Customer loyalty in vietnams hotel industry, the role of service quality, customer satisfaction, hotel image and customer delight

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
-----------------------------Do AnhQuan

CUSTOMER LOYALTY IN VIETNAM’S HOTEL INDUSTRY:
THE ROLE OF SERVICE QUALITY, CUSTOMER SATISFACTION,
HOTELIMAGE AND CUSTOMER DELIGHT

ID: 22120025
MBUS 3.1

MASTER OF BUSINESS (Honors)
SUPERVISOR:
Prof. Nguyen Dong Phong
Dr. Nguyen Phong Nguyen

Ho Chi Minh City - 2015


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ACKOWLEDGEMENT
I would like to express my sincere gratitude to Prof. Nguyen Dong Phongand
Dr. Nguyen Phong Nguyenfor their advice and supervision to complete the thesis.
I wish to thank you for my colleagues, friends and family for their support
and encouragement during the process of thesis writing.
I would like to thank allstaff from International School of Business-UEH for
their time with providing me necessary information.


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ABSTRACT
The purpose of this research is to contribute to the understanding of how
customer loyalty is developed within the context of the Vietnam’s hotel industry.A
questionnaire is developed based on previously measurement scales and then sent to
3-star hotel guests in central of Ho Chi Minh and Ha Noi City. Theresearch provides
an insight into the role of service quality, customer satisfaction, image and customer
delight in enhancing customer loyalty. The result proposes that loyalty of hotel
guests influence the most by customer delight, which is followed by customer
satisfaction and hotel image.
Keywords: hotels, restaurants, service quality, customer satisfaction, image,
customer delight, customer loyalty


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TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................. 4
Chapter 1 ........................................................................................................... 8
INTRODUCTION ............................................................................................ 8
1.1 Background ............................................................................................. 8
1.1.1 The crucial role of hotel industry in Vietnam .................................. 8
1.1.2 Benefits of customers loyalty ........................................................... 9
1.2 Research gap ......................................................................................... 10
1.3 Research objective ................................................................................ 11
1.4 Research scope ...................................................................................... 11
1.5 Contributions and implications ............................................................. 12
1.6 Structure of the thesis ........................................................................... 12
Chapter 2 ......................................................................................................... 13
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT ............. 13

2.1 Theoretical background ........................................................................ 13
2.2 The hypothesis development and proposed model ............................... 19
2.2.1 Relationship between service quality and customer loyalty ..........19
2.2.2 Relationship between customer satisfaction and customer loyalty
...........................................................................................................................

20

2.2.3 Relationship between hotel image and customer loyalty ..............20
2.2.4 Relationship between customer delight and loyalty ...................... 20
2.2.5 The proposed model ....................................................................... 22


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Chapter 3 ......................................................................................................... 23
RESEARCH METHODOLOGY ................................................................... 23
3.1 Measurement scales .............................................................................. 23
3.2 Sampling ............................................................................................... 26
3.3 Data collection methods ....................................................................... 27
3.4 Data analysis method ............................................................................ 27
3.4.1 Statistical method............................................................................... 27
3.4.2 Descriptive statistics .......................................................................... 27
3.4.3 Reliability analysis............................................................................. 28
3.4.4 Exploratory factor analysis (EFA) .............................................. 28
3.5.5 Multiple regression analysis .......................................................... 28
CHAPTER 4 ................................................................................................... 29
DATA ANALYSIS ........................................................................................ 29
4.1 Descriptive analysis .............................................................................. 29
4.2 Assessment and refinement of measurement scale .............................. 29

4.2.1 Cronbach’s Alpha .......................................................................... 30
4.2.2 Exploratory Factor Analysis (EFA) .............................................. 33
4.3 Pearson Correlations ............................................................................. 34
4.4 Multiple Linear Regression .................................................................. 35
4.4.1 Test of assumptions ........................................................................ 35
4.4.2 Regression analysis ....................................................................... 36
4.5 Discussion of findings .......................................................................... 38


