & Lee (2001),
in a Korean hotel context, demonstrated that a stronger customer-hotel relationship did in fact
lead to greater levels of repeat purchase and positive word of mouth, but again they did not
consider the price sensitivity and switching aspects of loyalty.
This study adds to existing research on loyalty in the hospitality context by attempting to
segment hotel users based on their loyalty behaviours towards hotels using the matrix
proposed by Dick & Basu (1994). It focuses on all four attitudinal aspects of loyalty as
previously described. It aims to determine how loyal hotel guests are and the nature of their
loyalty towards properties, based on a sample of New Zealand hotel users.
Methodology
Survey development
A survey was developed containing a range of measures included perceived service quality
dimensions based on Parasuraman, Berry, and Zeithaml (1991); behavioural intentions as
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81
measured by Zeithaml, Berry & Parasuraman (1996); a self-developed scale of variety
seeking behaviour; perceived service innovation and risk perceptions based on Dholakia’s
(2001) scale. Key demographic data was also included.
The current study focuses on the loyalty behaviours of hotel guests based on the 13-item

behavioural intentions scale developed initially by Zeithaml, Berry and Parasuraman (1996)
and later tested by various researchers such as Bloemer, de Ruyter & Wetzels (1999). Four
key dimensions of service loyalty were included– word of mouth promotion; future
repurchase intentions; price sensitivity; and complaint behaviour. The survey commenced by
asking respondents to indicate the extent to which they had used four or five star hotels over
the past five years, followed by nomination of the properties which they had stayed in. They
were then asked to indicate which of these hotels they considered they would stay at again in
the future and which (if any) they considered themselves to have some form of ‘loyalty’
towards. Respondents were also asked, through an open ended question, to define what they
believed the term ‘loyalty’ meant in this context and then to select one particular hotel
property which they considered themselves to be ‘loyal’ to which they were asked to consider
for the remainder of the survey.
Data collection
A pilot study was initially conducted to ensure that the wording of questions was clear and
logical, resulting in the removal of some questions where unnecessary duplication was
evident. For the main study, surveys were distributed to 1,500 New Zealand residents via a
commercial mailing list. The households selected for this study were from a list known as
“Ambitious Achievers” who were known to use luxury hotels. Households within this sample
were selected at random and each received a copy of the survey, a personalized cover letter
stating the purposes of the study, and a reply paid envelope. Two hundred and 18 completed
and useable surveys were returned, equating to a 15 percent response rate.
Results
To explore the different types of loyalty that existed among respondents, a hierarchical cluster
analysis using the within-groups linkage method was performed based on the 13 loyalty
attitudes and behaviours. A range of solutions were initially considered, with the final four
cluster solution reported in Table 1 selected as it was the most logical and interpretable, while
still being parsimonious. Table 1 reports the range of loyalty attitudes adopted by members of
each cluster using the average response across a five point likert-type scale where 1 = strongly
disagree and 5 = strongly agree. Three key measures of behavioural loyalty (number of times
visited hotel in last five years; year of first stay (length of association); and number of hotels

intending to reuse in the future) are also reported. Key demographic characteristics of each
cluster are also presented for profiling purposes, along with significance levels associated
with the differences between clusters (see final column).
The four cluster solution is similar, but not identical, to the nature of segments suggested by
Dick & Basu (1994). The first cluster termed ‘Uncommitted Repeat Users’ (28 percent) have
no real attitudinal loyalty to the hotel they selected and the evidence of behavioural loyalty is
low as they stayed there less than once a year on average. They do not demonstrate any real
attitudinal loyalty despite having used the hotels on several occasions. They are highly
sensitive to better prices offered by competitors; and do not spread positive word of mouth in
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general. They would definitely switch to competitors if they had trouble with the hotel in
question and they hold no firm intentions to do more business with the hotel.
Table 1: Cluster Analysis of Guest Loyalty Attitudes and Behaviours
Uncommitted
Repeat users
n = 49 (28%)
Spurious
Loyals
n = 94 (52%)
True Loyals
n = 18 (10%)
Conditional
Loyals
n = 17 (10%)
Significance
Level
Behavioural Loyalty
Times Visited Hotel in last 5 years 4.8 6.9 11.1 8.0
0.068

