Problem Definition

Discuss about the Effects of Service Quality on Customer Satisfaction in the Hotel Industry.

Quality has been defined as “conformance to requirements” (Bergman and Klefsjö, 2010). Service quality has been defined by Chen and Chen (2010) as the gap between the expectation of the customers regarding service and their assessment of the actual service received. Service quality has been emphasized by most of the market leaders as the primary solution to customer satisfaction. Qin and Prybutok (2009) note that success in the current competitive market substantially depends on the delivery of quality services which will consequently increase customer satisfaction levels. Thus, customer assessment for the quality of services is significant for organizations which have a mission of formulating effective marketing strategies (Bayraktaroglu and Atrek, 2010; Landrum et al., 2009; Jones, Taylor, and Reynolds, 2014). Those companies with competitive service qualities also benefit from high numbers of satisfied and loyal consumers (Yee, Yeung, and Cheng, 2010). The increase of organizational profits and revenue is substantially dependent on first repurchasing customer behaviors. Additionally, the hospitality industry contributes 10.09% of GDP to the Australian economy and thus a key pillar in economic development. Hence, the study on service quality and customer satisfaction is very critical for research. This study focused on customer satisfaction and service quality: a case study of Granville Hotel, Australia.

So that the hotel industry can accomplish its aim of delivering quality service to its customers, it is vital to examine how hotels can meet and surpass the service prospects of customers (Mok, Sparks, and Kadampully, J2013). According to Parasuraman et al. (cited in“Phil” Klaus and Maklan, 2012), service quality can be measured using five determinants namely reliability, responsiveness, assurance, empathy and tangibles. However, King et al. (2008) later regarded tangibles, empathy, and assurance as for the most important determinants. Similar studies by Harr,2008; Agbor, 2011) were conducted under different contexts and even their findings do not agree, however they all consent of the existence of a relationship between customer satisfaction and service quality. The objective of this study is to provide additional insight into the Australian hotel industry by responding to question: What are the effects of service quality on customer satisfaction?

This chapter provides in-depth information about service quality, determinants of service quality, Measurements of Service Quality, The SERVIQUAL Model, Customer Satisfaction, Factors Affecting Customer Satisfaction, Relationship between Service Quality and Customer Satisfaction and the Conceptual Framework.

Literature Review

The definition of service quality has been defined differently by various researchers. Parasuraman et al. (1985) describe it as the organization’s ability to meet or surpass the expectations of customers cited in“Phil” Klaus and Maklan, 2012). Aslan and Koçak (2011) also agree with the definition of Parasuraman et al., 1985. The study by Ladhari (2008) on the factors affecting service quality in the hospitality sector found out reliability to be the best predictor of general service quality. Naik, C.K., Gantasala, and Prabhakar (2010) also found out that the highest expectation of customers is on the timeliness of service, operations precision, and safety issues.

Customers consider several physical features when buying goods as a way of determining quality, color, taste, and package. Conversely, the procurement of services is limited to the tangible features and must, therefore, consider other service quality dimensions.

The study by Parasuraman et al. (cited in“Phil” Klaus and Maklan, 2012), provides ten determinants that affect the view of the customer, and these include access, responsiveness, communication, security, competence, credibility, courtesy, tangibility, insight, and reliability. Berry based his study on Parasuraman et al.(2002) and developed five summarised aspects namely reliability, responsiveness, tangibles, empathy and assurance. It is on these five elements that the SERVQUAL model used to measure service quality is based on Parasuraman et al. (2002).

The measurement of service quality is a significant element in the process of improving quality since it generates customer responses regarding the type of service offered and eh degree to which it met the expectations of the customer (Ladhari, 2008). Several models have been postulated by researchers that measure service quality, for example, the SERVQUAL model

The model was the work of Parasuraman et al. (2002), and it was designed for ascertaining underperformance in service quality. The basis of the SERVQUAL model is that service quality of a business can be determined by matching the organization’s view of its service with that of their prospects. It measures the expectations and perceptions of customer’s service quality. The formula of the quality shortfall (Q) is found by deducting the Expectation (E) from the Perception (P). Then the rate of overall quality is obtained by summing up all the Q value. The SERVIQUAL scale comprises of two parts: the first section measures expectations of consumers concerning service segment whereas the second part determines perception about the firm being evaluated.

