Impact of Service Quality on Customer Satisfaction

The research aims to examine the impact of service quality on customer satisfaction and measures that should be embraced in order to improve service quality in Vietnam five-star hotels. Based on the existing literature, it is evident that quality is a primary determinant for the success of businesses across the world since it helps in enhancing competitiveness. Similarly, consumers currently accords high priority to the maximum benefits derived from goods and services offered. To effectively meet such expectations, most companies have consistently invested in information technology which has indeed improved quality of service delivery. With the immense transformations in Vietnam hotel industry, various firms have been influenced to adopt best operational and administrative practices to guide them towards providing outstanding services to the customers as well as accomplish ultimate goal of profit maximization. Through the literature review, it is evident that service quality depends on five major dimensions including; reliability, assurance, empathy, responsiveness, and physical appearance. As such, quality and assurance manager is imperatively required to formulate policies based on these dimensions to ensure employees remain committed on delivery best quality. Moreover, most of the hotels that offer quality services satisfy their customers, which eventually lead to customer loyalty and improved performance. In order to effectively examine the problem, this study will capitalize on qualitative approach. Crucially, qualitative design is preferred because of its capability to allow comprehensive evaluation of the issue. Thus, data collection will be based on literature review, where secondary sources will be used.

Keywords: Customer satisfaction, Loyalty, Service Quality, Competitive Edge, Strategy

Table of Contents

Abstract 2

Introduction. 4

Research Question. 4

Areas to be Investigated. 4

Literature Review.. 6

Research Methodology. 9

Results. 11

Conclusions. 13

Recommendations. 14

References. 15

Appendix. 18

Introduction

Research Question

The study question is to examine the impact of service quality on customer satisfaction and how to improve service quality of five star hotels in Vietnam. In the recent two decades, Vietnam economy has experienced significant changes in its economy and structure, particularly from agricultural to industrial and services sectors (Boonitt and Rompho, 2012). The share of the service industry has increased remarkably as a result of economic integration. Service quality plays an instrumental role in enhancing customer satisfaction in the hotel sector globally (Al Khattab and Aldehayyat, 2011). Studies indicate that service quality has various benefits on business performance including; customer retention, the growth of profitability, and cost reduction (Al Khattab and Aldehayyat, 2011). Despite having various studies supporting the role of service quality towards customer satisfaction, the study wants to examine the impacts of these concepts on business performance based on five star hotels in Vietnam. The finding will help to formulate effective decisions on how five star hotels can enhance delivery of quality services and customer retention as well.

Areas to be Investigated

Effects of service quality on customer satisfaction and loyalty: According to Boonitt and Rompho (2012), companies that fail to tailor their products and services based on these changes indeed face myriad challenges due to lack of competitive edge. In order to realize outstanding performance, it important for a firm to give priority to the needs of the customer’s by complying with quality standards and measures (Boonitt and Rompho (2012). In regards to this, customer satisfaction and loyalty relies on various dimensions such reliability, accessibility, empathy, and competence of staff”, reliability. Hence, the study will base on the responses from respondents and observation of the current processes in five star hotels to determine the level of satisfaction among the clients and its impacts on loyalty. By doing so, the findings will be used to formulate operational strategy that can assist in improving service quality and performance.

Factors affecting customer loyalty and performance in Vietnam five star hotels: Currently, Vietnam is one of the most popular tourist destinations in ASEAN, offering different attractions in terms of people, landscape, and culture (Minh, Ha, Anh and Matsui, 2015). Hence, the hotel service is one of the core businesses contributing to the growth in the tourism sector (Bandyopadhyay, 2018). As a result, the fiercely competitive market compels hoteliers to continuously improve the quality of the services being delivered to meet customers varying needs. The focus is usually accorded on service quality based on customer perspectives in determining the success (Bandyopadhyay, 2018). In order to stay competitive and meet the varying needs of buyers, Vietnam five star hotels consistently employ unique business models. These practices aim at enhancing delivery of quality services which in turn, leads to customer loyalty. Since mixed results have been provided concerning the role of service quality on customer satisfaction, the study intends to base on the current performance of five star hotels to examine key determinants of customer loyalty.

