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

The result proposes that loyalty of hotel guests influence the most by customer delight, which is followed by customer satisfaction and hotel image.. In light of the above observation, t

MASTER OF BUSINESS (Honors)

SUPERVISOR:

Prof Nguyen Dong Phong

Dr Nguyen Phong Nguyen

Ho Chi Minh City - 2015

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 supportand encouragement during the process of thesis writing

I would like to thank allstaff from International School of Business-UEH fortheir time with providing me necessary information

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 to3-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 customerdelight 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

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

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

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

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

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 dramaticdevelopment in all aspects including economy, education and culture The entry intoASEAN 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, thehotel industry has made strong development and gradually integrates into the globaldevelopment process In the Grant Thornton Vietnam’s “Vietnam Lodging Industry

- Executive Summary of the Hotel Survey 2013” in June 2014, they report thatVietnam welcomed7,572,352 international visitors, increasing by 10.6% incomparison with 2012, exceeded the expected 7.2 million international touristarrivals for the year Together with that, a combination of strong economic growth,rising income levels, a growing middle class, a sizeable and growing youthpopulation, 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 growthplans, from exploring the “hidden charm” to developing “timeless charm” of thecountry Nonetheless, Vietnam is not ready for a large influx of tourists as well asdomestic sizeable youth population at the moment as there are a number ofconstraints hindering its development, and innovations in retaining customers is one

of the most important aspects that hotel industry in Vietnam should manageeffectively

The tourism has been considered playing important role in creating jobs,developing the country’s economy In fact, as travel has been developing rapidly

with series of beautiful landscapes, specialties and very friendly locals, together withmore businesses are being dealt with, the request for temporary accommodations hasbeen increased.However, in this emerging market, not only many multinationalgroups have been entering the market, but also a number of startups founded bylocal businesspeople or Vietkieu have been finding their path to gain the marketshare Effort by the government and media has educated the population becomesmart 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 ofnew hotels which have met the standards of serving international tourists have beenbuilt (up to 686 hotels from 3 to 5-start hotels in 2013, according to Grant ThorntonVietnam’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 affectingcustomer 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, theymay lose the customer throughout his/her purchasing lifetime.It is obvious thatloyalty has effect on financial health through steady cash-flow and repeatedcustomers Patterson (1997) reassures this point by stating that companies with largegroup of loyal clients can earn more seven percentages in price, as customers areless price sensitive Furthermore, Cheng et al (2011) and Tu et al (2011) also agreethat companies will spend at least five to nine time in attracting a new customerrather 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 shouldemphasize on customer retention than obtaining new ones in order to reduce theexpenditures on money and time This strategy will bring a long-term or short-termprofit 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:

(1) cheaper service cost than obtaining new customers, (2) possibility of payinghigher 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)morefrequent 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 emergingmarket like Vietnam are struggling on how to create real commitment of customersillustratting by the motivation of purchasing services without any encouragement

In light of the above observation, the research will identify factors that affectcustomer loyalty in Vietnam’s hotel sector; specifically, it will test the positiverelationship of service quality, customer satisfaction, hotel image and customerdelight 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 ofmany researchers However, due to their own essentials and restrictions, or thedifference 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 relationshipbetween those variables has been in different ways Moreover, the influence of thosefactors is also different between hotel and service sector and the researcher hardlyfound study comparing those two sectors Hoteliers should identify and developfactors 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 andsatisfaction enhancement (Kandampully& Hu, 2007)

InVietnamese context, only a few publicized studies research about customerloyalty in hotel sector For instance, Khuong et al (2015) on their study aboutfactors 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 satisfactionand 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 andsatisfaction of a5-star hotel in Hanoi City From these evidences, it is worth notingthat study about 3-star hotel in Vietnam is not easy to be found Besides, in thecompetitive market like in Vietnam recently, hotels should take into considerationthe importance of “customer delight” to enhance the level of loyalty Therefore, thisstudy aims at testing the factors affecting customer loyalty of 3-star hotel inVietnam, 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 whichservice quality, customer satisfaction, hotel image and customer delight influence oncustomer loyalty

