Abstract
In many parts of the world, the hotel industry has shown continued growth. This can be attributed to the economic growth that is being witnessed in many nations, effective marketing strategies, technological advancements, and diverse tourist attraction sites in many regions of the globe. The industry is expected to grow further in the future, a situation that has encouraged organizations, companies, and governments to put into place measures that will ensure match the expected needs of the customers in this industry. Research findings have shown that customer satisfaction, customer relationship, and customer loyalty are all very important in the industry.
These three factors determine the profitability of the industry and hence its growth. Customers who purchase the hospitality industry services value high-quality services, which determine whether they become satisfied or dissatisfied. Customers who get high-quality services usually show a high level of satisfaction, and therefore more likely to be loyal to the service provider (hotels). Those who are denied high-quality services are always dissatisfied and will lack confidence in the relevant institution. Different categories of requirements exist, and their fulfillment influences the customers’ perspectives about the services provided.
Introduction
The hotel management industry has become increasingly competitive with the service providers focusing greatly on delivering high-quality services to their customers. Too many service marketers, the aim is to provide “zero-defect” services to their customers. The hotel management has a responsibility to ensure its customers are satisfied with its services, a situation that will win the customer’s loyalty (Rutherford, G. 2001).
In the business industry, the relationship between the customer and the service provider is considered very important because it determines the success of a business enterprise. For instance, when customers have a good relationship with the service provider, the customers are very likely to be satisfied with the services that are provided to them. The need for businesses to handle their contracts with the customers properly has led to the development of customer relationship management, also abbreviated as CRM.
In the contemporary world, the management processes use CRM software to store prospective customers. Through this strategy, the hotel services can be improved and the information acquired to be used to improve marketing. In the hospitality industry, how well the customer relationship is managed determines the outcome of customer satisfaction.
Customer satisfaction refers to the level at which the products or services that are provided meet or surpass the expectations of the customers. Customer satisfaction is a key business element that allows businesses to determine how successful they are at providing quality services to customers. The type of customer relationship that the service provider organization has with its customers affects the level of satisfaction that a customer may get with the services.
For example, by managing the customer relationship effectively, hotels can be able to develop services that cater to the changing needs of the customers. This aims at ensuring that the customers get satisfied with the services that are offered to them.
Managing the customer relationship is one of the comprehensive and customer-centric approaches that the hotels, restaurants, and companies adapt as an organization’s philosophy that assists in dealing with the customers. The level of satisfaction affects the customers’ loyalty towards a given customer-service providing business enterprise. The quality of service that is provided to the customers leads to either satisfaction or dissatisfaction. This in turn determines how loyal a customer will be to the hotel- company, where great satisfaction in customers increases the profitability of the business and customer loyalty.
Taiwan is one of the world’s nations that have a very competitive hotel industry (Hsui, J. 1995). Located in East Asia, Taiwan is an island that is governed by the Republic of China (ROC). China has one of the fastest-growing economies in the world today, which has made the Island of Taiwan experienced rapid economic growth. The hospitality industry in Taiwan has also been growing due to its position as one of the favorite tourist destinations (Richard, L et al al.2001).
The industry has shown a great desire to provide high-quality services to the customers in order to promote customer satisfaction, which will no doubt increase customer loyalty. The industry just like in other regions of the globe has been considered as one that needs a reexamination of its approach to evaluate customer satisfaction.
In order to do this, it is important to determine customer relationships, customer satisfaction, and customer loyalty in this industry. The research findings will act as a base for developing better and effective ways in which customers in the industry can obtain services that meet their needs. Furthermore, problems that are identified as a hindrance to high-quality service within the industry can then be addressed.
Literature review
Taiwan has become a tourist destination which has, in turn, led to the growth of the hospitality industry. The Taiwan tourism industry growth has been predicted to record a total number of five million tourists by the end of 2008. Taiwan’s hospitality industry has continued to experience continuous growth which has, in turn, demanded competent professionals who are required to effectively and successfully manage the restaurants, hotels, lodgings, and other tourist facilities.