Strategies to improve service quality of five star hotels in Vietnam: The ensuing research will evaluate the impacts of service quality on customer satisfaction and how service quality of Vietnam’s Five Star Hotel can be improved. The literature review will play a central role in providing needed information to accurately develop effective operational approaches that are in line with the ultimate goal of the hotel.

Research Questions

1. To determine perceived service quality at Vietnam Five Star Hotels and its effects on consumer satisfaction and loyalty.

2. To evaluate potential factors affecting customer loyalty in Vietnam 5 star hotels.

3. To examine factors affecting service quality at Vietnam 5 star hotels and measures employed by managed to meet established standards.

Literature Review

Minh et al. (2015) proposed that the role of service quality for a firm’s performance is considered as the primary determinants of success in the contemporary competitive and turbulent environment. As a result, different indexes are employed in measuring quality such as a synthesized model of service quality, technical and functional quality model, SERVQUAL and antecedents and mediator model. According to the study, the SERVQUAL model is used across various sectors because of its ability to identify major factors affecting businesses from meeting quality standards (Minh et al., 2015). Besides, customer satisfaction is a vital concern for most businesses in the efforts to enhance customer loyalty and satisfaction within a highly competitive hotel industry (Minh et al., 2015). In this context, consumer satisfaction items usually determine whether the quality of goods and services offered by an organization meets user’s expectations or not. Despite making a significant contribution to the existing literature regarding the role of offering quality products and services, several weaknesses were evident (Minh et al., 2015). The primary challenge is the study focused on the general economy, rather than evaluating the impacts of service quality on the hotel sector. Thus, the forthcoming research will capitalize on these theories to explore the effects of service quality on customer satisfaction and loyalty in the five-star hotels.

Dinh Phi, Phan Thanh and Nguyen Viet (2018) using a mixed approach examined the effects of customer satisfaction and loyalty based on 4 and 5-star hotels in Vietnam. Findings suggest that customer satisfaction and loyalty is affected by four dimensions of service quality, including responsiveness, sympathy, reliability, and website utility. With the fact that hotels service industry immensely relies on devotion, hospitality, and understanding of customer needs, Dinhproposed that the management must accord priority to the four dimensions to ensure the organizational culture promotes employee’s commitment to meeting quality requirements. Moreover, the study proposed that customer satisfaction should be improved by employing multiple approaches such as improving empathy with consumers, monitor and gather buyer’s assessments on weekly basis, proactively update prices of the products and services on a weekly basis, and purchase better servers to enhance quick communications and transactions (Dinh et al., 2018). Nevertheless, the credibility and reliability of the findings might have been affected by the small population sample as a result of limited resources. Therefore, such challenges will be considered in this research to enhance validity, accurately, and reliability of the outcome.

Successful existence in a competitive hotel environment requires businesses to adopt measures that promote continuous improvement in service and product quality (Tuan and Lin, 2014). Studies indicate that service quality plays a central role in enhancing the sustainable competitive edge of a hotel due to increased customer satisfaction and retention (Tuan and Lin, 2014). In fact, quality is one of the areas of concern in most organizations globally, because of its capability to influence purchasing behavior among consumers. In this context, buyers are more interested in deriving maximum value from products and services being offered by companies across different sectors of the economy (Tuan and Lin, 2014). However, Vietnamese culture is often considered in terms of cultures, which firmly influence workers behaviors, daily habits, and attitudes. In regards to this, the effect of service quality of consumer satisfaction will be considered within a cultural context to assist in developing most sustainable solutions to the research problem.

Another study by Rao and Sahu (2013) examined the impact of service quality on customer satisfaction in the hotel industry. Findings suggested that consumer satisfaction is a function of service performance which is relative to their preferences and expectation as well (Rao and Sahu, 2013). For this reason, service performance should meet or exceed the buyer’s expectations in order to enhance satisfaction. Additionally, the scholars identified various factors of service quality by focusing on perception levels and customer expectations in order to ensure services are tailored according to their preferences (Rao and Sahu, 2013). In this case, consumer requirements are clearly identified, which allows hotel operators to embrace strategies that assist in fulfilling these needs. According to the research, hotels can remain competitive by examining user’s perception and expectations towards service quality of its operational areas such as front office (Rao and Sahu, 2013). However, the research was susceptible to certain limitations including small sample size and short time, which will be considered in the ensuing research.

