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

TABLEOFCONTENTS...4 Chapter1...8 INTRODUCTION...8 1.1 Background...8 1.1.1 ThecrucialroleofhotelindustryinVietnam...8 1.1.2 Benefitsofcustomersloyalty...9 1.2 Researchgap...10 1.3 Resear

ID:22120025MBUS3.1

MASTEROFBUSINESS(Honors)SU

PERVISOR:

Prof.NguyenDongPhongDr NguyenPhongNguyen

HoChiMinhCity-2 0 1 5

ACKOWLEDGEMENT

IwouldliketoexpressmysinceregratitudetoProf.NguyenDongPhongandD r NguyenPhongNguyenfortheiradviceandsupervisiontocompletethethesis

Iwishtothankyouformycolleagues,friendsandfamilyfortheirsupporta n d encouragementduringtheprocessofthesiswriting

IwouldliketothankallstafffromInternationalSchoolofBusiness-UEHfort h e i r timewithprovidingmenecessaryinformation

ThepurposeofthisresearchistocontributetotheunderstandingofhowcustomerloyaltyisdevelopedwithinthecontextoftheVietnam’shotelindustry.Aq u e s t i o n n a i r e isdevelopedbasedonpreviouslymeasurementscalesandthensentto3 -

s t a r hotelguestsincentralofHoChiMinhandHaNoiCity.Theresearchprovidesa n insightintotheroleofservicequality,customersatisfaction,imageandcustomerd e l i g h t inenhancingcustomerloyalty.Theresultproposesthatloyaltyofhotelguestsinfluencethemostbycustomerdelight,whichisfollowedbycustomers a t i s f a c t i o n andhotelimage

Keywords:hotels,restaurants,servicequality,customersatisfaction,image,customer

delight,customerloyalty

TABLEOFCONTENTS 4

Chapter1 8

INTRODUCTION 8

1.1 Background 8

1.1.1 ThecrucialroleofhotelindustryinVietnam 8

1.1.2 Benefitsofcustomersloyalty 9

1.2 Researchgap 10

1.3 Researchobjective 11

1.4 Researchscope 11

1.5 Contributionsandimplications 12

1.6 Structureofthethesis 12

Chapter2 13

LITERATUREREVIEWANDHYPOTHESISDEVELOPMENT 13

2.1 Theoreticalbackground 13

2.2 Thehypothesisdevelopmentandproposedmodel 19

2.2.1 Relationshipbetweenservicequalityandcustomerloyalty 19

2.2.2 Relationshipbetweencustomersatisfactionandcustomerloyalty .20

2.2.3 Relationshipbetweenhotelimageandcustomerloyalty 20

2.2.4 Relationship betweencustomerdelightandloyalty 20

2.2.5 Theproposedmodel 22

RESEARCHMETHODOLOGY 23

3.1 Measurementscales 23

3.2 Sampling 26

3.3 Datacollectionmethods 27

3.4 Dataanalysismethod 27

3.4.1 Statisticalmethod 27

3.4.2 Descriptivestatistics 27

3.4.3 Reliabilityanalysis 28

3.4.4 Exploratoryfactoranalysis(EFA) 28

3.5.5Multipleregressionanalysis 28

CHAPTER4 29

DATAANALYSIS 29

4.1 Descriptiveanalysis 29

4.2 Assessmentandrefinementofmeasurementscale 29

4.2.1 Cronbach’sAlpha 30

4.2.2 ExploratoryFactorAnalysis(EFA) 33

4.3 PearsonCorrelations 34

4.4 MultipleLinearRegression 35

4.4.1 Testofassumptions 35

4.4.2 Regressionanalysis 36

4.5 Discussionoffindings 38

CONCLUSION 41

5.1 Summaryofresearchfindingandlimitation 41

5.2 Managerialimplications 41

5.2.1 ImplicationsforhoteliersinVietnam 41

5.2.2 Implicationsforeducatorsinlocalhighereducationinstitutions445.3Li mitationandfurtherresearchdirection 47

APENDICES

AppendixA:QuestionnaireAppendi

xB:EFA’sresultsAppendixC:Testof

assumption

Figure2.1:Theproposedmodel 22

Figure3.1:Measurementscales 25

LISTOFTABLES Table4.1:Descriptiveanalysis 29

Table4.2:ReliabilityAnalysisofDependentFactor 30

Table4.3:ReliabilityAnalysisofIndependentFactor 31

Table4.4:PearsonCorrelationsresult 34

Table4.5:Regressionanalysisresult 36

Table4.6:Hypothesestestingresults 38

Chapter1INTRODUCTIO N

1.1 Background

1.1.1 ThecrucialroleofhotelindustryinVietnam

Sincet h e e c o n o m i c r e f o r m i n 1 9 8 6 , V i e t n a m h a d a c h i e v e d t

h e dramaticd e v e l o p m e n t inallaspectsincludingeconomy,educationandculture.TheentryintoA S E A N in1995andWTOin2007brought