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CHAPTER 5 ................................................................................................... 41
CONCLUSION ............................................................................................... 41
5.1 Summary of research finding and limitation ........................................ 41
5.2 Managerial implications ....................................................................... 41
5.2.1 Implications for hoteliers in Vietnam ............................................ 41
5.2.2 Implications for educators in local higher education institutions 44
5.3 Limitation and further research direction ............................................. 47

APENDICES
Appendix A: Questionnaire
Appendix B: EFA’sresults
Appendix C: Test of assumption


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LIST OF FIGURES
Figure 2.1: The proposed model.................................................................................... 22
Figure 3.1: Measurement scales..................................................................................... 25

LIST OF TABLES
Table4.1: Descriptive analysis........................................................................................ 29
Table4.2: Reliability Analysis of Dependent Factor.............................................. 30
Table4.3: Reliability Analysis of Independent Factor........................................... 31
Table4.4: Pearson Correlations result.......................................................................... 34
Table4.5: Regression analysis result............................................................................ 36
Table4.6: Hypotheses testing results............................................................................ 38


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Chapter 1
INTRODUCTION
1.1 Background
1.1.1 The crucial role of hotel industry in Vietnam
Since the economic reform in 1986, Vietnam had achieved the dramatic
development in all aspects including economy, education and culture. The entry into
ASEAN in 1995 and WTO in 2007 brought a boost to the hotel industry of Vietnam,
a developing country with free-market-oriented economy. Over the past years, the
hotel industry has made strong development and gradually integrates into the global
development process. In the Grant Thornton Vietnam’s “Vietnam Lodging Industry
- Executive Summary of the Hotel Survey 2013” in June 2014, they report that
Vietnam welcomed7,572,352 international visitors, increasing by 10.6% in
comparison with 2012, exceeded the expected 7.2 million international tourist
arrivals for the year. Together with that, a combination of strong economic growth,
rising income levels, a growing middle class, a sizeable and growing youth
population, and increasing exposure to Western lifestyle has fueled the rapid growth
of the lodging sector in Vietnam. The sector is expected to continue to growin years
to come as the government continues to emphasize tourism in their economic growth

plans, from exploring the “hidden charm” to developing “timeless charm” of the
country. Nonetheless, Vietnam is not ready for a large influx of tourists as well as
domestic sizeable youth population at the moment as there are a number of
constraints hindering its development, and innovations in retaining customers is one
of the most important aspects that hotel industry in Vietnam should manage
effectively.
The tourism has been considered playing important role in creating jobs,
developing the country’s economy. In fact, as travel has been developing rapidly


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with series of beautiful landscapes, specialties and very friendly locals, together with
more businesses are being dealt with, the request for temporary accommodations has
been increased.However, in this emerging market, not only many multinational
groups have been entering the market, but also a number of startups founded by
local businesspeople or Vietkieu have been finding their path to gain the market
share. Effort by the government and media has educated the population become
smart consumers; especially those in urban areas like Ho Chi Minh City and Hanoi,
where the consumers have a variety of choices for lodging services. Hundreds of
new hotels which have met the standards of serving international tourists have been
built (up to 686 hotels from 3 to 5-start hotels in 2013, according to Grant Thornton
Vietnam’s report 2014). The art of retaining customers has been in the urgent need
of all the players in this competitive playground, and identifying factors affecting
customer loyalty in light of service quality has become significant than ever before.
1.1.2 Benefits of customers loyalty
Kotler and Amstrong (2001) proposes that if companies lose a customer, they
may lose the customer throughout his/her purchasing lifetime.It is obvious that
loyalty has effect on financial health through steady cash-flow and repeated
customers. Patterson (1997) reassures this point by stating that companies with large

group of loyal clients can earn more seven percentages in price, as customers are
less price sensitive. Furthermore, Cheng et al. (2011) and Tu et al. (2011) also agree
that companies will spend at least five to nine time in attracting a new customer
rather than retaining an old one; and the company profit can be increased 25-85%
once loyalty is up by five percent effectively. Therefore, long-term strategy should
emphasize on customer retention than obtaining new ones in order to reduce the
expenditures on money and time. This strategy will bring a long-term or short-term
profit by maintaining a long-term relationship with customers. Dharmalingam et al.
(2011) are of the same opinion and point out some advantages of customer loyalty:


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(1) cheaper service cost than obtaining new customers, (2) possibility of paying
higher cost for a set of products, and (3) acting as a word-of-mouth marketing agent.
Tu et al. (2011) summarizes the benefits of loyal customers as follows: (1)more
frequent purchases, (2) expenditure on trying new products or services, (3)
recommendations on products and services to others, and (4) sincere suggestions.
Although the arguments about benefits of loyalty are evident, hotels in the emerging
market like Vietnam are struggling on how to create real commitment of customers
illustratting by the motivation of purchasing services without any encouragement.
In light of the above observation, the research will identify factors that affect
customer loyalty in Vietnam’s hotel sector; specifically, it will test the positive
relationship of service quality, customer satisfaction, hotel image and customer
delight on consumer loyalty in the mentioned context. Somerecommendations based
on the findings will benefit both hoteliers and educators in Vietnam.
1.2 Research gap
Factors affecting customer loyalty in hotel sector has become interest of
many researchers. However, due to their own essentials and restrictions, or the
difference of the sample sizes of the survey, cultural values of every country,

environment, income and emotions of respondents at the time of filling surveys,
there is no common research model and implication within those researches.
Besides, the model is also different from context to context and the relationship
between those variables has been in different ways. Moreover, the influence of those
factors is also different between hotel and service sector and the researcher hardly
found study comparing those two sectors. Hoteliers should identify and develop
factors that will give them the opportunities in long-term competitive advantages,
i.e. factors affecting customer loyalty. Those drivers are no longer the tangible offer;
they are also the intangible ones like service quality leading to image and
satisfaction enhancement (Kandampully& Hu, 2007).


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InVietnamese context, only a few publicized studies research about customer
loyalty in hotel sector. For instance, Khuong et al. (2015) on their study about
factors of affecting guests’ satisfaction and loyaltyof Vietnam’s luxury hotel sector,
they aim at testing the effect of service quality and hotel image on the satisfaction
and loyalty.Another study that somehow related to loyalty is study of Tuan and Linh
(2014), in which they show the positive relationship between customer service and
satisfaction of a5-star hotel in Hanoi City. From these evidences, it is worth noting
that study about 3-star hotel in Vietnam is not easy to be found. Besides, in the
competitive market like in Vietnam recently, hotels should take into consideration
the importance of “customer delight” to enhance the level of loyalty. Therefore, this
study aims at testing the factors affecting customer loyalty of 3-star hotel in
Vietnam, adding “customer delight” as a direct factor of customer loyalty.
1.3 Research objective
The primary objective of the research is to examine the degree to which
service quality, customer satisfaction, hotel image and customer delight influence on
customer loyalty.

1.4 Research scope
The research targets at individuals who are using services at hotels in big
cities like Ho Chi Minh City and Hanoi, mainly among medium-price market
segment; specifically, 3-star hotels are chosen in the study.Questionnaires were
delivered to hotels in the center of the cities as well as to well-known places in the
cities. The reason of not choosing 5-star or 4-star hotels as sample size of study is
that the limited access to respondents of hotels inthis market segment and interest of
the authors in 3-star hotels as hoteliers of 3-star hotels. Experiencing inhotel
industry, the author is interested in finding the most effective approach to enhance
customer loyalty at his own enterprise, as well as to gain an insights into customers’
needs and wants of the market.