Year of first stay in hotel 1998 1996 1993 1995
0.155
Number of hotels intending to return to 2.7 2.8 2.7 2.1
0.446
Attitudinal Loyalty
PRICE SENSITIVITY Average Score (where 5 = strongly agree)
I am willing to pay a higher price than other hotels
charge for the benefits I receive from this hotel
2.2 2.8 4.2 3.5
0.000
I will stay with a competitor hotel property if it
offers more attractive prices
4.3 4.1 1.8 2.5
0.000
I would book my stay at a competitor hotel if it
offered more attractive rates 4.0 4.0 1.9 2.8 0.000
WORD OF MOUTH
I say positive things about this hotel to other
people 3.7 4.2 4.7 4.4 0.000
I encourage friends and relatives to do business
with this hotel 3.0 3.7 4.8 4.2 0.000
I recommend this hotel to people who are looking
for advice on hotels 3.2 4.0 4.4 4.2 0.000
COMPLAINT BEHAVIOUR
I will complain to other consumers if I experience
a problem with this hotel
3.8 3.9 3.4 4.2
0.047
I will complain to an external agency if I
experience a problem with this hotel 2.4 2.6 1.7 2.7 0.000

I will switch to a competitor hotel if I experience a
problem with this 4.0 3.7 2.8 3.7 0.000
I will complain to the hotel’s staff if I experience a
problem with its services 4.1 4.1 4.4 4.4 0.134
INTENTIONS TO RETURN
I consider this hotel my first choice of property to
stay at when I travel
2.3 3.6 4.5 4.1
0.000
I will do more business with this hotel in the next
few years 3.6 3.8 4.8 4.1 0.000
I will do less business with this hotel in the next
few years
2.9 2.8 1.7 2.3
0.000
Personal Characteristics of Guest
% male respondents 53 47 61 47
0.707
% in 36-45 age group 20 21 28 31
% in 46-55 age group 41 42 22 25
0.561
% with household income over $150,000 24 34 50 63
% who stayed in hotel for business 25 22 28 24
0.996
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The ‘Spurious Loyal’ segment (52 percent) had a higher rate of past use and had held a longer
association with the hotel in general (since 1996 on average), but also demonstrated low
levels of attitudinal loyalty. While they indicated they spread positive word of mouth about
the hotel to others, they would still switch properties if problems occurred and were easily

attracted by competitor prices.
Only 10 percent of respondents in this study could be classified as ‘True Loyals’, exhibiting
both high behavioural loyalty (more than 2 stays per year on average) and high attitudinal
loyalty. They were not attracted to stay with competitors due to better prices; they were very
strong word of mouth promoters for the property which they were loyal to and had a strong
intention to return. While they will complain internally if problems occur with their preferred
hotel, they would not do so externally and were unlikely to switch to competitors.
The final group ‘Conditional Loyals’ (10 percent) are somewhat different to the final group
suggested by Dick & Basu (1994). Rather than being ‘latent loyals’ who have low repeat
patronage but high attitudinal loyalty, Conditional Loyals do have relatively higher
behavioural loyalty than the first two clusters (8 stays in five years on average), but their
attitudinal loyalty is only high providing that no service failures occur. While they shown
some signs of strong loyalty such as promoting the hotel through word of mouth and being
resistant to better prices offered by competitors, they are not so loyal that they will stay with
the hotel if any problems occur. In fact they will clearly switch hotels if something goes
wrong and complain to other consumers as a result.
Discussion
According to the results of this study, only a small proportion of hotel users who demonstrate
repeat visitation fit the description of ‘truly loyal’ guests as defined by Dick & Basu (1994).
By far the majority of respondents in this study were shown to be ‘spuriously loyal’,
demonstrating relatively high repeat patronage, but relatively low attitudinal commitment to
the property. There appears to be no significantly different personal characteristics that
distinguish one group of hotel users from another in this study. There was no particular
gender bias in any cluster, any unique age characteristics, or particularly different reasons for
staying in their chosen hotels. Perhaps the only characteristic which distinguishes True Loyals
and Conditionally Loyal guests from other groups is that they tended to have higher incomes
which may explain their relatively higher frequency of use of these hotels.
While this study is based on a relatively small sample and is focussed specifically on the New
Zealand environment, it does present some challenging implications for the hotel industry.
One conclusion that can be made is that few guests who have used a particular hotel on

multiple occasions actually have any real attitudinal loyalty towards the service. As such,
hotels need to be aware that marketing strategies, such as frequent-stay programs, that are
aimed primarily at encouraging repeat use do not necessarily create the emotional, attitudinal
types of loyalty the industry may desire. Most guests, according to this study, are still highly
sensitive to better price offerings by competing properties; do not spread a lot of positive
word of mouth for the hotels they use on a regular basis and will certainly switch properties if
anything goes wrong with their current choice. The hotel industry must, therefore, devise
other strategies for fostering true loyalty through the provision of quality service, specialised
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attention to customer detail as a reward for loyalty and value-based incentives rather than just
points.
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