CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

The chapter presented a review of the related literature by other researchers and other sources of information on this particular problem under study. The literature was cited from Journals, Books, Newspapers, websites, and reports and flows according to the research objectives.

2.1. Service quality strategies in the hotel sector

Service quality is crucial in the hospitality industry (Yen, 2016). It helps improve the effectiveness of the menu and serves as a key selling point for hotels (Neeng, 2016). Good service quality makes customers want to visit the hotel for its food and return in the future. Customers are willing to pay more for good service (Ryu et al., 2012). There are five important aspects of service quality: serving fresh and delicious food, providing nutritious options, offering a variety of menus, and making the food appealing to customers (Al-Tit, 2015).

Service quality measures how well the food meets customer expectations (Tjiptono, 2015). If the service falls short, customers are dissatisfied; if it meets or exceeds expectations, they are satisfied (Winarjo, 2016). Dao and Tin (2015) found that service quality significantly affects customer satisfaction. People often choose restaurants for leisure time, and quality is a major factor (Rijswijk and Frewer, 2018). Humans are naturally curious about their experiences, including what they eat and feel.

Service quality reflects how well the actual service matches customer expectations. Two key factors affect service quality: expected service and received service. If the service matches expectations, it is seen as high quality. If it falls short, it is viewed poorly. Therefore, the quality of service depends on the provider’s ability to consistently meet customer expectations (Indarini & Ernawati, 2012). Service quality is about how well the service meets customer perceptions. According to Yoo and Park (2017), a company’s ability to maintain a competitive edge depends on its high service level.

2.1.1 Reliability

Reliability is about the hotel’s ability to consistently deliver accurate and dependable service. This includes honoring reservations, ensuring rooms are ready upon arrival, and providing consistent service. Reliable service builds trust and confidence, increasing guest satisfaction (Ramya et al., 2019).

2.1.2 Tangibility

Tangibility refers to the physical aspects of the hotel that customers can see, such as its facilities, cleanliness, and appearance. This includes the condition of the rooms, lobby, and other physical elements that impact the customer’s view of quality. Tangibility is important because it creates the first impression. Clean and well-maintained facilities, attractive decor, and comfortable amenities contribute to a positive guest experience, making them feel welcomed and valued (Tešić, 2020).

2.1.3 Responsiveness

Responsiveness involves the hotel staff’s readiness to help and provide quick assistance. This includes the speed of service, attentiveness to requests, and addressing any issues promptly (Pakurár et al., 2019). Good responsiveness shows the hotel’s commitment to meeting customer needs efficiently, enhancing guest satisfaction (Teeroovengadum, 2022).

2.1.4 Assurance

Assurance is about building trust and confidence through staff competence, professionalism, and Reliability (Afthanorhan et al., 2019). It includes staff expertise, handling inquiries and complaints effectively, and ensuring guest safety and security. Assurance is vital as it gives guests confidence in the hotel’s ability to meet their needs (Zun et al., 2018).

2.1.6 Empathy

Empathy involves the staff’s understanding and care about guests’ needs and concerns (Uppal et al., 2018). This includes friendliness, courtesy, personalized attention, and anticipating guest needs. Empathy is highly valued as it shows the hotel’s genuine concern for guest satisfaction and creates a welcoming, personalized experience (Pakurar et al., 2019).

2.2 The meaning of customer retention

Customer retention refers to the extent of a customer’s commitment, attachment, and repeat patronage towards a particular brand, product, or service provider over time (Nastasoiu & Vandenbosch, 2019). It encompasses both behavioral aspects, such as repeat purchases and brand advocacy, and attitudinal aspects, including positive emotional connections, trust, and satisfaction with the brand (Myo et al., 2019).

Customer retention is characterized by a willingness to continue engaging with a brand despite competitive offers or external influences, reflecting a strong and enduring relationship between the customer and the brand (Nayiga et al., 2024). It is often measured through metrics such as customer retention rates, frequency of purchases, and Net Promoter Score (NPS), which gauge customer commitment and advocacy toward the brand (Abed et al., 2022).

Loyal customers are brand ambassadors, spreading positive word-of-mouth recommendations and attracting new customers through endorsements. This reduces customer acquisition costs while improving brand reputation and credibility in the marketplace. Loyal customers tend to be less price-sensitive, prioritizing product or service quality over temporary discounts (Nastasoiu & Vandenbosch, 2019). A loyal customer base fosters deeper relationships and enhances customer lifetime value. Repeat customers are more likely to engage with additional products or services offered by the brand, thereby increasing their average order value and frequency of purchase (Nayiga et al., 2024).