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1.5 Contributions and implications
This research provides insights into customer loyalty in Vietnam’s hotel
sector as well as introduces a factor predicting such the loyalty called “customer
delight”; additionally, the study also tests the ability and applicability of proposed
research model and the usability of constructs’ measured items in Vietnam’s
background. Its generalizability can specifically guide educators and hoteliers in the
country.
1.6 Structure of the thesis
The research has been structured in the following manner: it begins by
reviewing the literature for each variable considered in the study (service quality,
customer satisfaction, hotel image, customer delight and customer loyalty) and then
goes on to formulate the hypotheses for the proposed model. Then, the author
describes the methodology and design aspects of the research.
Chapter

1

“Introduction”

includes

a

brief

overview

of

the

researchbackground, problems and objectives, methodology as well as the
implication.Chapter 2“Literature review” comprises ofdefinition related to restaurant
services, deep review of previous researches on customer loyalty, corporate image,
service quality and customer satisfaction and the basis ofbuilding the conceptual
model.Chapter

3

“Research

methodology”

presents

the

research

process,measurement scale, preliminary assessment of measures and data
collectionprocedures as well as the data analyses process.Chapter 4 “Data analysis”
consists of the officialassessment of measures, hypotheses testing, data analysis
results andinterpretation.Chapter 5 “Conclusion” concludes the findings and
providing managerial implications and proposing specificrecommendations for
improving customer loyalty in hotel sector in Vietnam.


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Chapter 2
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
2.1 Theoretical background
Service quality.Among the service industries, tourism and hospitality is one
of the most sensitive fields to quality issues, so there is an ongoing need for original
empirical research on certain aspects of quality (Atilgan, Akinci&Aksoy, 2003).
Furthermore, Kandampully and Suhartanto(2000) stress the importance of quality of
hospitality firms as a main driving force to come up with competitive challenges.
Similarly, Hu, Kandampullyand Juwaheer(2009) view service quality as mean
assisting companies to differentiate from competitors to contribute to market share;
thus, the service quality has become avital factor for the survival and competition of
a firm. Hudson, Hudson and Miller (2004) prove that service quality receives
increasing attention in the literature, yet there is no consensus of which measure
offers the greatest validity. Grönroos (1984) identifies two dimensions of service
quality: functional quality (“how” service is performed) and technical quality
(“what” the customer receives from the service experience). The three main

measurements to analyze the concept of quality in service industry are the
Importance-Performance Analysis (IPA), SERVQUAL and SERVPREF. Introduced
in 1977 by Martilla and James, IPA is originally applied to the service department of
an automobile dealer and has been applied to the healthcare market, dental practices,
banking services, hotel industry, adult education, tourism policy and tourist
destination (Hudson et al., 2004). The currently popular measurement of service
quality can be traced to the research of Panasuraman, Zeithaml, and Berry (1985) in
which they defines service quality as a difference between what customersexpect
from service performance and their perceptions of what is delivered. Moreover, the
evaluation of service quality is more difficult than product quality as service needs a
whole process to be evaluated. Therefore, to develop determinants of service quality,


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the authors implement a series of focus group sessions and determine that service
quality has 10 determinants. Later on, in 1988, they recast those determinants into
five specific components: tangibles, reliability, responsiveness, assurance, and
empathy called SERVQUAL scale. In the scale, service quality is measured by
identifying the gaps between customers’ expectations and their perceptions of the
actual service performance by seven-point Linkert scale with 22 items grouped into
five dimensions as follows:
• tangibles – physical facilities, equipment and appearance of personnel;
• reliability – ability to perform the promised service dependently and
accurately;
• responsiveness – willingness to help customer and provide prompt service;
• assurance – knowledge and courtesy of employees and their ability to
inspire trust and confidence;
• empathy – caring, individualized attention the firm provide to its customer.
However, the validity of the two mentioned scale has been questioned. Oh

(2001) points out that the main limitation of IPA is in the survey instrument where
the Linkert scale cannot differentiate between level of importance and importance of
performance. SERVQUAL scale is argued about the consistency of the five
components when subjected to cross-sectional analysis (Carman, 1990) and
SERVQUAL conceptualization is only adopted in only a few industries(Cronin &
Taylor, 1992). They all agree that performance-based measures of service quality
should be used. Cronin and Taylor (1992, 1994) confirms that the performancebased scale developed (SERVPREF) is more efficient than SERVQUAL scale since
it explains more of variation in service quality. In light of this opinion, the study
suggests that performance-based scale should be implemented in measure service
quality.