1.4 Research scope

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

1.5 Contributions and implications

This research provides insights into customer loyalty in Vietnam’s hotelsector as well as introduces a factor predicting such the loyalty called “customerdelight”; additionally, the study also tests the ability and applicability of proposedresearch model and the usability of constructs’ measured items in Vietnam’sbackground Its generalizability can specifically guide educators and hoteliers in thecountry

1.6 Structure of the thesis

The research has been structured in the following manner: it begins byreviewing the literature for each variable considered in the study (service quality,customer satisfaction, hotel image, customer delight and customer loyalty) and thengoes 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 theresearchbackground, problems and objectives, methodology as well as theimplication.Chapter 2“Literature review” comprises ofdefinition related to restaurantservices, deep review of previous researches on customer loyalty, corporate image,service quality and customer satisfaction and the basis ofbuilding the conceptualmodel.Chapter 3 “Research methodology” presents the researchprocess,measurement scale, preliminary assessment of measures and datacollectionprocedures as well as the data analyses process.Chapter 4 “Data analysis”consists of the officialassessment of measures, hypotheses testing, data analysisresults andinterpretation.Chapter 5 “Conclusion” concludes the findings andproviding managerial implications and proposing specificrecommendations forimproving customer loyalty in hotel sector in Vietnam

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 originalempirical research on certain aspects of quality (Atilgan, Akinci&Aksoy, 2003).Furthermore, Kandampully and Suhartanto(2000) stress the importance of quality ofhospitality firms as a main driving force to come up with competitive challenges.Similarly, Hu, Kandampullyand Juwaheer(2009) view service quality as meanassisting 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 receivesincreasing attention in the literature, yet there is no consensus of which measureoffers the greatest validity Grönroos (1984) identifies two dimensions of servicequality: functional quality (“how” service is performed) and technical quality(“what” the customer receives from the service experience) The three mainmeasurements to analyze the concept of quality in service industry are theImportance-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 touristdestination (Hudson et al., 2004) The currently popular measurement of servicequality can be traced to the research of Panasuraman, Zeithaml, and Berry (1985) inwhich they defines service quality as a difference between what customersexpectfrom service performance and their perceptions of what is delivered Moreover, theevaluation of service quality is more difficult than product quality as service needs awhole process to be evaluated Therefore, to develop determinants of service quality,

the authors implement a series of focus group sessions and determine that servicequality has 10 determinants Later on, in 1988, they recast those determinants intofive specific components: tangibles, reliability, responsiveness, assurance, andempathy called SERVQUAL scale In the scale, service quality is measured byidentifying the gaps between customers’ expectations and their perceptions of theactual service performance by seven-point Linkert scale with 22 items grouped intofive 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 wherethe Linkert scale cannot differentiate between level of importance and importance ofperformance SERVQUAL scale is argued about the consistency of the fivecomponents when subjected to cross-sectional analysis (Carman, 1990) andSERVQUAL conceptualization is only adopted in only a few industries(Cronin &Taylor, 1992) They all agree that performance-based measures of service qualityshould be used Cronin and Taylor (1992, 1994) confirms that the performance-based scale developed (SERVPREF) is more efficient than SERVQUAL scale since

it explains more of variation in service quality In light of this opinion, the studysuggests that performance-based scale should be implemented in measure servicequality

Hotel image.Bitner (1990) and Nguyen (2006) identify image as an

important predictor of customers’ evaluation of a company and is the first thingcustomers think about when hearing a company’s name.Nguyen and LeBlanc (1998)consider image as a combination of product characteristics differentiating fromphysical product, as subjective knowledge and as an attitude Furthermore, whatcustomers stored in memory about ideas, feelings, and previous experiences with anorganization will comprise image Similarly, Barich and Kotler (1991) agree on therepresentative ability of image for the impressions and associations, the beliefs andattitudes that customers may memorize when experiencing with a company.Mazanec(1995) also reports that there is a positively relationship between image andcustomer preference (a dimension of customer loyalty) Kandampully and Hu (2007)argue that there are two principal components of corporate image, one is functionalisrelated to easily-to-measure tangible characteristics, one is emotionalassociated withfeelings 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 brandthat consumers may formulate through activities related to that brand Brand image

