Customer loyalty in the hotel industry

3.0 Introduction

This chapter will look at the procedure and instrumentation used to carry out the study. Firstly, the theoretical framework of the research is outlined, followed by a description of the hypothesis development. After that, the sampling method applied for this research is briefly presented. Next, the data collection method is explained and continued by the questionnaire development. To conclude, the chapter highlights the data analysis method used to analyze the results of questionnaire.

3.1 Theoretical Framework

The theoretical framework is based on Cunningham and Lischeron’s (1991) psychological characteristics school of thought. The dependent variable in this research is the customer loyalty in hotel industry and the independent variables are service quality, brand image, public relations perception, trustworthiness and perceived value. The relationship between the dependent variable and independent variables is illustrated in Figure1.

Figure 1 : Schematic diagram of the theoretical framework

Factors

Service Quality

Brand Image

Public Relations Perception Customer Loyalty

Trustworthiness

Perceived Value

INDEPENDENT VARIABLES DEPENDENT VARIABLE

3.2 Hypothesis development

3.2.1 Dependent Variable

The dependent variables are those that are observed to change in response to the independent variables. Therefore, in order to accept or reject the hypotheses, the variables would have to be tested.

Customer Loyalty

When there is repeated purchasing by the same customers and their willingness to recommend the product to other customers without any outright benefits, customer loyalty happens (Heskett and Schlesinger, 1997). For the purpose of this study on the hotel industry, it is assumed that a ‘loyal customer’ is a customer who repurchases from the same service provider whenever possible and who continues to recommend or maintains a positive attitude towards the service provider (Kandampully and Suharto, 2000). Loyal customers are best for hospitality firms because they are easier to serve than non-loyal customer, and they provide higher profitability (Mustafa Tepeci,1999).

3.2.2 Independent Variables

The independent variables are those that are deliberately manipulated to invoke a change either positively or negatively, in the dependent variables. The independent variables are used to formulate questions in the survey forms. Among the list of independent variables include :

Service Quality

DeMoranville and Bienstock (2003) identify service quality as a measure to assess service performance, diagnose service problems, manage service delivery, and as a basis for employee and corporate rewards. Together with customer’s loyalty, service quality may lead to success of the tourism business. Service quality is a way to manage business processes in order to ensure total satisfaction to the customer on all levels included internal and external. in the hospitality industry, communicating service begins with an understanding of the aspects of service quality that are most important to customers. Pariseau and McDaniel (1997) stressed that in order to attract customers, a firm has to serve their needs and retain them. Failure to achieve this may yield customer complaints, lack of repeat purchase and loss customer loyalty.

H1: Service Quality is positively related to customer loyalty.

Brand Image

According to Hsieh, Pan, and Setiono (2004), “a successful brand image enables consumers to indentify the needs that the brand satisfies and to differentiate the brand from its competitors. It plays an important role in customer loyalty and as reference to Martineau (1958), he pioneered research into brand image, with the results that a favorable brand image provided by an organization with a distinctive competitive advantage. Besides, image can generate value in terms of helping customer to process information, differentiating the brand, generating reasons to buy, give positive feelings, and providing a basis for extensions (Aaker, 1991).

H2: Brand image is positively related to customer loyalty.

Public Relations Perception

Hazelton and Botan (1989, p.13) has defined public relations (PR) as an “emerging” social science discipline. In effectively achieving corporate and business objectives, there has been an increasing recognition of the need for strategically managed communications programs. Moreover, earlier researches show that indication from empirical results in response to the increasingly intimate relationship between corporations and customers, would benefit the enhancement of customer loyalty in the long run (Crosby et al., 1990; Morgan and Hunt, 1994).

H3: Public relations perception is positively related to customer loyalty.

Trustworthiness

In the words of Flores and Solomon (1998), in the ideal case, one trusts someone because he is trustworthy, and one’s trustworthiness inspires trust. In addition, most researches agreed that trusting beliefs directly influenced loyalty (Chiou, 2004; Chaudhuri & Holbrook, 2001). There are also many recent studies in marketing have specifically explored the relationship between trustworthiness and customer loyalty. Most findings reveal that trustworthiness has an impact on customer satisfaction and loyalty in relationship management (Lundstorm & Dixit, 2008). Satisfaction can be created or increased by building a trustworthy image and by exhibiting trustworthy behavior (Chiou & Droge, 2006).

H4 : Trustworthiness is positively related to customer loyalty.

Perceived Value

Perceived value is expected to significantly influence channel purchase intentions, and by measuring its predictors, it can provide insights in how value is constructed in both channels. The connection between perceived value and customer satisfaction or future intentions has been debated in the services marketing literature. While it is contended that perceived value has a direct impact on how satisfied customers are with a supplier (Anderson et al., 1994) and that satisfaction depends on perceived value, little attention has been paid to customer perceived value in evaluating products (Lemmink et al., 1998).