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Hotel image.Bitner (1990) and Nguyen (2006) identify image as an
important predictor of customers’ evaluation of a company and is the first thing
customers think about when hearing a company’s name.Nguyen and LeBlanc (1998)
consider image as a combination of product characteristics differentiating from
physical product, as subjective knowledge and as an attitude. Furthermore, what
customers stored in memory about ideas, feelings, and previous experiences with an
organization will comprise image. Similarly, Barich and Kotler (1991) agree on the
representative ability of image for the impressions and associations, the beliefs and
attitudes that customers may memorize when experiencing with a company.Mazanec
(1995) also reports that there is a positively relationship between image and
customer preference (a dimension of customer loyalty). Kandampully and Hu (2007)
argue that there are two principal components of corporate image, one is functionalis
related to easily-to-measure tangible characteristics, one is emotionalassociated with
feelings and attitudes towards an organization.To be more specific, Keller (1993)
refers that brand image is associated with a series of perception of a specific brand
that consumers may formulate through activities related to that brand. Brand image

is recalled once customers experience some features of product or service and is
considered as the symbolic meaningsof that brand (Padgett & Allen, 1997).
Additionally, Low and Lamb (2000, p.352) defines brand image as “the reasoned or
emotional perceptions consumers associate to specific brand”. The implication of
various aspects of the hotel operation, including seven services marketing variables
(product, place, promotion, people, process, and physical evidence) may directly
affect hotel image. Therefore, hotel should manage the marketing activity in
accordance with the image. Altogether, this study refers hotel image as the sum of
the emotional perceptions, ideas and symbolic characteristics when customer
encounter service of hotel or restaurant.


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Customer satisfaction.Customer satisfaction is believed to be a leading
factor of customer loyalty since it enhances the company’s profit (Kim, Vogt &
Knutson, 2013). Yi (1990) is also on the same page as the author agrees that
customer satisfaction is a central concept of marketing as if firms know how to
deliver a product together with satisfaction to customer, i.e. meet the needs and
wants of customers, then the company will obtain profit in return. Hunt (1977)
defines satisfaction as “an evaluation rendered that the consumption experiences was
at least as good as it was supposed to be” (p.459). Oliver (1981) observes that
satisfaction is the confirmation or disconfirmation of customers’ perception of
service performance when comparing with the expectation, i.e., hedefines
satisfaction as “a summary psychological state resulting when the emotion
surrounding disconfirmed expectations is coupled with the consumers’ prior feelings
about the consumption experience” (p.27). He differentiates between satisfaction
and perceived service quality in which satisfaction is related to a specific transaction
whereas service quality is involved in the superiority of the service, i.e. satisfactionis
the emotional response from a cognitive process of judging the service received

against the costs of obtaining the service. The common belief of customer
satisfaction is an overall attitude towards a service provider. Customers really want a
common feature between their values (needs and wants) and the objects of their
evaluations (Parker and Mathews, 2001). Furthermore, Kotler (2003) argues that
satisfaction is the feelings of pleasure or disappointment when they compare
between perceived performance and their expectations; therefore, their feeling is
based on the compatibility between perceived performance and expectations, from
dissatisfaction, neutral stage or satisfaction. In light of all previous researches, the
studyconsiders satisfaction is an overall evaluation of customers towards the
difference between what they expect and what they actually perceive of a service
performance.