aboosttothehotelindustryofVietnam,a orientedeconomy.Overthepastyears,theh o t e l industryhasmadestrongdevelopmentandgraduallyintegratesintotheglobald e v e l o p m e n t process.IntheGrantThorntonVietnam’s“VietnamLodgingIndustry

developingcountrywithfreemarket

-E x e c u t i v e S u m m a r y o f t h e H o t e l S u r v e y 2 0 1 3 ” i n J u n e 2 0 1 4 , theyr e p

o r t t h a t Vietnamwelcomed7,572,352internationalvisitors,increasingby10.6%incomparisonwith2012,exceededtheexpected7.2millioninternationaltourista r r i v

a l s fortheyear.Togetherwiththat,acombinationofstrongeconomicgrowth,r i si n gincomel e v e l s , a g r o w i n g m i d d l e c l a s s , a s i z e a b l e a n d g r o w i n g youthpopulation,andincreasingexposuretoWesternlifestylehasfueledtherapidg r o w t h o f t h e

Thet o u r i s m h a s b e e n c o n s i d e r e d p l a y i n g i m p o r t a n t r o l e i n c

r e a t i n g j o b s , d ev elop in g t h e country’se c o n o m y I n f a c t , a s t r a v e l h a s b e e

n d e v e l o p i n g r a p i d l y

withseriesofbeautifullandscapes,specialtiesandveryfriendlylocals,togetherwithmorebusinessesarebeingdealtwith,therequestfortemporaryaccommodationshasb e en i n c r e a s e d H o w e v e r , i n t h i s emergingmarket,n o t onlym a n y m u l t i n a t i o n a l g r o u

p s h a v e b e e n e n t e r i n g t h e market,b u t a l s o a numbero f s t a r t u p s f o u n d e d byl

o c a l b u s i n e s s p e o p l e orV i e t k i e u h a v e b e e n f i n d i n g t h e i r p a t h t o g a i n t h

e markets h ar e E f f o r t byt h e g o v e r n m e n t a n d mediah a s e d u c a t e d t h e p o p

u l a t i o n b e c o m e smartconsumers;especiallythoseinurbanareaslikeHoChiMinhCityandHanoi,w h e r e t he c o n s u m e r s h a v e a v a r i e t y ofc h o i c e s f or lo dg in gs e

rv ice s H u n d r e d s ofn e w hotelswhichhavemetthestandardsofservinginternationaltouristshavebeenb uilt (upto686hotelsfrom3to5-

starthotelsin2013,accordingtoGrantThorntonVietnam’sreport2014).Theartofretainingcustomershasbeenintheurgentneedo f al ltheplayersint hi s competitive p

la yg ro un d, andid en ti fy in g factorsaffectingcustomerloyaltyinlightofservicequalityhasbecomesignificantthaneverbefore

1.1.2 Benefitsofcustomersloyalty

KotlerandAmstrong(2001)proposesthatifcompaniesloseacustomer,theym ay l o

s e t h e c u s t o m e r t h r o u g h o u t h i s /

h e r p u r c h a s i n g l i f e t i m e I t iso b v i o u s t h a t loyaltyhaseffectonfinancialhealththroughsteadycash-

flowandrepeatedcustomers.Patterson(1997)reassuresthispointbystatingthatcompanieswithlargeg r o u p ofloyalclients ca n earnmorese ven pe r c e n t a ge s inprice, ascustomersa r e l e ss pricesensitive.Furthermore,Chengetal.(2011)andTuetal

(2011)alsoagreethatc o m p a n i e s w i l l s p e n d a t l e a s t f i v e ton i n e timei n a t t r a c t i

n g a n e w c u s t o m e r r a t h e r thanretaininganoldone;andthecompanyprofitcanbeincreased25-

85%o nce

loyaltyisupbyfivepercenteffectively.Therefore,long-termstrategyshoulde m p h a s i z e o n c u s t o m e r r e t e n t i o n t h a n o b t a i n i n g n e

w o n e s i n o r d e r t o r e d u c e t h e ex p en d it u r es onmoneyandtime.Thisstrategywillbringalong-termorshort-termp r o f i t bymaintainingalong-

( 2 0 1 1 ) areofthesameopinionandpointoutsomeadvantagesofcustomerloyalty:

(1)c h e a p e r s e r v i c e c o s t t h a n o b t a i n i n g n e w c u s t o m e r s ,

( 2 ) p o s s i b i l i t y o f p a y i n g h i g h e r of-mouthmarketingagent.T u e t a l

Inlightoftheaboveobservation,theresearchwillidentifyfactorsthataffectcustomerl o y a l t y inV i e t n a m ’ s h o t e l s e c t o r ; specifically,i t w i l l t e s t t h e p o s i

c o n t e x t a n d t h e r e l a t i o n s h i p betweenthosevariableshasbeenindifferentways.Moreover,theinfluenceofthosef a c t o r s isalsodifferentbetweenhotelandservicesectorandtheresearcherhardlyfo un d s t u d y c o m p a r i n g t h o s e t w o s e c t o r s H o t e l i e r s s h o u l d identifya n d d e v e l o p f a ct o r s thatwillgive themtheopportunities i n long-term competitiveadvantages,

i.e factorsaffectingcustomerloyalty.Thosedriversarenolongerthetangibleoffer;theyare

a l s o th e i n t a n g i b l e one s l i k e s e r v i c e q u a l i t y leadingt o imagea n d s a t i s f a c t

i o n enhancement(Kandampully&Hu,2007)

