EFFECTS OF CUSTOMER SATISFACTION ON ORGANIZATION’S PERFORMANCE OF THE HOTEL INDUSTRY

(A STUDY OF DOVER AND BELISIMO HOTEL, LAGOS-ISLAND, LAGOS)

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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The hospitality sector is part of a huge group of travel and tourism industry and is one of the fastest growing industries that provide the necessary and desirable goods and services to travelers worldwide. Sriyam (2010) pointed out that guest satisfaction in the hotel industry is the highest priority for owners and managers competing with hundreds of others, because personal services are top most of the travelers list when considering a hotel to stay in. Tailoring of customer service has seen more and more customers switch from one service provider to another, this is seen especially in the hotel sector where guests prefer a high level of service, and individual requirements are therefore much differentiated. Little (2011) gave an example of Banyan Tree Hotels where customers were offered tailored reservation to their taste; such as enjoying dinner on the ocean sandbank, plus some music played by the boat crew.

According to Schulz (2012), the hospitality industry has seen customer satisfaction, a key marketing tactic in differentiating itself from its competitors. Therefore a heightened understanding of a guest preference and total worth will enhance a guest experience and maximize hotel revenue.

Customer satisfaction emerges from the provision of service to customers before, during and after a purchase. Kurtenbach (2000) explained that those who are successful in customer service rank their customers experience as the top priority.

Ettore (2001) indicated that concentrating on current customer’s information can and should be obtained, to better understand their view of the service provided.  The quality of service provided determines the level of satisfaction of the customer. Even though what is seen as quality by one customer, may not necessarily be quality to another.

Customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer’s expectations. Customer satisfaction is an asset that should be monitored and managed just like any physical asset. The relationship between customer service and customer satisfaction is a vital one.

In a competitive market place, understanding customer needs become crucial, therefore companies have moved from product-centric to customer-centric positions. Customer satisfaction is influenced by the type of service provided. Satisfaction is a challenge these days to all industries.

High levels of customer satisfaction bring several positive aspects to a company; it is believed that customer satisfaction has a positive relationship with economic profit (Anderson, Fornell, and Lehmann, 1994). Moreover, it will lower customer’s price sensitivity (Fornell, 1992), and contribute to the creation of loyal customers, which in turn implies a stable future cash-flow (Matzler, 1996).

Any organization that has satisfied customers, is bound to increase its customer base and hence profitability. Satisfied customers may sell your organization either consciously or unconsciously.  It is therefore important that service industries provide quality service to customers so as to satisfy them, make them loyal and retain them at the end.

Customer satisfaction has never been as exciting as it is today because customers are more connected and knowledgeable than ever before. The social media, online customer reviews, messages forums and the power of internet search, are tipping and shifting the balance of power in their favour.

Effective modes of communications have shaped the marketplace, enabling consumers to present their preferences and standards to organizations that are poised to listen and respond (Adele, 2013). As contributed by Schultz (2012), that as competition in the hotel industry intensifies, hoteliers have learnt to shift their strategies from customer acquisition to customer retention and loyalty, which is only possible with effective customer satisfaction.

1.2  PROBLEMS OF THE STUDY

Employees especially in the service area either lack motivation or have a problem in attitude towards their work because this is a people industry and serving clients unhappily is against the industry expectations.

The problems associated with trying to relate individual attitudes and behaviour to organization-level performance, have meant that much of the empirical work to date has focused on relationships between the various individual attitudes.

Despite formulation and efforts made in improving employee’s satisfaction in the hotel industry, there have been scanty information effects of internal customer satisfaction, on service quality delivery in the company.

Barriers such as large numbers of customers with few hotel attendant, some problems with the system affect customer service provision in the hotel industry.