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Customer delight.Customer satisfaction has been researched and convinced
as premium goal in service industry, yet the researches about satisfaction leading to
customer loyalty has been challenged these days (Skogland&Siguaw, 2004; Voss,
Roth & Chase, 2008). The researchers are interested in finding a factor that takes
into consideration both emotional aspects and peak experience called “customer
delight” (Torres, Fu &Lehto, 2014). Torres and Kline (2006) suggest that in recent
literature, firms strive to not only achieve loyalty from satisfaction but also
transform themselves to a higher level of satisfying customers – delighting
customers to earn more loyalty and higher profit.There are three approaches to
definition of customer delight in current literature, one definition stresses the
confirmation–disconfirmation paradigm, one stressesaffect-based approach, and the
last one stresses on human needs. The first approach proposes that customer delight
is achieved when customers encounter services that can please them beyond the
level of satisfaction (Patterson, 1997), i.e. customer delight will be generated at the
degree beyond the tolerance thresholds of customers (Keinningham et al., 1999).

The second approach proposes that customer delight consists of the emotions of joy,
thrill, and exhilaration (Kumar et al., 2001) and it really is an emotional response
resulting from surprising and positive levels of performance (Finn, 2005). The last
approach proposes that customer delight is a function of the satisfaction of three
human needs: security, justice, and self-esteem (Schneider and Bowen, 1999).Based
on the literature review, this study supports the conceptualization of customer
delight as an emotional response which is based on joy, thrill, and exhilaration.
Customer loyalty.Setó-Pamies (2012) observes that loyalty is genuinely
described as a type of customer behavior towards a particular brand over time.
Oracle Corporation (2005) considers loyalty is generated from a series of interaction
between customers and companies during customers’ purchasing experience and it
will ensure the future purchase. Once companies earn customers’ loyalty, there will


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be a lower chance of finding potential alternatives and a higher chance of
consistentre-patronize (Marshall, 2010). Therefore, Bagdonienė&Jakštaitė (2007)
suggest that companies should focus on enhancing customer loyalty through
effective marketing strategy as a primary strategy. The implementation of this
strategy is to make customers feel involved in a win-win situation which leads to a
more favorable perception toward the company and word-of-mouth, lower price
sensitivity, less expenditure on obtaining new customers and higher profit. Loyalty
is not only in the form of behavior but also in a deeper form, attitude. In the former,
customers are not considered as loyal in case they keep using the services because
they have no alternatives to the sources of providers. The latter assists the idea of repatronizing customers even when they have potential alternatives. The emotional
background of loyalty is in the form of combination between feelings, expectations
and relations with staff, whereas the rational background is associated with thinking,
availability ofinformation and its understanding, cognition of organization activities’
processes.McCain et al. (2005) assert that customer loyalty is summated by the

process of cognitive–affective–conation–action pattern and a consumer can become
loyal at any of these four phases. Customers firstly evaluate one brand’s service as
superior than other alternatives and then find way to experience the service to
develop a positive attitude toward the brand. In the third loyalty phase, customers
commit to return to patronize, which is followed by the last phase transforming the
intention into readiness to act. In light of previous research, the study defines a
customer as loyal when they possess repurchase intention, price insensitivity,
positive word-of-mouth and frequent purchase and no switching behavior.


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2.2 The hypothesis development and proposed model
2.2.1 Relationship between service quality and customer loyalty
There are many studies prove the positive relationship between service quality and
customer loyalty. Kandampully et al. (2011) says that service quality is one of the
most crucial factor for survival and development for hotels, once a hotel can acquire
high level of service quality, it can meet the requirements of a successful
competition like loyalty and profitability. Panasuraman and Grewal (2000) agrees
that customers have been no longer compromised with the quality offered by service
providers, hence the enterprises should better stand from the crowd with their unique
standard of service and that the competitors cannot duplicate with. If the indicators
of customer loyalty are repurchase intention or positive word-of-mouth
recommendation, numerous studies have investigated the positively direct
relationship between quality and loyalty(Parasuraman et al., 1991; Getty &
Thompson,1994;Kangis& Zhang, 2000). Similarly, Chow et al. (2007) figure out
that a high level of service quality is associated with frequent patronage.However,
some studies agree on both direct and indirect relationship between service quality
and customer loyalty. For instance,Cronin et al. (2000)prove on their study that the
direct relationship appears in fast‐food services, spectator sport, participative sport,