The growth has even initiated the development of hospitality and tourism courses and programs in universities and colleges. The hotel industry in Taiwan has contributed to Taiwan’s economic growth and the industry has been predicted to continue growing (Andrew, B et al. 2004). Some of the factors that have contributed to the success of the industry include Taiwan’s political and economic stability, coupled with the government’s commitment to support and encourage tourism. The development of the hospitality industry in Taiwan can be attributed to an industry cycle, where the customer’s needs are affected by both external and internal factors.
The hotel industry is divided into international and domestic hotels. In addition, the scale of operation and hotel ownership makes a hotel a domestic-owned company or a family-owned hotel (Sellnow, T., and Sarabakhsh, M. 1999). Based on this, the hotels vary in the manner through which they utilize their resources to provide quality services to the customers. The hotels differ in their organizational structure, business strategies, and scale of operation. The difference then determines the type and the quality of services the hotels can provide to the customers, however, they have a common objective; to utilize the available resources in order to provide efficient and services of excellent quality to the customers with the aim of ensuring customer satisfaction (Lawrence, Y et al. 1999).
It is the high-quality services that increase a hotel’s profits and customer loyalty, which makes it very vital for the hotels to survey the type of customer relationship they have with the customers and the level of satisfaction that the services delivered to give to the customers. Both domestic and international hotels are able to build a very strong industry if they cater to the diverse needs of their customers appropriately. In order to do this, the issues of the price of the services, customer relationship, accommodation, and other customer needs need to be addressed by the management (Nguyen ET al.2001).
Although the SARS outbreak affected the tourism industry, including Taiwan’s, the hospitality industry has recovered and it has in the recent past shown great growth. The witnessed rampant construction of hotels in China’s mainland, Hong Kong and Taiwan is a good indication of the industry’s growth in the future. The industry enjoys a favorable business environment which promotes stiff competition within the industry, making it very necessary for the different hotels’ management to adopt management and operations strategies that will attract a large number of customers and at the same time provide high-quality services to the customers (Steven, C. 2008). In addition, the strategies will need to achieve good customer relationships, great customer satisfaction, and encourage customer loyalty.
Statement of the problem
Different hotels within the hospitality industry provide distinct services to their customers, which gives the customers an opportunity to decide which kind of service suits them most amongst the many choices. In the mid-1990s, the hospitality industry in Taiwan required the government’s leadership and proper guidance for it to grow. One of the ways in which this has been done is by establishing the Tourism Bureau of Taiwan, which has the responsibility to provide information about Taiwan’s hospitality industry to the public and to market it as an excellent tourist destination.
This was to be done through sufficient goal-oriented employee training and comprehensive planning of the industry’s facilities. The Six-year National Development Plan that was put into place resulted in a 1.1 percent increase in the GDP between 1990 to 1994 and 7 percent in 1997 (Andrew, B. et al. 2004). The economic growth that was witnessed then led to the development of Taiwan’s hospitality and tourism industry. For example, a high number of tourists who visited Taiwan in 1997 were from other Asian countries (76%). The remaining percentage was represented by tourists from Europe, North America, and the other regions (ivythesis.typepad.com/term_paper_topics/2008/01/development-of.html).
Domestic tourism in Taiwan has been growing. However, the hotel industry growth in Taiwan faces some challenges. The industry’s diverse customer services that are provided demand proper organizational structures and business strategies. They face the challenge of effectively planning on how to utilize their resources, in order to completely satisfy the customers and to win their loyalty too (Maysing, H. Y.1997).
In the past, the hotels have experienced severe effects of the SARS outbreak in 2003. The hotels incurred great losses due to the low number of customers which reduced the revenue, and the efforts to alleviate the losses led to the offering of hospitality services at large discounts. This measure aimed at attracting a large number of visitors, a situation that made the hotels bankrupt.
Though the hotel industry in Taiwan has recovered and is now growing, customer satisfaction and loyalty still remain an issue that needs to be addressed. Not all the hotels and hospitality facilities in Taiwan have fully integrated the customer’s needs approach as they provide their services, due to lack of adequate information on which to base their management. Although the industry has put into place measures that promote customer satisfaction and customer loyalty, there is a need to review the customer service approaches so as to address the customers changing needs.. The hospitality industry has not been able to clearly understand customer relationships, satisfaction, and loyalty in the field.