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

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 thatcustomer satisfaction is a central concept of marketing as if firms know how todeliver a product together with satisfaction to customer, i.e meet the needs andwants 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 thatsatisfaction is the confirmation or disconfirmation of customers’ perception ofservice performance when comparing with the expectation, i.e., hedefinessatisfaction as “a summary psychological state resulting when the emotionsurrounding disconfirmed expectations is coupled with the consumers’ prior feelingsabout the consumption experience” (p.27) He differentiates between satisfactionand perceived service quality in which satisfaction is related to a specific transactionwhereas service quality is involved in the superiority of the service, i.e satisfactionisthe emotional response from a cognitive process of judging the service receivedagainst the costs of obtaining the service The common belief of customersatisfaction is an overall attitude towards a service provider Customers really want acommon feature between their values (needs and wants) and the objects of theirevaluations (Parker and Mathews, 2001) Furthermore, Kotler (2003) argues thatsatisfaction is the feelings of pleasure or disappointment when they comparebetween perceived performance and their expectations; therefore, their feeling isbased on the compatibility between perceived performance and expectations, fromdissatisfaction, neutral stage or satisfaction In light of all previous researches, thestudyconsiders satisfaction is an overall evaluation of customers towards thedifference between what they expect and what they actually perceive of a serviceperformance

Customer delight.Customer satisfaction has been researched and convinced

as premium goal in service industry, yet the researches about satisfaction leading tocustomer loyalty has been challenged these days (Skogland&Siguaw, 2004; Voss,Roth & Chase, 2008) The researchers are interested in finding a factor that takesinto consideration both emotional aspects and peak experience called “customerdelight” (Torres, Fu &Lehto, 2014) Torres and Kline (2006) suggest that in recentliterature, firms strive to not only achieve loyalty from satisfaction but alsotransform themselves to a higher level of satisfying customers – delightingcustomers to earn more loyalty and higher profit.There are three approaches todefinition of customer delight in current literature, one definition stresses theconfirmation–disconfirmation paradigm, one stressesaffect-based approach, and thelast one stresses on human needs The first approach proposes that customer delight

is achieved when customers encounter services that can please them beyond thelevel of satisfaction (Patterson, 1997), i.e customer delight will be generated at thedegree 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 responseresulting from surprising and positive levels of performance (Finn, 2005) The lastapproach proposes that customer delight is a function of the satisfaction of threehuman needs: security, justice, and self-esteem (Schneider and Bowen, 1999).Based

on the literature review, this study supports the conceptualization of customerdelight 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 interactionbetween customers and companies during customers’ purchasing experience and itwill ensure the future purchase Once companies earn customers’ loyalty, there will

be a lower chance of finding potential alternatives and a higher chance ofconsistentre-patronize (Marshall, 2010) Therefore, Bagdonienė&Jakštaitė (2007)suggest that companies should focus on enhancing customer loyalty througheffective marketing strategy as a primary strategy The implementation of thisstrategy is to make customers feel involved in a win-win situation which leads to amore favorable perception toward the company and word-of-mouth, lower pricesensitivity, 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 becausethey have no alternatives to the sources of providers The latter assists the idea of re-patronizing customers even when they have potential alternatives The emotionalbackground of loyalty is in the form of combination between feelings, expectationsand 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 theprocess of cognitive–affective–conation–action pattern and a consumer can becomeloyal at any of these four phases Customers firstly evaluate one brand’s service assuperior than other alternatives and then find way to experience the service todevelop a positive attitude toward the brand In the third loyalty phase, customerscommit to return to patronize, which is followed by the last phase transforming theintention into readiness to act In light of previous research, the study defines acustomer as loyal when they possess repurchase intention, price insensitivity,positive word-of-mouth and frequent purchase and no switching behavior

