News for the Hospitality Executive
As the hospitality industry becomes more competitive, economic pressures increases and the industry continues to expand, there is an obvious need to keep clientele as well as increasing profitability. It is therefore unsurprising that hospitality management professionals strive to improve guest satisfaction, and short-and long-term revenues. The management professionals whom are striving for these results however often have limited understanding of research surrounding the models of guest satisfaction, and the consequent effects it has on guest loyalty and financial performance. This article will discuss some of the driving theories of guest satisfaction.
Though over 15,000 trade and academic papers discussing guest satisfaction has been published since the 1960s (Ekinci et al., 2004, p. 189), one can note by researching that limited attention has been paid to the value perception and expectations guests have towards product delivery, and the effects price guests pay for an experience has on satisfaction and future spending. Further Voss et al. argues the role of pricing in relation to guest satisfaction has been largely ignored within the little research that does exist (Cited in Mattila et al., 2003, p. 328), which makes existing research less applicable as the price pattern is often excluded. Considering that guest’s expectations has gone up in the past 30 years within the hospitality industry, and continue to do so, does not make it any easier for management to understand what guests expect.
Loyalty Equals Better Performance
The reasons loyal guests are so important is: 1) because it costs three to five times as much to attract new guests than to retain existing ones; 2) because previous guests strongly influence others by word of mouth recommendation (Conlon et al., 2004, p. 434). Most hospitality professionals do understand the undisputed research on guest service which proves that: 1) Companies that have more satisfied guests experience higher guest loyalty; 2) Companies with higher guest loyalty, perform better financially compared to their competition. Kristiansen et al. (1992), Zeithaml et al. (1996), McColl-Kennedy and Schneider (2000) all found in studies conducted that satisfied guests are key to long-term business success (Cited in Gilbert et al., 2006, 298). This long-term success is based on guest loyalty and retention which consequentially results in future revenue (Ibid). Another theoretical and empirical study on guest satisfaction and performance (including repeat purchase intentions) suggest that satisfaction levels can be directly linked to financial performance (Gupta et al., p. 284, 2007). This is an easy concept to grasp, but understanding guest satisfaction is not as easy.
The hospitality industry must charge guests different rates depending on demand to stay profitable, thus effective yield management is within the industry important. Because of this, guests are likely to experience variations in their value perception. This supposition is based on research by Zeithaml that argue that value is low price (Cited in Petrick, 2004, p. 398). Because of the complexity of the guest experience, guests are likely to search for evidence of value and satisfaction from three distinct sources: 1) people; 2) process; 3) physical environment; or what has been dubbed as the servicescape (Mattila, 1999, p. 42). There are several theories surrounding the satisfaction and service paradigm of which five of them will be discussed in this article. These theories of interest are ones that relate to antecedents and decedents of satisfaction.
The ‘servicescape’ is a general and widely used term to describe the physical surroundings of a service environment (Reimer et al., 2005, p. 786) such as a hotel or cruise ship. The service offered is to some extent intangible which makes it very difficult for guests to gauge what is good and not so good about the services offered. Therefore, guests are sometimes subconsciously trying to get as much information as possible through experiences to decrease information asymmetries (Reimer et al., 2005, p. 786). This causes guests to look for quality signals or cues which would provide them with information about the service (Ibid), which leads us to ‘cue utilization theory’.
Cue utilization theory
Cue utilization theory argues that products or services consist of several arrays of cues that serve as surrogate signs of product or service quality (Reimer et al., 2005, p. 786). There are both intrinsic and extrinsic cues to help guests determine quality. Where the intrinsic cues provide information on the physical qualities of the product or service, whereas extrinsic cues are product related and provide information such as brand and price (Ibid). Consequentially, because of the limited tangibility of services within a hospitality environment, guests are often left to accept the price of the experience and the physical appearance or environment of the hotel or cruise ship itself as quality signals.
One of the basic frameworks that help us understand how behavior is impacted by the physical environment is the stimulus-organism-response theory. Which in a hospitality environment states the physical environment acts as a stimulus, guests are organisms that respond to stimulus, and the behavior directed towards the environment by guests is a direct response to the stimulus (Mattila, 1999, p. 42). It can be difficult for guests to evaluate the service quality, as the experience as a whole can be overwhelming. To make the service-evaluation simpler, guests turn to the physical environment, the hotel or cruise ship itself. They do so to look for tangible evidence that point to that either ’yes’ this is a great hotel or cruise ship or ‘no’ this is not up to expectations (Mattila, 1999, 42). It is therefore important to understand the physical environment can have a great effect on guest satisfaction. One study also found the satisfaction levels lodging guests had were influenced by several dimensions such as room cleanness, room to be in working order, staff friendliness and attentiveness (Mattila et al., 2003, p. 330). It was also found that guests had a low tolerance for any of these dimension to be far from their expectations (Ibid). It has been found that not only the quality of services correlate to overall satisfaction, but also the room design and the physical property impact satisfaction levels (Mattila et al., 2003, p. 330).