Saleem and Raja (2014) assert that the high quality of services substantially helps in boosting buyer satisfaction, which eventually strengthens their loyalty. Similarly, strong customer loyalty creates a positive image of the firm, and such may result in repetitive purchase and improved performance. To remain competitive, businesses focus more on research progress to develop effective practices that inherently helps in enhancing consumer satisfaction (Saleem and Raja, 2014).Hence, higher service quality will lead to positive consumer repurchase behavior. With the fast-growing hotel industry, firms can realize profits if they create a positive culture that enhances the provision of quality services (Saleem and Raja, 2014). As a result, most hotels are integrating their day to day operations with modern technology in order to improve efficiencies in their practices as well as respond to emerging needs (Saleem and Raja, 2014). Nevertheless, this research basically focused on the importance of offering quality services, rather than proposing strategies to employ to propel firms towards meeting quality standards.

Bucak (2014) argues that service quality depends on five dimensions, including physical appearance, trustfulness, willingness, assurance, and empathy. The finding was based on the assumption that consumers judgments are as a result of comparison with other organizations providing a similar product. Notably, this conclusion aligns with other works where empathy and assurance were unveiled as key determinants of service quality and customer satisfaction (Minh et al., 2015). Additionally, Bucak suggests that consumer satisfaction is a primary reason for the success of every organization, particularly in the hotel industry. In fact, tourists are mostly attracted by the quality of services and products being offered by an institution (Bucak, 2014). Evidently, these studies have comprehensively described the role of service quality on enhancing consumer satisfaction, especially in the hotel industry. Therefore, the ensuing research will use the literature to evaluate measures put forth by Vietnam five star hotels to enhance customer satisfaction. Similarly, the literature will be instrumental in developing a proposal that must be adopted by the organization to effectively realize ultimate objectives.

However, the research gap is that most the previous studies based on the different sectors to determine how service quality affects customer satisfaction and loyalty rather than using particular hotel(s). Again, most studies used a small sample to examine the problem which could not provide accurate and reliable results. In other circumstances, ethical principles were not adequately considered to enhance validity and credibility. Since the research intends to specifically use secondary sources, the results will specifically be grounded on recent peer reviewed journals on hotel industry. Many sources will be used to ensure the results are formed on strong theoretical background. Hence, this aim will be achieved by considering various ethical imperatives when collecting, coding, analyzing, and presenting the findings.

Research Methodology

In this context, the qualitative design will be used in order to develop appropriate findings of the topic. The qualitative approach is most effective because it will offer the opportunity to a get a deeper understanding of the research problem by allowing the researcher to examine different journals (Rahman, 2016). There are various benefits that are associated with qualitative method including; simplicity, ability to get individuals opinion regarding a particular issue, and allows identification of patterns and themes about the topic. The qualitative method will also enable the researcher to apply secondary sources of data to formulate appropriate answers to the study problem (Rahman, 2016). Additionally, the method will provide the chance to evaluate variables based on their natural setting. Ultimately, real experiences of the customers and employees in relation to service quality offered at Vietnam five star hotels will be determined. Unlike other methods, a qualitative technique will help in evaluating subjects and issues in depth and detail as well as providing the researcher with clear visions regarding the expectations.