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 andcustomer loyalty Kandampully et al (2011) says that service quality is one of themost crucial factor for survival and development for hotels, once a hotel can acquirehigh level of service quality, it can meet the requirements of a successfulcompetition like loyalty and profitability Panasuraman and Grewal (2000) agreesthat customers have been no longer compromised with the quality offered by serviceproviders, hence the enterprises should better stand from the crowd with their uniquestandard of service and that the competitors cannot duplicate with If the indicators

of customer loyalty are repurchase intention or positive word-of-mouthrecommendation, numerous studies have investigated the positively directrelationship between quality and loyalty(Parasuraman et al., 1991; Getty &Thompson,1994;Kangis& Zhang, 2000) Similarly, Chow et al (2007) figure outthat a high level of service quality is associated with frequent patronage.However,some studies agree on both direct and indirect relationship between service qualityand customer loyalty For instance,Cronin et al (2000)prove on their study that thedirect 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 qualityand behavioral intent - which is very closely to loyalty.On the basis of the abovediscussion, the following hypothesis is proposed:

H1: Service quality positively affects customer loyalty.

2.2.2 Relationship between customer satisfaction and customer loyalty

Thomas (2013) clarifies the positive relationship between satisfaction andrepurchase intentions or likelihood of recommending a product or service, i.e.,satisfaction can lead to repurchase and word-of-mouth communication, which in thelong run will become customer loyalty Anton (1996) and Cronin and Taylor’s(1992) finding reveals that satisfaction is a significant antecedent of positivebehavioral intention in service sector; hence, a dissatisfied customer are likely tospread 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) findthat among housekeeping, reception, F&B and price, satisfaction with housekeeping

is the strongest factor in determining customers’ intention to repurchase andrecommend Riadh (2009) explores that emotionsatisfaction significantly impact onloyalty 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 andcustomer satisfaction (Hu et al., 2009) Heung, Mok, and Kwan (1996) explore thathotel 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 Asproved earlier in this paper, many evidences prove a strong role of image as anantecedent 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

(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 strongerpredictor 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) hasalso 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.

2.2.5 The proposed model

The research on antecedents of customer loyalty has been an interest ofresearchers in literature review with many proposed model and suggestion on theantecedents As per the mentioned hypotheses, the research model is proposed asbelow:

Service quality

H1Customer satisfaction

H2

Hotel image

Customer loyaltyH3

H4Customer delight

Figure 2.1.The proposed model.

Chapter 3 RESEARCH METHODOLOGY

The research was designed with a clear objective of identifying factorsaffecting customer loyalty in hotel industry The literature review session revealedprevious studies researching relevant variables in the researched model Theresearch methodology explained the method of collecting data, the source,measurement scale, sampling techniques and also the data analysis method Theresearch methodology in this chapter started with a pilot study and was analysedafterwards to research further on the collected data in order to make conclusion anddiscussion from that

3.1 Measurement scales

The research model consisted of five variables and their measurements werebased on previous studies: a dependent variable customer loyalty, and fourindependent variables (service quality, customer satisfaction, hotel image andcustomer delight) Since SERQUAL scale developed by Panasuraman et al (1985),service quality has been a widely studied and modified construct However, for thepurpose of explaining variance in dependent constructs, many researchers havesupported 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 appliedthe performance-based service quality measure (SQP) in measuring the servicequality 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 adaptedfrom work of Ryu, Han and Kim (2008) on a seven-point Linkert scale (1: “stronglydisagree” to 7: “strongly agree”) with statement like “The overall feeling I got fromthe hotel was satisfied.” For the measurement of hotel image, items from work ofMilfelner, Snoj and Korda (2011) were adapted with statement like “I think most

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 atsome time during my stay at this hotel” A five-item scale was adopted from work ofZelthaml et al (1996) to measure customer loyalty construct, accompanied by aseven-point Linkert scale (1: “not at all likely” to 7:”exetremely likely”) withstatement like “I will say positive thing about this hotel / restaurant to other people."