InVietnamesecontext,onlyafewpublicizedstudiesresearchaboutcustomerlo ya

l ty i n h o t e l s e c t o r F o r i n s t a n c e , K h u o n g e t a l

( 2 0 1 5 ) o n t h e i r s t u d y a b o u t f a c t o r s ofaffectingguests’satisfactionandloyaltyofVietnam’sluxuryhotelsector,theyaimattestingtheeffectofservicequalityandhotelimageonthesatisfactionand loyalty.Anotherstudythatsomehowrelatedtoloyaltyisstudyof

TuanandLinh( 2 0 1 4 ) , inwhichtheyshowthepositiverelationshipbetweencustomerserviceands a t i s f a c t i o n ofa5-

starhotelinHanoiCity.Fromtheseevidences,itisworthnotingthats t u d y a b o u t 3-

s t a r h o t e l i n V i e t n a m i s n o t easyt o b e f o u n d B e s i d e s , i n t h e competitivemarketlikeinVietnamrecently,hotelsshouldtakeintoconsiderationt h e importanceof“customerdelight”toenhancethelevelofloyalty.Therefore,thiss t u d y aimsattestingthefactorsaffectingcustomerloyaltyof3-

starhotelinVietnam,adding“customerdelight”asadirectfactorofcustomerloyalty

1.3 Researchobjective

Thep r i m a r y o b j e c t i v e o f t h e r e s e a r c h i s t o examinet h e d e g r e e to

w h i c h servicequality,customersatisfaction,hotelimageandcustomerdelightinfluenceoncustomerloyalty

starhotels.Experiencinginhotelindustry,theauthorisinterestedinfindingthemo

steffectiveapproachtoenhancecustomerloyaltyathisownenterprise,aswellastogainaninsightsintocustomers’n e e d s andwantsofthemarket.

1.5 Contributionsandimplications

Thisr e s e a r c h p r o v i d e s i n s i g h t s i n t o customerl o y a l t y i n V i e

t n a m ’ s h o t e l s e c t o r a s w e l l a s i n t r o d u c e s a f a c t o r p r e d i c t i n g s u c h t h e l

o y a l t y ca l l e d “ c u s t o m e r d e l i g h t ” ; additionally,thestudyalsoteststheabilityandapplicabilityofproposedr e s e a r c h modelandtheusabilityofconstructs’measureditemsinVietnam’sb a c k g r o u n d Itsgeneralizabilitycanspecificallyguideeducatorsandhoteliersinthecountry

1.6 Structureofthethesis

The research has beenstructuredinthe followingmanner:itbeginsbyr eviewi ng the li te ra tu re foreac hvariable con si der ed inth e s t u d y (servicequality,customersatisfaction,hotelimage,customerdelightandcustomerloyalty)andtheng o e s o n t o formulatet h e hypothesesf o r t h e p r o p o s e d model.T h

e n , t h e a u t h o r d e s c r i b e s themethodologyanddesignaspectsoftheresearch.

Chapter1“Introduction”includesabriefoverviewoftheresearchbackground,problemsandobjectives,methodologyaswellasthei m p l i c a t i o n C h a p t e r 2“Literaturereview”comprisesofdefinitionrelatedtorestaurants e r v i c e s , deepreviewofpreviousresearchesoncustomerloyalty,corporateimage,serviceq u a l i t y a n d c u s t o m e r

s a t i s f a c t i o n a n d t h e b a s i s o f b u i l d i n g t h e c o n c e p t u a l m o d el C h ap t e r 3

“ R e s e a r c h m e t h o d o l o g y ” pr esen ts t h e research process,measurements c

a l e , p r e l i m i n a r y assessmento f measuresa n d d a t a c o l l e c t i o n p r o c e d u r e s aswellasthedataanalysesprocess.Chapter4“Dataanalysis”co nsi st s o f t h e o f f i c i

a l a s s e s s m e n t o f measures,h y p o t h e s e s t e s t i n g , d a t a analysisr e s u l t s a

n d i n t e r p r e t a t i o n C h a p t e r 5 “ C o n c l u s i o n ” c o n c l u d e s t h e f i n d i

n g s a n d p ro vi ding managerialimplications andproposingspecificrecommendationsfor i m p r o v i n g customerloyaltyinhotelsectorinVietnam