Secondary sources will play an instrumental role in answering the research questions because of the rich theories that have explicitly explained the impacts of service quality on customer satisfaction and hotel performance as well. For instance, previous studies have provided comprehensive data concerning strategies that should be employed by management in order to create and implement a unique organizational culture that promotes the delivery of quality services to buyers. The literature search from the internet will be based on the key words such as customer satisfaction, service quality, and customer loyalty. Specifically, peer reviewed journals that were published in the past 8 years will be used to enhance relevance as well as align with the changing external business environment. In regards to determining how perceived service quality of five-star hotels affects consumer satisfaction and loyalty, the question will be answered based on the comparison of the current practices and the existing literature (Rahman, 2016). The next objective that entails examining potential factors affecting customer loyalty will in the hotel be answered based on the strategies employed by the organization. Finally, solutions to quality issues will be answered based on both existing literature and researcher’s judgments. Additionally, the secondary data will be analyzed using a thematic approach (Javadi & Zarea, 2016). In fact, a thematic approach will inherently help to specifically focus on the research questions (Walters, 2016). Consequently, there is an increased possibility of identifying particular themes and patterns depending on the study objectives; hence, this will allow formulation of accurate and reliable results (Walters, 2016). However, case studies, quantitative and mixed design approaches will not be used because they will limit the capability to get a comprehensive view of the problem (Walter, 2016). Additionally, they may consume a lot of time and resources, requires special skills in analyzing secondary data. Therefore, it is apparent that qualitative approaches will greatly assist to overcome these challenges, which will eventually lead to the formulation of an accurate outcome.

Results

First, it is expected that the findings will indicate that service quality has a positive impact on customer loyalty and satisfaction. Customers are the central most important aspect of the business (Bhagat, 2012). Every business aims to remain in a competitive edge and this is achieved when the company offers a quality product that meets the market demands (Bhagat, 2012). Market demands are the gaps that are resulted by clients’ desires. Most of the policies developed by businesses intend to help to meet buyer expectations and overall objectives. Hence, should a company trip and end up offending the customer’s, there are high possibility that it may lose a competitive edge to their rivals in the industry (Lee, 2013). From the previous studies; there is a positive relationship between service quality and customer satisfaction (Lee, 2013). Hence, the ensuing research aims to make a similar conclusion.

Despite having numerous studies on the impacts of customer service quality on satisfaction, very few are specific to Vietnam hotel industry. For instance, Tuan & Linh (2014) investigated the effects of service quality performance on customer satisfaction on a five-star hotel; where the findings apparently conclude that quality is a key determinant of organizational success. As such, satisfaction can only be determined when the company offers products and services that meet consumer’s expectations and needs (Lee, 2013). The view of the target clients was taken, and the study found out that customer loyalty increases when quality products are offered. Provision of quality services depends on various factors, including organizational culture, employees’ commitments, operational policies, and level of competition (Lee, 2013). In this context, survival requires the firm to tailor services based on consumer expectations in order to achieve a competitive edge.

Secondly, it is expected that the study will found that customer loyalty strongly depends on service quality. Most studies suggest that the service quality is the overall source of excellence in the hotel or service sector (Sarkey, Turkson & Ansah, 2013). Hence, it goes beyond the foods and drinks offered, but also the attitude of the staffs, proficiency in foreign language, the general professionalism among other factors (Sarkey et al., 2013). Measuring quality of service is not similar to examining the tangible good. As a result, most hotels are usually customer centric to ensure their services are delivered based on their expectations. Evidently, the study will found that consumer loyalty depends on service quality and organizational commitment to meet user’s expectations. Nevertheless, possible limitations related to such results is that secondary sources may not provide precise information regarding the current factors affecting service quality of Vietnam five star hotels.

Finally, it is projected that the research will found that service quality is affected/ determined by five major dimensions including; empathy, reliability, assurance, physical appearance, and responsiveness (Williams and Naumann, 2011). Responsiveness looks at the rate at which the hotel workforce responds to queries and issues of the customers. Additionally, reliability involves the ability of the company to meet the standards which it has stated it provides alongside services given, which ought to be considered by the company. Similarly, empathy is the personal care and attention that the customers enjoy from the firm fraternity and assurance that involves the confidence that the customers have in the business (Williams and Naumann, 2011). From the findings responsiveness-empathy, reliability and assurance have a bigger relationship with customer satisfaction and loyalty. The satisfaction makes the customers more loyal to the hotel over competing hotels (Bucak, 2014).