This has to some extent acted as a limitation to the industries in relation to attaining their goals. Even in cases where customer relationships, satisfaction, and loyalty are studied, some hotels lack effective planning to address the issues that arise effectively. There is a need to study the customer’s perspectives so that the findings can be integrated into the industry’s management to increase profitability and to ensure that providing high-quality services becomes a priority in the industry( Lawrence, Y et al.1999).
Justification
The demands of the hospitality industry growing market are also being experienced in Taiwan, which has made the Taiwan government participate in the industry’s growth. For instance, the development and implementation of the Six-Year National Development Plan for the period between 1991 and 1996 promoted the growth of the industry. The Tourism Bureau in Taiwan has strengthened the industry by developing innovative leisure resorts, as well as tour packages that have attracted visitors into the country.
Other measures that have been taken to boost the industry’s growth include the creation of a favorable environment in the country and the development of effective marketing strategies. In addition, the Bureau has established links with other international tourism co-operations such as the Asia Pacific Economic cooperation, the American Society of Travel Agents, and the East Asia Travel Association.
All these measures have been put in place so that maximum gains from the industry can be attained. However, this cannot be achieved without proper knowledge of the customer relationship, customer loyalty, and customer satisfaction in the industry. There is a need to conduct research on these issues so that the findings from the research can be used to complement the other measures that have been recommended for the industry’s success (Walker, J. 2003).
High-quality service in any business helps an organization to have a competitive advantage over the others, which has made the hotel management efforts and contributions to be directed towards high-quality services delivery. A customer usually judges the quality of a service based on his/her perceptions and expectations, while the type of customer relationship whether good or bad determines the level of satisfaction a customer gets from a service that has been offered. This will then affect the loyalty of a customer. It is therefore very vital to understand customer relationships, satisfaction, and loyalty in the hospitality industry.
The industry is a service-providing industry which makes a customer’s perspective towards the offered services very important. The study will be very important in determining the type of customer relationship that exists between the customers and the hotels’ management in Taiwan. The findings on the relationship will enable the industry to identify how well the industry handles its contact with the customers, and the customer satisfaction study results may be used to measure Taiwan’s hotel industry’s success in meeting the customer’s expectations and needs. The level of satisfaction in customers will provide a better understanding of the customer loyalty that is expressed or is expected to be expressed.
Research Model
A customer-centered business model was being used in the research (Kandampully, J. 2006). The research will identify and present factors that affect the customers’ satisfaction, relationship, and loyalty. Different categories of customer expectations will be used to discuss customer satisfaction based on the research findings. The questionnaire that was designed took into account the must-be-requirements of the customers, one-dimensional requirements, and the attractive requirements of the customer services.
Using this model, the transformational changes in the hotel industry and the global market will be examined. This will provide the hospitality industry managers with information that will give a practical direction for the industry. The model will also effectively reorient the hospitality industry to be customer-centered by integrating some ideas from the customer satisfaction model by Kano. In this model, customer satisfaction will be measured based on the client’s happiness(www.12manage.com/description-customer-loyalty.html). In addition, some ideas from the customer loyalty model where the equality of service that is provided is considered to result in the customer’s satisfaction or dissatisfaction will be borrowed.
Research Methodology
Research area
The research will be conducted in Taiwan, an island located in East Asia. Taiwan covers a land area of 36,000 square kilometers, 394 kilometers in length (245 miles), and 144 kilometers in width (89 miles). The area has steep mountains which are covered by tropical and subtropical vegetation. Taiwan has the geographic coordinates of 25003’N latitude and longitude 121030’W. Different hotels in different locations in Taiwan will be studied (Andrew, B et al. 2004).
Data collection
One method in which customer relationship, satisfaction, and loyalty were examined is through the hotel guest comments cards (GCCS). In Taiwan hotels, guest comment cards have been designed to enable the hotels to evaluate the quality of services they provide to the customers (Walker, J. 2003), and the results of the services (level of customer satisfaction and the likelihood of customer loyalty towards the hotel). The content of the cards was then used to determine the customers’ perceptions about the hotel’s services. The analyzed findings will show how the best practice criterion which recommends quality services to the customers has been met by the hotels.