According to Kotler (2015), customer satisfaction is the degree to which the apparent performance of a product matches the expectations of the buyer.  Kassim and Asiah Abdullah (2010) examined customer satisfaction through a cross-cultural survey and found out that most of the guests were contented with the employees’ ability to communicate in a foreign dialect, workers’ hospitality and room conditions. The research by Prayag (2008) of Cape Town hotels ascertained customer satisfaction areas to include spa experience, customer entertainment, and well-ordered grounds.

Research Methodology

Hanif, Hafeez, and Riaz (2010) opine that customer satisfaction is affected by several factors like product and characteristics of service, customers’ feelings, view of equity and justice, family fellows, colleagues, and friends. Parasuraman, Zeithml and Berry (2002) outline multiple aspects that impact customer satisfaction namely: physical facilities, apparatus, staff presentation, communication tools, and service promptness, among others.

Findings from research contend that service quality is an originator of customer satisfaction (Kuo et al., 2009) whereas others contend vice versa (Hu et al., 2009; Rod et al., 2009). However, some of the studies are inclined to the former assertion (Carrillat et al., 2009). Overall, studies consent to the existence of a relationship between service quality and customer satisfaction (Kuo et al., 2009). Bai, Law, and Wen (2008) carried out a study on the association between customer satisfaction and service quality, and the findings recommended the enhancement of aspects of service quality in order to increase customer satisfaction.

A theoretical framework was formulated on the basis of the literature review as illustrated in Figure 2.1 below

This chapter includes the proposed research design. It outlines a detailed general research design alongside a justification for it, sources of data, conceptualization, and measurement, methods of gathering data and data analysis.

Sekaran and Bougie (2016) define a research design as a general outline of the procedure to be carried out by the researcher in the research with an objective of determining responses to the research questions. The primary goals of research design are to ascertain and develop mechanisms and logistical strategies required to execute the study and to highlight the value in these procedures to accomplish validity, independence, and accuracy (Smith, 2012).

This study is to adopt a descriptive research design to find out, describe and discuss the effects of service quality on customer satisfaction in Granville hotel, Australia. A descriptive design describes and infers “what is” and is concerned with the current situation or relationship; experiential effects; perceptions; enduring process; or developing trends (Garg and Kothari, 2014).  This study proposal opted for a descriptive approach because it will generate findings that will lead to the positive conclusion and most probably the approach will describe the various aspects of the respondents with regard to certain study purposes (Zikmund et al., 2013).

Both primary and secondary data will be collected in this research. Secondary data will be collected using qualitative research of existing relevant literature from corporations and state governments on the service quality and customer satisfaction (Ritchie et al., 2013). Conversely, primary data will be gathered using quantitative techniques to evaluate the effect of service quality on customer satisfaction in the Australian hotel industry. Content analysis was on the relevant literature to develop a better understanding of the research topic and to find out the current research gap. Reliability of the data sources was ensured since the outcomes and conclusions were acquired from previous studies relevant to the topic of my study.

The proposed target population of 500 is to consist of the tourists of Granville Hotel, Australia which will be visiting the hotel during the period of research. The guests are selected because they are the most fitted group to offer reliable information on the service quality provided in the hotel and their personal views. This study’s sampling frame will comprise of all tourists who have experienced any kind of service in the hotel during the time of the study.

The study plans to use non-probability convenience sampling method because of the context of the target population. This approach will enable easy collection of data from the selected respondents from the sample size, which is 10% (50 respondents) of the target population according to Mugenda, Mugenda (2008).