Chapter2 LITERATUREREVIEWANDHYPOTHESISDEVELOPMENT

(2004)p r o v e thatservicequalityr e c e i v e s i n c r e a s i n g a t t e n t i o n i n t h e l i t e

r a t u r e , yett h e r e i s n o c o n s e n s u s o f w h i c h measureofferst h e g r e a t e s t v a l i d

i t y G r ö n r o o s ( 1 9 8 4 ) i d e n t i f i e s t w o d i m e n s i o n s o f s e r v i c e quality:functionalquality( “ h o w ” serviceisperformed)andtechnicalquality( “ w h a t ” thecustomerreceives fromtheserviceexperience).Thethreemainm easu r em en t s t o analyzet h e c o n c e p t o f q u a l i t y in s e r v i c e i n d u s t r y are t h e I m p o r t a n c e -

P e r f o r m a n c e Analysis(IPA),SERVQUALandSERVPREF.Introducedi n 1977byMartillaandJames,IPAisoriginallyappliedtotheservicedepartmentofa n automobiledealerandhasbeenappliedtothehealthcaremarket,dentalpractices,b a n k i n g s e r v i c e s , h o t e l industry,a d u l t e d u c a t i o n , t o u r i s m p o l i c y a n d t o u r i s t d e s t i n a t i o n ( H u d s o

n eta l , 2 0 0 4 ) T h e c u r r e n t l y p o p u l a r m e a s u r e m e n t o f s e r v i c e qualitycanbetracedtotheresearchofPanasuraman,Zeithaml,andBerry(1985)inwhichtheydefines s e r v i c e q u a l i t y asa d i f f e r e n c e b e t w e e n w h a t c u s t o m e r s e x p e c t f r o

m serviceperformanceandtheirperceptionsofwhatisdelivered.Moreover,theevaluationofservicequalityismoredifficultthanproductqualityasserviceneedsaw h o l e processtobeevaluated.Therefore,todevelopdeterminantsofservicequality,

theauthorsimplementaseriesoffocusgroupsessionsanddetermine thatserviceq u a li ty has10determinants.Lateron,in1988,theyrecastthosedeterminantsintofive specificcomponents:tangibles,reliability, responsiveness,assurance,ande m p a t h y c a l l e d S E R V Q U A L s c a l e Int h e s c a l e , s e r v i c e q

u a l i t y ismeasuredbyidentifyingt h e gapsbetweencustomers’ e x p e c t a t i o n s andtheirp e r c e p t i o n s of t h e a c t u a l serviceperformancebyseven-

• empathy–caring,individualizedattentionthefirmprovidetoitscustomer

However,t h e val id it y oft h e t wo mentioneds c a l e has been qu est io ned O

h (2 00 1)pointsoutthatthemainlimitationofIPAisinthesurveyinstrumentwheretheLinkertscalecannotdifferentiatebetweenlevelofimportanceandimportanceofperformance.SERVQUALscaleisargued abouttheconsistency ofthe fivec o m p o n e

n t s w h e n s u b j e c t e d t o c r o s s

-s e c t i o n a l analy-si-s( C a r m a n , 1 9 9 0 ) a n d S E R V Q U A L conceptualizationisonlyadoptedinonlyafewindustries(Cronin&Taylor,1992).Theyallagreethatperformance-

Hoteli m a g e Bitner( 1 9 9 0 ) a n d N g u y e n ( 2 0 0 6 ) i d e n t i f y imagea s a

n i m p o r t a n t p r e d i c t o r o f customers’e v a l u a t i o n o f a c o m p a n y a n d i s t h e f i

r s t t h i n g customersthinkaboutwhenhearingacompany’sname.NguyenandLeBlanc(1998)c o n s i d e r i m a g e a s a c o m b i n a t i o n o f p r o d u c t c h a r a c t e r i s t i c s d i f f

e r e n t i a t i n g fromphysicalp r o d u c t , a s s u b j e c t i v e k n o w l e d g e a n d a s a n a

t t i t u d e F u r t h e r m o r e , w h a t customersstoredinmemoryaboutideas,feelings,andpreviousexperienceswithano r g a n i z a t i o n willcompriseimage.Similarly,BarichandKotler(1991)agreeonther ep r e s en ta t iv e abilityofimagefortheimpressionsandassociations,thebeliefsanda t t i t u d e s thatcustomersmaymemorizewhenexperiencingwithacompany.Mazanec(1995)alsoreportsthatthereisapositivelyrelationshipbetweenimageandcustomerpreference(adimensionofcustomerloyalty).KandampullyandHu(2007)a r g u e thattherearetwoprincipalcomponentsofcorporateimage,oneisfunctionalisr elat ed toeasily-to-

measuretangiblecharacteristics,oneisemotionalassociatedwithfeelingsa n d a t t i t u d e s

t o w a r d s ano r g a n i z a t i o n T o b e mores p e c i f i c , K e l l e r ( 1 9 9 3 ) refersthatbrandimageisassociatedwithaseriesofperceptionofaspecificbrandth at consumersmayformulatethroughactivitiesrelatedtothatbrand.Brandimagei s r e c a l l e d o n c e c

u s t o m e r s e x p e r i e n c e s o m e f e a t u r e s ofp r o d u c t o r s e r v i c e a n d i s considered asthesymbolic meaningsoft h a t brand (Padgett& Allen, 1997) A d d i t i o n a l