Nevertheless, management usually bases on these dimensions to develop effective policies with the capability to enhance performance. Hence, improving the reliability, assurance, empathy, and responsiveness is vital in the hotel industry as the organization maximizes on these dimensions to perfect their services (Bucak, 2014). In fact, a team should be set aside that deal specifically with the quality of service at the hotel. The workforce should be motivated regarding rewards to increase their commitments towards meeting varying consumer expectations (Bucak, 2014). The right person with the appropriate qualifications should be hired to guide others on how to overcome issues that adversely affect the overall service quality. Therefore, these factors will be evaluated to gauge the measures utilized by five star hotels to enhance the application of the five dimensions and customer satisfaction as well. However, possible limitations to this finding may include differences in the operational and administrative strategies between five star hotels and organizations of which the current finding is based.

Conclusions

Based on the literature, it is evident that the service quality is important in determining the level of customer satisfaction and loyalty in the hotel industry. Vietnam’s hotel and hospitality industry have experienced various transformations that have brought about a significant improvement in the quality of services. These changes are attributed to tremendous development in technology and consumers behavior towards value for money. On the organization basis, integration of day to day operations has been fueled by the need to achieve efficiency its practices. Delivery of quality services to the customers leads to high retention and improved performance. In this case, outstanding performance is attributed to the capability to enhance the competitive edge which allows the firm to outshine rivals. Additionally, consumer satisfaction depends on five major dimensions such as empathy, reliability, responsiveness, tangibility, and assurance. By the use of the qualitative method, the study will capitalize on the literature review describe the impact of service quality on customer satisfaction and how Vietnam five star hotels can improve service quality. A qualitative approach is preferred because it will provide the opportunity to get in –depth information regarding their level of satisfaction with the services currently offered by five-star hotels.

Recommendations

First, suitable items/tools should be employed in measuring service quality in five-star hotels in order to allow the generation of reliable results. Since consumer’s judgment concerning the degree of satisfaction varies, applying an appropriate tool will ensure a basic standard in which subjects responses will be evaluated. When developing recommendations on measures to be adopted by the hotel to improve quality, the literature review and current issues should be combined in order to effectively address factors affecting quality.

Secondary, the limitation of low sample size used in the previous literature should be addressed by using many peer-reviewed journals. Most recent journals, specifically in the hotel industry will be used to enhance accuracy and reliability of the findings. Multiple theories on service quality and customer satisfaction should be used to enhance identification of critical issues affecting service quality of the five star hotels. Another limitation is that the research problem will be specifically addressed using secondary sources. In light of this, there is high possibility that some factors affecting the service quality of the five star hospitals will not be unveiled. Therefore, such challenge should be addressed by combining secondary sources, theoretical frameworks, and personal insights to make the findings.

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Appendix

Questionnaire

Dear respondents, answer the questions depending on your knowledge. Note that the research findings will be strictly used by management of five-star hotel to formulate appropriate policy to enhance delivery of quality services to the customers. Therefore, don’t disclose your name or identity to enhance confidentiality of your information. Provide your responses in a chronological under to avoid confusion.

Employees

1. Do the business value service quality?

2. What measures that have been established by the management to enhance service quality?

3. What is the organizational culture regarding service quality?

4. Are the customers satisfied with services offered by the hotel?

5. What strategies should the company employ to promote service quality?

6. Does the company reward exceptional performance relating to quality delivery?

Customers

1. How many times have you dined in the hotel?

2. What level of satisfaction do you achieve from the services offered by the hotel?

3. Do you consider buying your meals from the hotel in future?

4. Do you feel the organization is committed to offering goods and services based on your interests?

5. Which services offered in the hotel that you like or dislike? Provide the reasons .

6. Suggest some of the strategies you feel the organization should implement to deliver services that effectively satisfy customers need?

Quality

and Assurance Managers

1. State strategies that are applied by the company to enhance service quality?

2. Does the customer get satisfied with the services offered by your organization?

3. What is the performance of the business for the past 3 years?

4. What challenges that hinder the hotel from meeting service quality standards as well as the enhancing customer loyalty?

5. What steps should the company implement to consistently meet consumers expectations and preferences?

6. Does the organization culture promote service quality and customer satisfaction? Support your claim