2.3 Determinants of customer retention in the hotel sector

2.3.1 Consistency with brand promise

Customers are more likely to remain loyal if the hotel’s services consistently align with its brand promise (Chiguvi, 2016). This means that the hotel delivers on what it advertises and maintains a reliable level of service that matches its brand image (Choi & Chu, 2011). When a hotel upholds its brand promise, it strengthens trust and satisfaction, which fosters long-term loyalty (Abed et al., 2022).

2.3.2 Customer satisfaction

High levels of customer satisfaction are closely linked to customer loyalty. When customers are satisfied with the services they receive, they are more inclined to return and recommend the hotel to others (El-Adly, 2019). Satisfaction encompasses various aspects, including service quality, amenities, and overall experience (Chiguvi, 2016).

2.3.3. Repeat patronage

The tendency to choose the same hotel repeatedly indicates strong customer loyalty. When customers select the same hotel for their needs, it reflects their trust and satisfaction with the services provided (Eckert, 2015). Repeat patronage often results from positive past experiences and satisfaction (Choi & Chu, 2011).

2.3.4 Positive referrals

Customers who refer friends and family to a hotel demonstrate high loyalty (Brown, 2016).

These referrals indicate that the customer values the hotel’s services enough to recommend them to others, which also helps attract new customers. Referrals endorse the hotel’s quality and Reliability (Chen, 2016).

2.3.4 Employee expertise

The expertise and professionalism of hotel staff play a crucial role in customer loyalty (Ekinci & Dawes, 2019). When employees are knowledgeable and skilled, they enhance customer satisfaction through effective interactions and problem resolution. Expert staff contribute to a positive customer experience, leading to increased loyalty (Caro & García, 2018).

2.3.5 Perceived value

The perceived value of the services provided by a hotel, relative to the price paid, significantly affects customer loyalty (Fornell, 2016). When customers believe they receive good value for their money, they are more likely to return and remain loyal. Value perception includes tangible and intangible aspects of the service (El-Adly, 2019).

2.3.6 Service Quality

High service quality is fundamental to customer loyalty. Factors such as cleanliness, timely service, and attention to detail contribute to the overall quality of service, impacting customer satisfaction and loyalty (Gongera, 2018). Consistent, high-quality service encourages customers to stay loyal (Han & Hyun, 2017).

2.3.7 Customer experience

The customer experience of comfort, convenience, and personalized attention influences loyalty (Yoo & Park, 2017). A positive experience enhances satisfaction and makes customers more likely to choose the same hotel again and recommend it to others (Choi & Chu, 2011). A memorable and enjoyable stay builds a strong emotional connection with the hotel (Eckert, 2015).

2.4 Relationship between service quality and customer loyalty in the hotel sector

A study by Ginah (2019) in Hungary’s hospitality industry established a positive relationship between service quality and customer loyalty. Service quality is a focused evaluation that reflects the customer’s perception of food essentials. According to Yoo and Park (2017), firms that fail to deliver on their promises fail customers instantly, and customer expectations for service are likely to go down when service delivery is underperforming. Customers’ tolerance zones are likely to shrink when service failures occur, and their adequate desired service levels are likely to rise (Gongera, 2018).

Building customer loyalty is considered to be a key priority for business success. Therefore, determining the factors that affect customer loyalty is important (Jalal, 2016). Service quality is the characteristic quality of a food customized by customer expectations to be accepted for consumption (Winarjo et al., 2016). If the service quality is good, consumer satisfaction will also be awakened. When the service quality is received well, then the customer perception of the food becomes good, and this will make consumer satisfaction wake up and increase. Rashid et al. (2014) also revealed that service quality can influence customer loyalty significantly.

Tjiptono (2015) means that the quality of service is a measure of how good the level of service provided is in matching customer expectations. If the customer’s perception is in line with expectations, then the quality of service is considered good or positive. Good service quality will make customers feel at home and remain loyal customers from somewhere. This is in accordance with research conducted by Al-Tit (2015), which explained that service quality relationships can positively and significantly impact customer loyalty.

Miklos (2019) found a strong relationship between service quality and customer loyalty. In his study, he explains that firms use tangibles to convey image and signal quality because it is the physical image of the service that customers will use to assess quality.

However, Jarke (2019) found a weak relationship between Tangibility and customer loyalty. He inferred that when firms emphasize providing quality foods, customer loyalty will likely improve. The purpose of such higher service quality is to provide greater customer loyalty.

However, providing more or better quality features requires an investment and increases costs.

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This section presented the research design, sample size, population study, data collection tools, data sources, analysis of data and presentation, and study limitations.

3.1 Research Design

A cross-sectional research design was employed to collect qualitative data. The design of this study was chosen for this research due to its capacity for an in-depth investigation.

Furthermore, the study adopted a quantitative approach for data collection and analysis.