l y , LowandLamb(2000,p.352)definesbrandimageas“thereasonedore m o t i o n a l p e r

c e p t i o n s consumersa s s o c i a t e tos p e c i f i c b r a n d ” T h e implicationofv a r i o u saspectsofthehoteloperation,includingsevenservicesmarketingvariables(product,p l a c e , p r o m o t i o n , p e o p l e , p r o c e s s , a n d physicale v i d e n c e ) m a y d i r e

c t l y a f f e c t hotelimage.Therefore,hotelshouldmanagethe marketingactivityi

na c c o r d a n c e withtheimage.Altogether,thisstudyrefershotelimageasthesumoft h e emotional p e r c e p t i o n s , ideasand sym bo li c characteristics w h e n customere n co u n t e r serviceofhotelorrestaurant

n p r o f i t i n r e t u r n H u n t ( 1 9 7 7 ) definessatisfactionas“anevaluationrenderedthattheconsumptionexperienceswasatl e a s t a s g o o d a s i t w a s s u p p o s e d t o b e ” ( p

4 5 9 ) O l i v e r ( 1 9 8 1 ) o b s e r v e s t h a t sati sfacti on istheconfirmationordisconfirmationofcustomers’perceptionofs e r v i c e performancewhencomparingwiththeexpectation,i.e.,hedefinessat i sf ac ti o n a s “ a s u m m a r y p s y c h o l o g i c a l s t

a t e r e s u l t i n g w h e n t h e emotions u r r o u n d i n g disconfirmedexpectationsiscoupledwiththeconsumers’priorfeelingsa b o u t t h e c o n s u m p t i o n e x p e r i e n c e ” ( p 2 7) H e d i f f e r e n t i a t e s b e t w e e n s a t i s f a c t i o n andperceivedservicequalityinwhichsatisfactionisrelatedtoaspecifictransactionwh ereas servicequalityisinvolvedinthesuperiorityoftheservice,i.e.satisfactionist h e e m o t i o n a l r e s p o n s e f r o m a c o g n i t i

a s premiumgoalinserviceindustry,yettheresearchesaboutsatisfactionleadingtocustomerloyaltyhasbeenchallenged thesedays(Skogland&Siguaw, 2004;Voss,R o t h &Chase, 2008).The researchers are interested infindinga f ac t o r thattakesin t o c o n s i d e r a t i o n b o t h e m o t i o n a l a s p e c t s a n d p e a k e x p e r i e

n c e c a l l e d “ c u s t o m e r deli gh t” (Torres,Fu&Lehto,2014).TorresandKline(2006)suggestthatinrecentl i t e r at u r e , firmsstrivetonotonlyachieveloyaltyfromsatisfactionbutalsot r a n s f o r m t h e m s e l v e s t o a h i g h e r l e v e l o f satisfying

c u s t o m e r s –

d e l i g h t i n g customerst o e a r n morel o y a l t y a n d h i g h e r p r o f i t T h e r e a r

e t h r e e a p p r o a c h e s t o d e f i n i t i o n ofcustomerdelightincurrentliterature,onedefinitionstressestheco n f i r m at i o n –

d is c o n f i r m at i o n

paradigm,onestressesaffect-basedapproach,andthelastonestressesonhumanneeds.Thefirstapproachproposesthatcustomerdelighti s a c h i e v e d w h e n c u s t o m e r s e n c o u n t e r s e r v i c e s t h a

t c a n p l e a s e t h e m b e y o n d t h e l ev el ofsatisfaction(Patterson,1997),i.e.customerdelightwillbegeneratedatthedegreeb e y o n d t h e t o l e r a n c e t h r e s h o l d s o f

c u s t o m e r s ( Keinninghame t a l , 1 9 9 9 ) T h e secondapproach

ofjoy,th ri ll, andexhilaration (Kumaretal.,2001)a n d itreallyisanemotionalresponser e s u l t i n g fromsurprisingandpositivelevelsofperformance(Finn,2005).Thelasta p p r o a c h p r o p o s e s t h a t customerd e l i g h t i s a f u n c t i o n o f t h e s a t i

s f a c t i o n o f t h r e e

humanneeds:security,justice,andself-esteem(SchneiderandBowen,1999).Basedo n theliteraturereview,thisstudy

supportstheconceptualizationofcustomerd e l i g h t asanemotionalresponsewhichisbasedonjoy,thrill,andexhilaration

Customerloyalty.Setó-Pamies(2012)observesthatloyaltyi s genuinelyd e s c r i b e d a s a t y p e ofcustomerb

e h a v i o r t o w a r d s a p a r t i c u l a r b r a n d o v e r time.O r a c l e Corporation(2005)considersloyaltyisgeneratedfromaseriesof

interactionbetween customersandcompaniesduringcustomers’purchasingexperienceanditw il l ensurethefuturepurchase.Oncecompaniesearncustomers’loyalty,therewill

bea l o w e r ch ance o f f i n d i n g p o t e n t i a l a l t e r n a t i v e s a n d a h i g h e r ch a n ce o f c

on sisten

tre-patr on ize ( M a r s h a l l , 2 0 1 0 ) T h e r e f o r e , B a g d o n i e n ė & J a k š t a i t