H5: Perceived value is positively related to customer loyalty.

3.3 Research Design

In this study, we are doing the survey research. The method used in this study is through quantitative research. Survey will be carried out among the individuals in Malacca, Johor, and Kuala Lumpir. In order to support the findings of the survey, journals and previous case studies will be used as references.

The questionnaires will be distributed to one hundred and fifty individuals in these three states. The questionnaires for our research divided into three parts. The first part consists of demographic variables and the second part consists of several independent variables. The third part of the questionnaire will be the pilot study which requires feedback from 30 respondents. This study takes about twelve weeks to complete.

The dependent variable for this study is the customer loyalty in hotel industry while the independent variables for this study are service quality, brand image, public relations perception, trustworthiness and perceived value.

3.4 Research Instruments

The research instrument used in this study is a four-page questionnaire (with a cover page explaining purpose of the study). A set of questionnaires is required and develop for the purpose of collecting primary data. Questionnaire is used to translate the research objectives into specific questions to ask the respondents. The questionnaire started off with a brief introduction about the purpose of conducting the survey. Then, it is followed by the instruction to the respondents in answering the questionnaire.

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There are three sections in this questionnaire, section A, section B and section C. Section A will serve as the warm up questions and follow by section B, which contains complicated and opinion-based questions. Section A comprises demographic questions. The questions will ask about the respondent’s gender, races, age, faculty, and year of study. These data is needed for descriptive analysis, which is to identify the relationship between demographic variables with independent variables and dependent variables.

Then, the questionnaire is followed by section B which has five questions for each of the independent variables that will give the result in this research. The independent variables include service quality, brand image, public relation perception, trustworthiness and perceived value.

The last part of the questionnaire will be section C which is the pilot study. We distribute questionnaire to 30 respondents to get feedback about our questionnaire.

To preclude respondents from answering all questions with the same response, the items from all scales were interspersed, and several items were negatively worded and reverse scored (for every independent variable, one of the statements is negatively worded). All the variables are measured on interval scales except for demographic variables.

3.5 Sampling method

A random sample of survey is conducted and the date are collected via self administrated questionnaire distributed to all Malaysian, this survey is targeted and focus in Malacca, Johor and Kuala Lumpur. The questionnaire is randomly distributed to the respondent to avoid from biases happen. Besides, questionnaires are given to respondents who are hotel guests in several hotels in the selected states. Additionally, hotel guests are given the questionnaires to answer once they check-in the hotel and were asked to answer again their after-stay experience upon check-out.

3.6 Data Collection

First of all, the data for the survey will collect in two different kinds of forms that are the Personally Administered Questionnaire within a period of 1 week. The sources of data in this research are obtained through primary and secondary data collection. The primary data for this research was collected by the means of structured questionnaire was directly distributed to the respondents. The questionnaire data collection helped gather responses from 150 respondents so as to ensure reliability and validity. The purpose of the questionnaire was to correlate the findings from the questionnaires and the objectives of this study. Questionnaires were used in this study as it allowed the researcher to collect information from a large number of respondents somewhat inexpensively. Questionnaires also helped reduce biasness by providing anonymity, which no doubt encourages more honest and frank answers.

3.7 Data Analysis Methods

After the collection of data, the analysis of data was carried out. Several analysis techniques were used in order to analyze and interpret the quantitative data with the help of a well known statistical package Statistical Package for Social Science (SPSS) version 18.0. For this study, the descriptive statistics are designed to provide information about the distribution of the variables. This includes some statistical procedures such as the means. Apart from that, we include frequencies, mean, pie charts and bar charts and it does give idea about how the respondent have respond to the question and how it measures.

Pilot Study

The questionnaire will be distributed to 30 respondents to get the feedback about our questionnaire. The feedbacks that we will receive are as follow:

Feedback/ Suggestion

Are the above question/ statements clear enough? (Yes or No)

Most of the 30 participants give an answer “YES”.

Is there any part of the questionnaire confusing you? (Yes or No)

Most of the 30 participants give an answer “No”.

Would you like to see any additional questions/statements to be developing? Why?

There are 3 participant comments that there is too much question to answer. 1 participant comments the question to difficult to answer. Other participants say no comment.

What additional recommendations or suggestions would you like to make on how to enhance the questions/statements?

There are 3 participants comments us to make the question simple and less and the question still can be improved. Other comments say the questionnaire is good enough and nothing to comment.

3. 8 Chapter Summary

This chapter focused on the research methodology, including the theoretical framework, hypothesis development, research design, research instrument, sampling method, data collection and data analysis methods. The data in this study was analyzed using SSPS version 18.0. The respondents’ demographic background was analyzed and presented in percentage and frequency distribution pie chart and bar graphs. The more advanced statistical methods such as correlation analysis and linear regression analysis are used to examine the hypothesis and to determine the independent variables contribute most to hotel industry about the customer loyalty.