1.3   OBJECTIVES OF THE STUDY

The general objective of this study is to examine effects of customer satisfaction on organization’s performance of the hotel industry. The following are the specific objectives:

1. To assess the perception of customer on the services of the hotel Industry
2. To find out the kind of strategies the hotel industry has put in place to enhance customer satisfaction.
3. To establish whether customer satisfaction strategies put in place, have improved            and sustained performance in the hotel industry.
4. To examine the challenges influencing customer satisfaction in the hotel industry and suggest ways of overcoming the challenges.

1.4   RESEARCH QUESTIONS

The following research questions were raised to elicit information for this study:

1. To what extent will customer perception affect the services of the hotel Industry?
2. What strategies has the hotel industry put in place to enhance customer satisfaction?
3. How will customer satisfaction strategies improve  and sustain performance in the hotel industry?
4. What are the challenges influencing customer satisfaction in the hotel industry and suggest ways of overcoming them?

1.5   RESEARCH HYPOTHESIS

The following research hypothesis was raised and validated in the research project.

H_O1: There is significant relationship between customer perception and hotel performance.

H_O2: Service delivery is significant as a determinant of customer perception in the hotel industry.

H_O3: Customer satisfaction strategies improve and sustain performance in the hotel industry.

  1.6   SIGNIFICANCE OF STUDY

The study will be beneficial to the Dover Hotel and Belisimo hotel in Lagos as it will demonstrate the link between service quality and customer satisfaction expected in a hotel setting. This will in turn enable industry practitioners to define quality-related strategies, that will enhance customer satisfaction and firms’ competitiveness. It will provide empirical evidence on the customer perceptions on service quality and how this is linked with customer satisfaction.

Additionally, the study will be of great value to the government, especially the Federation of Tourism Association of Nigeria, it will help in formulating policies and the design of incentive schemes towards improving Nigeria as a tourist destination of choice. The study will also inform industry players on quality-related practices that enhance customer satisfaction, hence the overall destination appeal.

Finally, the study will greatly benefit the academia since it will serve to advance the literature on service quality and suggest areas for further study.

1.7   SCOPE OF THE STUDY

The study examines the effects of customer satisfaction on organization’s performance of the hotel industry. Due to competition in recent times in the hospitality industry, the study covers the hospitality industry practices in Nigeria as reflected by the employees and customers of Dover hotel and Belisimo hotel Lagos-Island, Lagos.

1.8   Definition of terms

Customer satisfaction: Customer satisfaction is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation.

Organizational performance: Organizational performance comprises the actual output or results of an organization as measured against its intended outputs

Hospitality Industry: The hospitality industry is a broad category of fields within the service industry that includes lodging, event planning, theme parks, transportation, cruise line, travelling and additional fields within the tourism industry.

Hotel: A hotel is an establishment that provides paid lodging on a short-term basis.

REFERENCES

Adele, E. (2013). The Service Encounter  Managing Employee / Customer Interaction in Service Businesses. Lexington, MA: Lexington Books.

Anderson, O. Fornell, D. and Lehmann, G. (1994): Relationship between drivers and results of performance in the Kenyan Hotel industry. Journal of Hospitality Management and Tourism. Vol. 3(3): 48-54

Ettore, R. (2001). Expectations and norms in models of consumer satisfaction. Journal of Marketing Research. 24 (3) 305-314.

Fornell, D. (1992), Hotel & Motel Management and Operation.  NJ: Prentice Hall, Inc.

Kurtenbach, E. (2000). Hotel Front Office Management. 3^rd ed. Printed in the United States of America.

Little, K. (2011). The Effects of Customer Expectation and Perceived Service Quality on Customer Satisfaction. International Journal of Business and Management Invention,  pp.79-84.

Matzler, E. (1996).  Strategic Management and Marketing in the Service Sector. Swedish School of Economics and Business Administration, Helsingfors.

Schulz, E. (2012). Determining Sample Size for Research activities, Educational and psychological measurement, 30,607-610

Sriyam, G. (2010) Current and Future trends in tourism and hospitality. The case of Greec; International Journal of Economic practice and Theories, 2(1), p.3

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