ė ( 2 0 0 7 ) s u g g e s t thatcompaniesshould focus onenh anc in g customerloyaltythrougheff ect iv e marketingstrategya s aprimarystrategy.Theimplementationofthiss t r a t e g y istomakecustomersfeelinvolvedinawin-

winsituationwhichleadstoamoref a v o r a b l e p e r c e p t i o n t o w a r d t h e c o m p

a n y a n d w o r d o f

-m o u t h , l o w e r p r i c e sensitivity,lessexpenditureonobtainingnewcusto-mersandhigherprofit.Loyaltyi s notonlyintheformofbehaviorbutalsoinadeeperform,attitude.Intheformer,customersarenotconsideredasloyalincasetheykeepusingtheservicesbecausetheyhavenoalternativestothesourcesofproviders.Thelatterassiststheideaofre-

p a t r o n i z i n g c u s t o m e r s e v e n w h e n theyh a v e p o t e n t i a l a l t e r n a t i v e s T h

e e m o t i o n a l backgroundofloyaltyisintheformofcombinationbetweenfeelings,expectationsan d relationswithstaff,whereastherationalbackground

isassociatedwiththinking,av ail abi l it y ofinformationanditsunderstanding,cognitionoforganizationactivities’p r o c e s s e s M c C a i n e t a l

( 2 0 0 5 ) a s s e r t t h a t c u s t o m e r l o y a l t y i s s u m m a t e d byt h e p ro cess ofcognitive–affective–conation–

actionpatternandaconsumercanbecomeloyalatanyofthesefourphases.Customersfirstlyevaluateonebrand’sserviceass u p e r i o r t h a n o t h e r a l t e r n a t i v e s a

n d t h e n findwaytoe x p e r i e n c e t h e s e r v i c e t o develo p apositiveattitudetowardthebrand Inthethirdloyaltyphase,customerscommittoreturntopatronize,whichisfollowedbythelastphasetransformingthei n t e n t i o n i n t o r e a d i n e

s s t o a c t I n l i g h t o f previousr e s e a r c h , t h e s t u d y d e f i n e s a customerasloyalwhentheypossessrepurchaseintention,priceinsensitivity,p o s i t i v e word-of-mouthandfrequentpurchaseandnoswitchingbehavior

2.2 Thehypothesisdevelopmentandproposedmodel

2.2.1 Relationshipbetweenservicequalityandcustomerloyalty

Therearemanystudiesprovethepositiverelationshipbetweenservicequalityandcustomerloyalty.Kandampullyetal

(2011)saysthatservicequalityisoneofthemostcrucialfactorforsurvivalanddevelopmentforhotels,onceahotelcan

acquireh i g h l e v e l o f s e r v i c e quality,i t c a n meett h e r e q u i r e m e n t s ofa s u c c e s s

f u l co m p e t i t i o n likel oy al ty andp ro fi ta bi li ty P a n a s u ra m a n a n d G r e wa l (2000)ag r e e s th at customershavebeennolongercompromisedwiththequalityofferedbyservicep r o v i d e r s , hencetheenterprisesshouldbetterstandfromthecrowdwiththeiruniquest and ard ofserviceandthatthecompetitorscannotduplicatewith.Iftheindicatorsofcustomerl o y a l t y a r e r e p u r c h a s e i n t e n t i o n o r p o s i t i v e w o r d - o f -

m o u t h recomm end at io n , numerousstudieshaveinvestigatedthepositivelydirectr el ati on sh ip b e t w e e n q u a l i t y a n d l o y a l t y (Parasuramane t a l , 1 9 9

1 ;G e t t y & T h om p s on ,1 9 9 4 ; Ka n g i s & Z h a n g , 2 0 0 0 ) S i m i l a r l y , C h o w e t

a l

( 2 0 0 7 ) f i g u r e o u t thatahighlevelofservicequalityisassociatedwithfrequentpatronage.However,somestudiesagreeonbothdirectandindirectrelationshipbetweenservicequalityan d customerloyalty.Forinstance,Croninetal

(2000)proveontheirstudythatthe

directrelationshipappearsinfast‐

foodservices,spectatorsport,participativesport,a n d entertainment,andtheindirectonedoessoinlong‐distancecarrierandhealth‐careservices

Inhotelindustry,Bakerand Crompton(2000)andAlexandris et

al

(2002)supportthetheoryofpositivelydirectrelationshipbetweenservicequalitya n d behavioralintent-

w h i c h is verycloselytoloyalty Onthebasisof t h e above d i s c u s s i o n , thefollowinghypothesisisproposed:

H1:Servicequalitypositivelyaffectscustomerloyalty.

c u s t o m e r a r e l i k e l y tosp r e a d

negativeword-of-mouthandspendinglesswhileasatisfiedcustomersactina viceversaway.Inhotelindustry,KandampullyandSuhartanto(2000, 2003)findt h a t amonghousekeeping,reception,F&B

andprice,satisfactionwithhousekeepingi s thestrongestfactorindeterminingcustomers’intentiontorepurchaseandrecommend.Riadh(2009)exploresthatemotionsatisfactionsignificantlyimpactonl o y a l t y inadirectmanner.Fromthat,thefollowinghypothesisisproposed:

H2:Customersatisfactionpositivelyaffectscustomerloyalty.