SQ1 Generally, the employees provide service reliability,

consistently, and dependably

SQ2 Generally, the employees are willing and able to provide

service in a timely manner

SQ3 Generally, the employees are competent (i.e., knowledgeable

and skillful)

SQ4 Generally, the employees are approachable and easy to

contact

SQ5 Generally, the employees are courteous, polite, and respectful

SQ6 Generally, the employees listen to me and speak in a language Cronin et al (2000)

that I can understand

SQ7 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

Customer satisfaction

SA1 I was pleased to stay at the hotel

SA2 The overall feeling I got from the hotel was satisfied Ryu et al (2008)

SA3 The overall feeling I got from the hotel put me in a good

IM4 I think this hotel is popular

IM5 The staff in this hotel always put their customers first

Customer delight

DE1 I felt delighted at some time during my stay at this hotel

DE2 I felt gleeful at some time during my stay at this hotel Kim et al (2013)

DE3 I felt elated at some time during my stay at this hotel

DE4 I felt positively surprise at some time during my stay at

this hotel.

DE5 I felt overjoyed at some time during my stay at this

hotel

DE6 The hotel had experiences/services which were

unexpected and they delighted me

Customer loyalty

CL1 I will say positive thing about this hotel to other people

CL2 I will recommend this hotel to someone who seeks my Zeithaml et al (1996)

advice

CL3 I will encourage friends and relatives to do business

with this hotel

CL4 I will consider this hotel my first choice to buy services

be at least 100: n > 100 samples and n=5k (where k = the number of items), (2) thedesired level was: n > 50 + 8m (where m = number of independent variables).Therefore, the minimum sample size is n = 5*29 = 145 and n > 50 + 8*5 = 90 Thiscould be implied that the sample size should be at least 145

To test the four hypotheses, a study of customers who stayed at 3-starhotelswas conducted The physical facilities were located in the centres of Ho ChiMinh City and Ha Noi City, where travel parties were most crowded and found iteasy to discover about characteristics of hospitality in Vietnam The surveys wereput at the reception desks, coffee lounges, hotel rooms, or restaurants’ tables, where

it could catch attention of customers and gave them comfortable room to fill in thequestionnaires

3.3 Data collection methods

A pilot study (n=30) was conducted using a hard-copy survey in September2014with guests staying in some hotels in Ho Chi Minh City and Ha Noi City to testthe questionnaire instrument Based on the performance in the pilot study, thequestionnaire was revised to minimize all difficulties in reading andmisunderstandings in wording (Appendix A)

The empirical study was carried out in Ho Chi Minh City and Ha NoiCityfrom September to November 2014 Individuals over the age of 18 years andwho were staying in 3-star hotels in mentioned cities were considered to be thetarget population Applying the convenient sampling technique, the data collectionwas achieved mainly through printed surveys On completing a stay at a hotel in HoChi Minh City or Ha Noi City, hotel guests were asked to fill in the questionnaire on

a volunteer basis With a total of 500 surveys were put and distributed in mentionedareas (with the introduction of hotels staff when needed), there were350respondents After shortlisting, 54 responses were dropped because they were found

to be inappropriate (incomplete data, traveller businesses and events’ customers).Finally, only 296 completed and usable surveys could be used for the next step ofanalysis

3.4 Data analysis method

statistics was also used to extend beyond the immediate data alone and makeconclusions beyond the data or reach conclusions regarding any hypotheses.

3.4.3 Reliability analysis

To assess the internal consistency of the data used for the survey, Cronbach’salpha was used to reject the inappropriate items The higher the alpha was, the morereliable the sample was For a more reliable data, the research only acceptedvariables with Cronbach’s alpha higher than 0.5

3.4.4 Exploratory factor analysis (EFA)

After filtering data from Reliability analysis, EFA was applied to explore theinter relationship between the variables by Barlett’s test (< 0.05) and KMO indexwas greater than 0.6 (the range from 0 to 1)

3.5.5 Multiple regression analysis

Finally, the multiple regression was conducted to test the hypotheses throughstudying the correlation and determine the variation in four independent variablespredicted by one dependent variable According to Leech et al (2005), the multipleregression required six assumptions: (1) A linear relationship between predictorvariables and dependent variable, (2) Independence of residuals (errors), (3)Homoscedasticity of residuals / equal error variances, (4) No multicollinerarity, (5)

No significant outliers, and (6) Residuals/ errors are normally distribute