Another method of data collection that was used as the collection of information through questionnaires. The questionnaires were designed to enquire about the customer’s overall satisfaction with the services that were provided to them (Kandampully, J. 2006). The questionnaires were administered to the hotel customers in 50 well-known hotels in Taiwan. The participants were approached at random and then invited to take part in the survey based on the services they were getting from the hotels. In each hotel, a sample study of 40 customers was taken.
Data analysis
The content of the guest comments cards (GCCs) and the questionnaires was analyzed to determine the customer relationship and the level of satisfaction in customers in the hotels. The questionnaires provided an overall view of the customer’s satisfaction which was closely related to the customer’s loyalty.
Results and Discussion
Customer Relationship
The results indicated that more than 80% of the customers who were sampled asserted that their good relationship with the hotel’s management was important to them. Another 65% asserted that the hotels in which they stayed had shown the desire to develop and maintain a good relationship with the customers. The development of strong customer relationships in the hotels has been observed in the quick customer responses that were given to the customers and the hotels’ staff’s genuine desire to provide customers with outstanding services. Based on this, about 92% of the customers sampled stated that they preferred to stay in hotels that created and maintained superior customer relationships.
However, 34% of those interviewed admitted that the hotels in which they stayed lacked strong customer relationships. The hotels that had strong customer relationships showed a competitive advantage over the others in relation to goodwill, perceptions of trustworthiness in customers, and customer loyalty (Steven, C. 2008). The 66% of the customers who indicated that the hotels had a strong customer relationship said that they would seek again the services of the hotels in the future when the need to do arose. The hotels that had strong customer relationships showed commitment to customer relationship management (CRM) based on the findings.
The hotels view CRM as a very vital management tool in the competitive hospitality industry (Rutherford, G. 2001), which made the hotel adopt measures that would promote strong customer relationships. Some ways through which the hotels carried out customer relationship management included, database marketing, relationship marketing, and changing of the hotels/ marketing and service-providing strategies.
Customer relationship marketing has been integrated into hotels management with the aim of retaining the customers. The services were provided in order to promote a good relationship with the customers since it was considered by the hotels’ management as a very important element that would ensure customer satisfaction and loyalty. The hotels used the guest comment cards (GCCs) to analyze and predict the behavior of the customers.
Customer Satisfaction
Of the total 2000 customers who were interviewed, only 64% stated that they were completely satisfied with the quality of services that were provided in the hotels. While 47% of the customers expressed satisfaction with the diversity of services that were offered in the hotels, only 17% indicated that they were fully satisfied with the services. Those who were partly satisfied said that the hotels had fulfilled the basics, but failed to cater for other issues that would have made them more satisfied.
Those who were dissatisfied with the services attributed their dissatisfaction to low-quality services and insecurity. The type of services that were offered to the customers influenced their level of satisfaction. About 66% of customers experienced very minimal or no crime incidences, which made them express greater satisfaction than those who had been robbed or attacked more frequently (34%). The Taiwanese hotels were located in different regions of the nation and towns and depending on the location, the crime rate was either high, low, or not there at all.
Of the 50 hotels that were studied, around 8% were said to encounter insecurity problems either within the hotels or in the vicinity of the hotels. The customers who stayed in hotels where the security was not compromised expressed satisfaction (Tzeng, G. et al. 2002). Those who had been robbed or attacked showed dissatisfaction.
The quality of food offered in the hotels and restaurants affected the customer’s satisfaction since the customers came from different nations and cultural backgrounds, a factor that influenced their food preferences. The Taiwanese hotels showed diversity in relation to the food types they offered to their customers. Over 90% of the hotels offered a very wide range of food types which catered for visitors from different cultural backgrounds. About 86% of the customers stated that the food type’s diversity in the hotels was satisfying since it gave them a wide range of food types to choose from. When customers were offered food types that they liked or loved they were most likely to be satisfied with the hotels’ food services.