2.2.3 Relationshipbetweenhotelimageandcustomerloyalty

Theo v e r a l l imageo f t h e s e r v i c e f i r m i s i n f l u e n c e d bys e r v i c e q u a l i t

y a n d customersatisfaction(Huetal.,2009).Heung,Mok,andKwan(1996)explorethath o t e l imageisanimportantcontributingfactortoenhancingcustomerloyalty.Furthermore,K a n d a m p u l l y a n d S u h a r t a n t o ( 2 0 0 0 , 2 0 0 3 ) a n d K a

Inrecentyears,insteadofcustomersatisfaction,theattentionhasbeenshiftedt o customerdelighttobeoneofthestrongestpredictorofmanagingguestrelations

(Torrese t a l , 2 0 1 4 ) A r n o l d e t a l

( 2 0 0 5 ) s t a t e s t h a t o u t c o m e s o f d e l i g h t h a v e generallyfocusedonrepurchaseintentions an dcustomerloyalty.Additionally, d e l i g h t i s r e v i e w e

d a s o n e o f t h e l a s t s t a g e t o measurep o s t

-p u r c h a s e c u s t o m e r r e s-p o n s e s, theyare:outrage/

pain,dissatisfaction,satisfaction,anddelight(Berman,2 0 0 5 ) Betweensatisfactionanddelight,customerdelightisconsideredasastrongerp r e d i c t o r of c u s t o m e r loyalty,positive w o r d o f mouth,a n d r epe at p u r c h a s e in te nt ( Torres&Kline,2006).Inlightofthis,Kim(2011)andTorresandKlight(2006)hasal so foundthatcustomerdelightisconsideredasabettermeasurementinmanagingcustomerrelationship,i.e.delightislikelytogeneratepositivebusinessresultssuch

asword‐of‐mouthcommunications,loyaltyandincreasedprofitability.Paul(2000)concludesthatthetaskofdelightingcustomersisallaboutdeliveringaservicethatiso u t s t a n d i n g a n d s t i m u l a t e s c u s t o m e r a c c e p t a n c e t o w a r d s a f i r m , w h

i c h int u r n

generatesapositiveword‐of‐

mouthcommunication.Tosumup,customerdelightisal s o provedtobeastrongindicatorofcustomerloyaltyintheworkofOliveretal

(1997),T o r r e s a n d K l i n e ( 2 0 0 6 ) , G o s w a m i

a n d S a r m a ( 2 0 1 4 ) , a n d K i m e t al

( 2013 ).On thebasisoftheabovediscussion,thefollowinghypothesisisproposed:

H4:Customerdelightpositivelyaffectscustomerloyalty.

Service quality

H1Customer satisfaction

H2

Customer loyaltyH3

Hotel image

H4Customer delight

Chapter3 RESEARCHMETHODOLOGY

Theresearchwasdesignedwithaclearobjectiveofidentifyingfactorsaffectingcustomerloyaltyinhotelindustry.Theliteraturereviewsessionrevealedp r e v i

o u s stu di esr esea rc hi ng relevantvariables int he researchedmodel.T he r e s

i n d e p e n d e n t variables(service quality,customersatisfaction,hotelimageandcustomerdelight).SinceSERQUALscaledevelopedbyPanasuramanetal

(1985),s e r v i c e qualityhasbeenawidelystudiedandmodifiedconstruct.However,forthep u r p o s e o f e x p l a i n i n g v a r i a n c e ind e p e n d e n t c o n s t r u c t s ,

m a n y r e s e a r c h e r s h a v e su p p o r t ed t h e us e o f performancep e r c e p t i o n s i nmeasureo f s e r v i c e q u a l i t y ( P a n a s u r a m a n e t a l , 1 9 9 8 Z e i t h a m l e t a l ,

1 9 9 6 ) I n l i g h t o f p r e v i o u s r e s e a r c h e s (Croninetal.,2000;Hudsonetal.,2004;Martina&Irene,2006),thisstudyappliedt h e p e r f o r m a n c e -

b a s e d s e r v i c e q u a l i t y m e a s u r e ( S Q P ) i n m e a s u r i n g t h e s e r v i

c e q u al i t y

scalewith10-itemscaleonaseven-pointLinkertscale(1:“verylow”to7:“ v e r y high”).Themeasurementofcustomersatisfaction is afour-itemscale adaptedf r o m workofRyu,HanandKim(2008)onaseven-pointLinkertscale(1:“stronglyd i s a g r e e ” to7:“stronglyagree”)withstatementlike“TheoverallfeelingIgotfromthehotelwassatisfied.”.Forthemeasurementofhotelimage,itemsfromworkofMilfelner,Snojan dKorda (2011)were adaptedwithstatement like“Ithink most

itemscalewasadoptedfromworkofZelthamle t a l

( 1 9 9 6 ) t o measurec u s t o m e r l o y a l t y c o n s t r u c t , a c c o m p a n i e d bya s e v e n

t o 7:”exetremelyl i k e l y ” ) withstatementlike“Iwillsaypositivethingaboutthishotel/restauranttootherpeople."