and entertainment, and the indirect one does so in long‐distance carrier and health‐
care services. In hotel industry,Baker and Crompton (2000) andAlexandris et al.
(2002) support the theory of positively direct relationship between service quality
and behavioral intent - which is very closely to loyalty.On the basis of the above
discussion, the following hypothesis is proposed:
H1: Service quality positively affects customer loyalty.


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2.2.2 Relationship between customer satisfaction and customer loyalty
Thomas (2013) clarifies the positive relationship between satisfaction and
repurchase intentions or likelihood of recommending a product or service, i.e.,
satisfaction can lead to repurchase and word-of-mouth communication, which in the
long run will become customer loyalty. Anton (1996) and Cronin and Taylor’s
(1992) finding reveals that satisfaction is a significant antecedent of positive
behavioral intention in service sector; hence, a dissatisfied customer are likely to
spread negative word- of-mouth and spending less while a satisfied customers act in
a vice versa way.In hotel industry, Kandampully and Suhartanto(2000, 2003) find
that among housekeeping, reception, F&B and price, satisfaction with housekeeping
is the strongest factor in determining customers’ intention to repurchase and
recommend. Riadh (2009) explores that emotionsatisfaction significantly impact on
loyalty in a direct manner. From that, the following hypothesis is proposed:
H2: Customer satisfaction positively affects customer loyalty.
2.2.3 Relationship between hotel image and customer loyalty
The overall image of the service firm is influenced by service quality and
customer satisfaction (Hu et al., 2009). Heung, Mok, and Kwan (1996) explore that
hotel image is an important contributing factor to enhancing customerloyalty.
Furthermore, Kandampully and Suhartanto (2000, 2003) and Kandampullyet al.
(2011) reassure the positive role of image on the level of loyalty of hotel guests. As

proved earlier in this paper, many evidences prove a strong role of image as an
antecedent of customer loyalty and the following hypothesis is proposed:
H3: Image positively affects customer loyalty.
2.2.4 Relationship between customer delight and loyalty
In recent years, instead of customer satisfaction, the attention has been shifted
to customer delight to be one of the strongest predictor of managing guest relations


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(Torres et al., 2014). Arnold et al. (2005) states that outcomes of delight have
generally focused on repurchaseintentions and customer loyalty. Additionally,
delight is reviewed as one of the last stage to measure post-purchase customer
responses, they are: outrage/pain, dissatisfaction, satisfaction, and delight (Berman,
2005). Between satisfaction and delight, customer delight is considered as a stronger
predictor of customer loyalty, positive word of mouth, and repeat purchase intent
(Torres &Kline, 2006). In light of this, Kim (2011) and Torres and Klight (2006) has
also found that customer delight is considered as a better measurement in managing
customer relationship, i.e. delight is likely to generate positive business results such
as word‐of‐mouth communications, loyalty and increased profitability. Paul (2000)
concludes that the task of delighting customers is all about delivering a service that
is outstanding and stimulates customer acceptance towards a firm, which in turn
generates a positive word‐of‐mouth communication. To sum up, customer delight is
also proved to be a strong indicator of customer loyalty in the work of Oliver et al.
(1997), Torres and Kline (2006), Goswami and Sarma (2014), and Kim et al.
(2013).On the basis of the above discussion, the following hypothesis is proposed:
H4: Customer delight positively affects customer loyalty.


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2.2.5 The proposed model
The research on antecedents of customer loyalty has been an interest of
researchers in literature review with many proposed model and suggestion on the
antecedents. As per the mentioned hypotheses, the research model is proposed as
below:
Service quality
H1
Customer satisfaction
H2
Customer loyalty
Hotel image

H3

H4
Customer delight

Figure 2.1.The proposed model.