The quality of food also affected the customer’s perspectives. About 78% of the customers asserted that the quality of food that was offered in the hotels was fine, while the remaining 22% felt that the food quality was not up to the standards. Food that was well cooked and served but unappetizing to the customer resulted in customer dissatisfaction. Providing a healthy, appetizing, and well-balanced diet to the customers was appreciated which promoted customer loyalty.
Customer Satisfaction and Customer loyalty
The quality of service in the hotels was represented by the difference between what the customers expected and what they received (linkinghub.elsevier.com/retrieve/pii/5027843/904000209). Based on the content of the questionnaire, three categories of customer expectations were identified. These categories determined the customers’ satisfaction and loyalty. The findings indicated that the must-be requirement was one category of expectations that the customers based on to show satisfaction or dissatisfaction. Over 90% of the customers stated that they were satisfied when the hotels fulfilled the must-be requirements.
For instance, all customers said that they preferred hotels that showed a high level of cleanliness. About 15% expressed dissatisfaction when the must-be requirements were not fulfilled. The customers said that the hotels had portrayed hygienic standards that fell below their expectations. The requirements were considered prerequisites and the failure to fulfill them promoted a feeling of disappointment in customers. About 8% of the customers said that they had been targets of criminal activities by being robbed of their property or being in the vicinity of a crime scene. Having appropriate security measures in place was also considered a prerequisite by the customers.
All the customers said that security was a must for them, and it was only through appropriate security measures that the customers would then be assured of their own security and that of their families and relatives. Customers who felt that the must-be requirements were fulfilled admitted that they were satisfied and would seek the hotel’s services in the future if need be (Bhote, K.1996).
Another category of expectations was the one-dimensional requirements. The fulfillment of one-dimensional requirements led to a high level of satisfaction in customers. For instance, hotels that provided customers with elaborate and refined food dishes had their customers express a higher level of satisfaction as compared to those who stayed in hotels that provided basic meals with limited food items. The customers who perceived the meals that had been offered to them as “just basic” showed dissatisfaction with the services, which resulted in a perception of low quality in customers.
Hotels that provided high-quality bed and bedding facilities, as well as exciting and enjoyable leisure facilities, were most preferred by the customers, as indicated by over 85% of the customers. The availability of attractive requirements to the customers led to their satisfaction or dissatisfaction. The requirements had a great impact on the customers’ satisfaction and loyalty. Customers who had these requirements fulfilled in their hotels showed great satisfaction. On the other hand, those who did not have these requirements fulfilled did not show a low level of satisfaction.
According to the findings, only 3% indicated dissatisfaction due to unfulfilled attractive requirements. For instance, customers who had private balconies, a fireplace in the guest rooms, and meals served in the guest room indicated great satisfaction compared to those who lacked such services.
The customers’ loyalty was determined by looking at the behavioral and attitudinal dimensions. In behavioral dimensions, the customer’s preference for a given service over a certain period of time determined the loyalty of the customer to the hotel. The attitudinal dimension helped in determining a customer’s intention of repurchasing the service again. This indicated strongly the customer’s loyalty. The customers who had shown the intention to seek services from the same hotel over and over again were very likely to remain loyal to the hotels.
Conclusion
From the research findings, the customers’ satisfaction and high-quality services are prerequisites of customer loyalty. However, other factors that may influence the customer’s satisfaction and loyalty are just additional prerequisites. Taiwan is recognized as one of the world’s most attractive tourist attractions, which has prompted the growth of the hospitality industry in the country. The image of a hotel influences the customer’s loyalty, and the customer’s satisfaction in the hotel industry is considered to be very vital in determining the outcome of the industry economically (Steven, C. 2008).
In order to satisfy the customers, the hotels need to identify clearly the customers’ perspectives about their services so that they can expand the range and quality of their services to cater to the customer’s needs effectively. This increase in the profits generated from the businesses the customers’ satisfaction with the services and the quality of service provided to them affects the future purchase intentions (customer loyalty). The customers’ recommendations are a representation of the function of their satisfaction, and service quality perceptions.
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