SERVICE QUALITY AND CUSTOMER LOYALTY IN THE HOTEL SECTOR. A CASE STUDY OF FAIRWAY BOUTIQUE HOTEL KAMPALA

ABSTRACT

The study sought to assess the relationship between service quality and customer satisfaction in the hotel sector. Specifically, it established the strategies for service quality in the hotel sector, assessed customer satisfaction levels in the hotel sector, and examined the relationship between service quality and customer satisfaction in the hotel sector.

A cross-sectional study design was used to collect quantitative data. The study used questionnaires to collect data from guests at Fairway Boutique Hotel Kampala. The data collected was analyzed using descriptive and Pearson Correlation.

The study found that the service quality is that the hotel provides accurate information and services as promised, and the food in this hotel is visually appealing and highly dependable to the hotel’s information and services. Employees provide their services at the time they promised to do so and are always willing to help customers when they have problems. In Fairway Boutique Hotel Kampala, employees tell customers exactly when services will be performed and are always willing to help the customers. The employees give prompt customer service and are never too busy to respond to customers’ requests.

The study concluded that a positive change in service quality is associated with a positive change in customer satisfaction in the hotel industry. The researcher recommended that the hotel management train its staff members further on how to present food on the table for the guests through seminars and training.

CHAPTER ONE

INTRODUCTION

1.1 Introduction

This chapter presents the background to the study, statement of the problem, general objective of the study, specific objectives of the study, research questions, the scope of the study, and the significance.

1.1. Background to the study

Service quality is the extent to which customers’ perceptions of service meet and/or exceed their expectations (Upadhyai et al., 2019). Service quality is “the differences between customer expectations and perceptions of service” (Nilashi et al., 2021). They argued that measuring service quality as the difference between perceived and expected service was a valid way for management to identify gaps in what they offer (Prakash, 2019). The aim of providing quality services is to satisfy customers (Zhong & Moon, 2020). Measuring service quality is a better way to dictate whether the services are good or bad and whether the customers will or are satisfied with them (Alzoubi et al., 2021).

Service quality includes practices like how clean and nice the hotel looks, how reliable and quick the service is, how friendly and knowledgeable the staff are, and how well the hotel takes care of its guests (Ali et al., 2021). Studying service quality is important because it affects how happy customers are and whether they will return (Kirillova & Chan, 2018). Good service quality leads to satisfied customers who return, tell others about the hotel, and help the hotel build a good reputation (Wampande & Osunsan, 2020). Key factors determining service quality include well-trained staff, a clean and well-kept environment, clear communication, and consistently good service (Muheebwa et al., 2019).

Customer loyalty in the hotel industry means how likely a customer is to return to the same hotel (El-Adly, 2019). Loyal customers often return because they had a good experience and trust the hotel to meet their needs again. Loyalty is shown by repeat visits, positive reviews, and recommendations to others (Mokhtar & Sjahruddin, 2019). It is important to study customer loyalty because loyal customers help the hotel by bringing in steady business and spreading positive word-of-mouth (Priyo, et al., 2019). Factors influencing customer loyalty include the quality of service, how well the hotel meets customer expectations, the personal touches or rewards offered to repeat customers, and guests’ overall experience during their stay (Phi et al., 2018).

Customer loyalty is beyond just returning guests; it also involves an emotional connection with the hotel brand. This bond is strengthened through personalized services, consistent quality, and unique experiences that make the hotel stand out from its competitors (Kim et al., 2020). In a competitive market, creating memorable experiences is key to building loyalty. Hotels do this by understanding what guests like and customizing services to meet those needs, such as personalized room settings, special discounts for returning guests, or loyalty programs that reward frequent stays (El-Adly, 2019).

The higher the hotel’s service quality, the greater the chances of building strong customer loyalty (Trini & Salim, 2018). Customers who experience excellent service are more likely to return to the hotel, leading to repeat business and long-term relationships (Ali et al., 2021). High service quality can also encourage customers to become loyal to the brand, frequently choosing the same hotel over others (Prakash, 2019). In addition, satisfied customers often use positive word-of-mouth marketing, recommending the hotel to friends and family (Alzoubi et al., 2021). On the other hand, if the service quality is poor, customers may not return, and they might share their negative experiences with others, damaging the hotel’s reputation (Upadhyai et al., 2019). Despite the importance of service quality in fostering customer loyalty, hotels still report challenges in maintaining consistent customer loyalty, which could be attributed to variations in service quality (Nilashi et al., 2021).

When customers perceive that the service quality at a hotel is consistently high, they are more likely to develop a strong sense of loyalty to the hotel, returning for future stays and recommending it to others (Ali et al., 2021). High-quality services, such as clean and wellmaintained facilities, attentive and professional staff, and prompt and reliable service, create positive customer experiences that lead to higher satisfaction and repeat business (Muheebwa et al., 2019). Therefore, improving service quality is a key strategy for hotels to enhance customer loyalty and secure long-term success. However, there is still a limited understanding of the different aspects of service quality and customer loyalty (Phi et al., 2018). This study used quantitative research methods to examine the relationship between service quality and customer loyalty in the hotel sector.

1.2 Statement of the problem

Customer loyalty is key for organizations wishing to achieve better business (El-Adly, 2018). Fairway Boutique Hotel Kampala has implemented several initiatives, such as staff training and facility upgrades, to improve service quality. However, despite these efforts, the hotel continues to face challenges with low customer loyalty and recurring complaints, which may be due to inconsistencies in service quality (Barakagira & Paapa, 2024). If these issues are not addressed, the hotel risks declining revenue and market position (Muheebwa et al., 2019). Therefore, this study investigated the relationship between service quality and customer loyalty in the hotel sector.

1.3. General objective

To assess the relationship between service quality and customer loyalty in the hotel sector.

1.4 Specific Objectives

1. To establish service quality strategies in the hotel sector
2. To assess the determinants of customer loyalty in the hotel sector.

• To examine the relationship between service quality and customer loyalty in the hotel sector

1.5 Research Questions

1. What are the service quality strategies in the hotel sector?
2. What are the determinants of customer loyalty in the hotel sector?

• What is the relationship between service quality and customer loyalty in the hotel sector?

1.6 Scope of the study

1.6.1 Content scope

The study assessed the relationship between service quality and customer loyalty in the hotel sector. The study was guided by establishing service quality strategies in the hotel sector, determining customer loyalty, and determining the relationship between service quality and customer loyalty in the hotel sector.

1.6.2 Geographical scope

The study was carried out at Fairway Boutique Hotel Kampala. The reason for the selection of the study area was because of the ease of access.

1.6.3 Time scope

The study was conducted for four months and used secondary data for the past five years (20172024).

1.7 Significance of the study

Policymakers

Policymakers will use the findings to develop policies and regulations that promote better service quality and customer loyalty, which can contribute to industry and economic growth.

Management

The management will develop effective strategies to address the needs and preferences of their customers, thereby enhancing the hotel’s competitiveness in the market.

Customers

The study findings will help customers make informed decisions when choosing a hotel and can also provide feedback to the hotel on areas that need improvement.

Employees

The findings will help employees understand the importance of their role in providing quality customer service and motivate them to perform their duties with more diligence and care.

Academicians

The study will contribute to the academic literature on service quality and customer loyalty in the hospitality industry.