3.2 Study population

The total population was customers at Fairway Boutique Hotel Kampala. The hotel receives an average of 65 guests daily.

3.3 Sample size

A sample of 56 customers was selected by the researcher and was determined using Krejcie and Morgan (1970). According to Krejcie and Morgan, a population of 65 gives a sample size of 56 respondents.

3.4 Sampling techniques and procedure

3.4.1 Systematic sampling technique

Customers were selected using a systematic sampling technique from the hotel. Systematic sampling is a probability sampling method in which researchers select population members at a regular interval (or k) determined in advance (Lauren, 2020). The researcher stood by the entrance and selected every fourth customer who came in until the required number of respondents was reached.

3.5 Sources of data

3.5.1 Primary data

The researcher got information directly from the respondents in Fairway Boutique Hotel Kampala using closed-ended questionnaires.

3.5.2 Secondary data

The study used information already collected, processed, and made available by other sources, such as research reports, published research, and organizational records.

3.6 Tools for collecting data

3.6.1 Questionnaire

Questionnaires were used to collect data for the study. Close-ended questionnaires were chosen because they increased reliability due to the large number of questions and helped collect valid data (Amin, 2005). The questionnaires used a 5-point scale and mostly contained closed questions to make data collection and analysis faster. They were given directly to the respondents to fill out on their own.

3.7 Procedure of data collection

The researcher first obtained an official introductory letter from the Department of Hotel and Institutional Catering, to which the researcher belonged. This letter was presented to the management of Fairway Boutique Hotel Kampala, allowing the researcher to conduct the study in the areas officially and easily. A schedule accommodated the respondents’ time, avoiding inconvenience and resultant biases. The researcher presented the introductory letter to the respondents upon request.

3.9 Validity and Reliability of data

3.9.1 Validity of Instrument

Content validity checks whether the research design fully addresses the study’s objectives. In this study, validity meant how well each questionnaire item measured what it was supposed to. The researcher used face validity, where questionnaire items were taken from past studies that clearly explained the variables. A content validity test was done to check if the research variables showed convergent validity, which means the items strongly related to the concept they represented. This relationship was tested to ensure it was significantly different from zero.

Construct validity was tested using factor analysis, which checks how well items relate to others measuring the same variable. Items with factor loadings above 0.50 were considered to show convergent validity and were included in the final study. A content validity index (CVI) was calculated using a specific formula.

C.V.I = 𝑁𝑢𝑚𝑏𝑒𝑟𝑜𝑓𝑟𝑒𝑙𝑒𝑣𝑎𝑛𝑡𝑖𝑡𝑒𝑚𝑠𝑖𝑛𝑡ℎ𝑒𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡

𝑇𝑜𝑡𝑎𝑙𝑛𝑢𝑚𝑏𝑒𝑟𝑜𝑓𝑖𝑡𝑒𝑚𝑠𝑖𝑛𝑡ℎ𝑒𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡

Experts were asked to rate each item on the questionnaire and interview guide by measuring the content validity indices. The average ratings yielded computations of the content validity index, which had to be above 0.70 for constructs to show internal Consistency. Significant levels exceeding 0.70 were considered valid.

3.9.2 Reliability of the instrument

The reliability of the questionnaire was tested using Cronbach’s Alpha. According to Odiya (2009), Cronbach’s Alpha measures how consistently the questionnaire items measure the research variables. Reliability generally improves when there is a strong correlation between items. A value closer to 1 indicates a more reliable questionnaire. Sekaran (2003) suggested that reliability coefficients close to 1.0 indicate high reliability. This study’s reliability score of at least 0.70 was considered acceptable.

3.10 Ethical Considerations

Before starting data collection, the researcher introduced himself to the authorities at Fairway Boutique Hotel Kampala with a letter from the University. He explained the purpose and details of the study during this introduction.

Informed consent was obtained from participants before they were given questionnaires following Cresswell’s (2003) guidance that consent should be secured before data collection.

Participants were informed that their involvement was voluntary and could withdraw without consequences. The researcher assured them that all research findings would remain confidential.

In addition, respondents’ names were not recorded to maintain anonymity and protect their privacy for future matters.

3.11 Limitations to the Study

Hesitant participants

Some people were afraid to join the study because they worried management might punish them for sharing information. The researcher promised to keep everything confidential, which helped people feel more comfortable sharing their information.

Time limits

The study had a tight schedule. The researcher worked hard to meet the deadlines set by the supervisor, putting in all available time.

Cost issues

The study was costly due to printing, data collection, airtime, binding, and internet expenses. The researcher got financial support from family and friends to cover these costs and complete the study.

Data from one hotel

The data was collected from only one hotel in Kampala. This means the results cannot be applied to other hotels in Uganda.