(2)thed e s i r e d l e v e l w a s : n > 5 0 + 8m( w h e r e m = numbero f i n d e p e n d e n t

v a r i a b l e s ) Therefore,theminimumsamplesizeisn=5*29=145andn>50+8*5=90.Thisc o u ld beimpliedthatthesamplesizeshouldbeatleast145

To testthefourhypotheses,astudyo f starh o t e l s w a s conducted.ThephysicalfacilitieswerelocatedinthecentresofHoChiM i n h CityandHaNoiCity,wheretravelpartiesweremostcrowdedandfounditeasytodiscoveraboutcharacteristics ofhospitalityinVietnam.Thesurveyswereputatthereceptiondesks,coffeelounges,hotelrooms,orrestaurants’tables,wherei t couldcatchattentionofcustomersandgavethemcomfortableroomtofillintheq u e s t i o n n a i r e s

questionnaireonavolunteerbasis.Withatotalof500surveyswereputanddistributedinmentioneda r e a s ( w i t h t h e

i n t r o d u c t i o n o f h o t e l s staffw h e n n e e d e d ) ,

t h e r e w e r e 3 5 0 respondents.Aftershortlisting,54responsesweredroppedbecausetheywerefoundtob e i n a p p r o p r i a t e ( i n c o m p l e t e d a t a , t r a v e l l e r b u s i n e s s

e s a n d e v e n t s ’ c u s t o m e r s ) Finally,only296completedandusablesurveyscouldbeusedforthenextstepofanalysis

e d a t a , t h e d e s c r i p t i v e s t a t i s t i c s w a s i m p l e m e n t e d F u r t h e r m o r e , t h e i

n f e r e n t i a l

statistics was also used to extendbeyondthei m m e d i a t e d a t a a l o n e

a n d makeconclusionsbeyondthedataorreachconclusionsregardinganyhypotheses

3.4.3 Reliabilityanalysis

Toassesstheinternalconsistencyofthedatausedforthesurvey,Cronbach’sa l p h awasusedtorejecttheinappropriateitems.Thehigherthealphawas,themorer e l i a b l e thesamplewas.Foramorereliabledata,theresearchonlya c c e p t e d v ar i ab l e swithCronbach’salphahigherthan0.5

3.4.4 Exploratoryfactoranalysis(EFA)

AfterfilteringdatafromReliabilityanalysis,EFAwasappliedtoexplorethei n t e rrelationshipbetweenthevariables byBarlett’stest(<0 05)andKMOindex

w a s greaterthan0.6(therangefrom0to1)

3.5.5Multipleregressionanalysis

Finally,themultipleregressionwasconductedtotestthehypothesesthroughstudyingthe correlationand determinethe variation infourindependentvariables

Items Description Frequency %

from35to44yearsoldan d therestwas45yearsoldandover.Themajority ofrespondentswerev a c at io n e r s ( 8 1 % , e q u i v a l e n t t o 2 4 0 ) w h i c h w e r e f o l l o w e dby1 2 5 % o f b u s i n e s s travell er s (37),therestwereforotherpurposes

4.2 Assessmentandrefinementofmeasurementscale

Inthispartofresearch,themeasurementscaleswereassessedandrefinedby:

- Cronbachalphatotestthereliabilityofmeasurementscales

- Exploratoryfactoranalysis(EFA)totestthevalidityofmeasurementscalesT h e computingprocessofthealphashouldgeneratearesultof0.60orgreater

(Leechetal.,2005).Besides,ifascalehadCorrectedItem-TotalCorrelationequalorgreaterthan0.40,theyshouldbeke pt fornextstepof

an al ysi ng astheyareat

leastm o d e r a t e l y c o r r e l a t e d w i t h m o s t o f t h e o t h e r itemsa n d w i l l mak

Onethingshouldbeconsiderediswhethertheinformationexplainedbyonefactorw a s i n d e p e n d e n t o f theinformationint h e o t h e r

f a c t o r s Therefore,thisc h a p t e r utilizestheorthogonalrotation(Varimax),indicatingthefinalfactorswillbeasuncorrelatedaspossiblewitheachother

4.2.1 Cronbach’sAlpha

TheresultofCronbach’salphaintablebelowwasusedforthenextstepofdataanalysisprogress

Table4.2

ReliabilityAnalysisofDependentFactor

Code ScaleMeanifI temDeleted ScaleVarianceifI temDeleted

Corrected TotalCorrelatio n

Item-Cronbach'sA lphaifItemDe leted

Customerloyalty-CL(4items).Cronbach’sAlpha=0.867