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Chapter 3
RESEARCH METHODOLOGY
The research was designed with a clear objective of identifying factors
affecting customer loyalty in hotel industry. The literature review session revealed
previous studies researching relevant variables in the researched model. The
research methodology explained the method of collecting data, the source,
measurement scale, sampling techniques and also the data analysis method. The

research methodology in this chapter started with a pilot study and was analysed
afterwards to research further on the collected data in order to make conclusion and
discussion from that.
3.1 Measurement scales
The research model consisted of five variables and their measurements were
based on previous studies: a dependent variable customer loyalty, and four
independent variables (service quality, customer satisfaction, hotel image and
customer delight). Since SERQUAL scale developed by Panasuraman et al. (1985),
service quality has been a widely studied and modified construct. However, for the
purpose of explaining variance in dependent constructs, many researchers have
supported the use of performance perceptions in measure of service quality
(Panasuraman et al., 1998Zeithaml et al., 1996). In light of previous researches
(Cronin et al., 2000; Hudson et al., 2004; Martina & Irene, 2006), this study applied
the performance-based service quality measure (SQP) in measuring the service
quality scale with 10-item scale on a seven-point Linkert scale (1: “very low” to 7:
“very high”). The measurement of customer satisfaction is a four-item scale adapted
from work of Ryu, Han and Kim (2008) on a seven-point Linkert scale (1: “strongly
disagree” to 7: “strongly agree”) with statement like “The overall feeling I got from
the hotel was satisfied.”. For the measurement of hotel image, items from work of
Milfelner, Snoj and Korda (2011) were adapted with statement like “I think most


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people have a positive opinion about this hotel”, on a seven-point Linkert scale (1:
“strongly disagree” to 7: “strongly agree”). A six-item scale from work of Kim et al.
(2013) was adopted to measure customer delight by a seven-point Linkert scale (1:
“strongly disagree” to 7: “strongly agree”), with statement like “I felt delighted at
some time during my stay at this hotel”. A five-item scale was adopted from work of
Zelthaml et al. (1996) to measure customer loyalty construct, accompanied by a

seven-point Linkert scale (1: “not at all likely” to 7:”exetremely likely”) with
statement like “I will say positive thing about this hotel / restaurant to other people."


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SQ1
SQ2
SQ3
SQ4
SQ5
SQ6

Service quality
Generally, the employees provide service reliability,
consistently, and dependably.
Generally, the employees are willing and able to provide
service in a timely manner.
Generally, the employees are competent (i.e., knowledgeable
and skillful).
Generally, the employees are approachable and easy to
contact.
Generally, the employees are courteous, polite, and respectful.
Cronin et al. (2000)
Generally, the employees listen to me and speak in a language

that I can understand.
Generally, the employees are trustworthy, believable, and
honest.
SQ8

Generally, this facility provides an environment that is free
from danger, risk, or doubt.
SQ9
Generally, the employees make the effort to understand my
needs.
SQ10 Generally, the physical facilities and employees are neat and
clean.
SQ7

Customer satisfaction
SA1
SA2
SA3
SA4
IM1
IM2
IM3
IM4
IM5
DE1
DE2
DE3
DE4

I was pleased to stay at the hotel.
The overall feeling I got from the hotel was satisfied.
Ryu et al. (2008)
The overall feeling I got from the hotel put me in a good
mood.
I really enjoyed myself at the hotel.

Hotel image
I think most people have a positive opinion about this
hotel.
The staff in this hotel is friendly towards the customers. Milfelner et al. (2011)
This hotel has a unique image.
I think this hotel is popular.
The staff in this hotel always put their customers first.
Customer delight
I felt delighted at some time during my stay at this hotel.
I felt gleeful at some time during my stay at this hotel.
Kim et al. (2013)
I felt elated at some time during my stay at this hotel.
I felt positively surprise at some time during my stay at