The study will mainly use a quantitative research approach because it allows statistical measurement of some dimensions, their impacts, and influences on customer satisfaction (Garg and Kothari, 2014). A five-point Likert scale varying from “strongly agree” to strongly disagree” is to be used to measure the feedbacks of the participants for easy rating, coding, and analysis. Furthermore, this study will also make use of qualitative research to gather extra information to give insight into the situations that encompass the research variables and provide a solution to the research questions: what are the factors that influence customer satisfaction and what is the relationship between service quality and customer satisfaction in Granville hotel, Australia.

This study will use primary data which is to be gathered using a questionnaire with five statements developed from the Landrum et al. (2009) as a modification of the SERVQUAL model. The questionnaire is conveniently chosen by the researcher because it is more accurate, convenient to use, preserves anonymity of respondents, and it’s cost-effective (Garg and Kothari, 2014). Furthermore, the researcher intends to gather the attitudes, views, and behaviors of the participants, hence a questionnaire best fits the research situation. The questionnaire is customized to three sections. Section one consist of demographic features of the respondents and this will assist in obtaining information on the type of guest. Section two will measure the rate the indicated dimensions affect customer satisfaction. The third part will measure the perception levels concerning the hotel services. The questionnaires will be administered by the researcher to each subject of the sample and then picked later

The research will use quantitative data analysis methods to analyze data namely descriptive and inferential statistics since they are better in illustrating events occurrence by making statistical relationships between the research variables (Sekaran and Bougie, 2016). The study is to adopt the mean as the descriptive statistical method while correlations between the study variables are to be determined under inferential statistics. Data analysis will be done using the Statistical Package for the Social Sciences software (SPSS) version 22.

To determine the association between the study variables with customer satisfaction, a multivariate regression model will be adopted as illustrated below.

Y = β0+ β1X1 + β2X2 + β3X3+ β4X4+ β5X5+?

Where:

Y = customer satisfaction

β0 = Constant Term

β1= Coefficients of Beta

X1= Tangibles

X2= Assurance

X3= Reliability

X4= Empathy

X5= Responsiveness

?= error ter

The participants’ identities will be held in anonymity in the entire research to avoid any possible harm to the individual participants. Furthermore, the information obtained from Granville hotel, Australia will be treated with utmost confidentiality and used only for the intentions initially outlined in the university’s introductory letter, and that is just for academic purposes. Informed consent will also be sought from the potential participants before they are engaged in the research. All relevant and important information will be made available to them including the time frame of the study, assurance of discretion, confidentiality and the aim of the research.

The survey only covers the Granville hotel in Australia because of the limited budget and allotted time which will not permit a bigger sample size through the incorporation of other hotels in Australia. As a result, this study uses a rather small sample size which is likely to limit the application of its outcomes to a larger scale. The research should have better included other Hotels in Australia to make the sample size larger and enable generalization in different geographical settings.

The prospective primary challenge of this study is a reluctance to participate in the study by the respondents for fear of destroying the organization’s reputation and endangering the career of the employees. Nevertheless, the research intends to address this issue by attaching the introduction letter from the university with the questionnaire as a way of guaranteeing the confidentiality of collected information and its intended objective.

This study’s estimated budget is $245. This constitutes $35 subscription fee for accessing published literature relevant to the study topic. This is inevitable because it will form a theoretical foundation of the survey and in ascertaining the research gap. Since the study will use questionnaires as an instrument for data collection at the hotel, printing them alongside introduction letter will cost $90. This is because the sample size of the study is 50 guests at the hotel. Data collection will cost approximately $25 because it will take two weeks and they will be collected at the convenience of the respondent. Thus, there will be transportation costs involved in traveling to and from the hotel to distribute and collect questionnaire, all at the cost of $50. Overall, the entire study is expected to cost $245.

The study will take a total of three months starting with the selection of the study topic on 12th April to the submission of the final write-up on 28th June 2018. A better portion of the time will be consumed in Data collection (13 days) then followed by choice of research topic with 8days. This is because data collection will depend on the decision of the hotel management and customers’ convenience. Otherwise, the remaining schedules will each take less than a week each because they are less involving.

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