Moving along to theories on satisfaction, many researchers have argued what the definition of satisfaction is, and many theories have been proposed. Among the most popular theories is the ‘disconfirmation theory’ which argues that “satisfaction is related to the size and direction of the disconfirmation experience that occurs as a result of comparing service performance against expectations” (Ekinci et al., 2004, p. 190). Szymanski and Henard found in their meta-analysis that the disconfirmation paradigm is the best predictor of customer satisfaction (Cited in Petrick, 2004, p. 398). Though many models exist such as the disconfirmation theory; performance-only approach; the technical and functional dichotomy approaches; the service quality versus service satisfaction approach, and the attribute performance approach; it is agreed amongst all theories that satisfaction is a post-consumption evaluation by the guest (Gilbert et al., 2006, p. 299).
Oliver offers an updated definition on the disconfirmation theory which states “Satisfaction is the guest’s fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under- or over-fulfillment” (Cited in Ekinci et al., 2004, p. 190). Based on this definition it can be assumed the fulfillment response is a positive feeling experienced by guests as pain reduction occurs when a problem is solved or alleviated (Ibid). Oliver however also argues that positive feelings can occur not only by the unexpected effects of over-fulfillment, but also by under-fulfillment which can occur when the damage or pain a problem causes is less than expected (Ibid). These definitions are very interesting as they point towards two ideas: “First, satisfaction is the result of direct experiences with products or services; and second, it occurs by comparing this experience against a standard (e.g. expectations)” (Ekinci et al., 2004, p. 191). The major flaw of the disconfirmation theory should however be noted, which is the model suggests that if one’s expectations are decreased, satisfaction must inevitably increase (Petrick, 2004, p. 398).
Past research indicates that satisfaction is an excellent predictor of repurchase intentions (Petrick, 2004, p. 397). Anderson et al. (1994), Fornell (1992) and Yeung et al. (2000) also found through several empirical studies that satisfaction, and quality, are key drivers in a company’s financial performance (Cited in Matzler et al., 2006, p. 180). These findings point towards the importance for hospitality companies to fully understand and recognize what drives guest satisfaction and focus on the areas which are performing poorly and consequentially have a negative effect on guest satisfaction.
When discussing satisfaction, it is important to understand that guest’s evaluation of service comprise of two basic distinct dimensions: service delivery and service outcome (Mattila, 1999, p. 42). Research suggests that how the service was delivered (perceived functional quality) is more important than the outcome of the service (technical quality) (Ibid). This research clearly shows that effort by staff have a strong effect on guest’s satisfaction judgments.
Having thoroughly discussed satisfaction, it is important to also discuss dissatisfaction and why it occurs. Dissatisfaction towards the service often simply occurs when guest’s perceptions do not meet their expectations. There are several specifics to why dissatisfaction would occur within a hospitality environment, such as: 1) the company not understanding what guests wants, and can therefore not deliver; 2) false or incorrect advertising which causes guests to have unrealistic expectations; 3) staff not able or willing to deliver adequate service. On a more theoretical level, dissatisfaction can be explained by Parasuraman’s gap model which proposes that ten dimensions determine service quality: “reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding/knowing the guests, and tangibles” (Cited in Haksik et al., 2000, p. 218). Above essentially propose the differences between expected performance and perceived performance on each of the above dimensions will determine the overall received service quality (Ibid). Dissatisfaction could therefore arise if the perceived performance falls short on any or all the expected performance dimensions; this is based on the disconfirmation theory.
In conclusion, though there is much research on guest satisfaction within a hospitality environment, the role of pricing in relation to guest satisfaction has been largely ignored. Undisputed research on guest service proves that companies that have more satisfied guests experience higher guest loyalty, and perform better financially compared to their competition.
Guests are likely to experience variations in their value perception as value can include low price in the minds of guests, and as the service offered is to some extent intangible. Guests are also sometimes subconsciously trying to get as much information as possible through experiences to decrease information asymmetries. Guests are therefore often left to accept the price of the experience and the physical appearance of the hotel or cruise ship itself as quality signals.
Among the most popular satisfaction theories is the disconfirmation theory which argues that satisfaction is related to the size and direction of the disconfirmation experience that occurs as a result of comparing service performance against expectations. Basically, satisfaction is the result of direct experiences with products or services, and it occurs by comparing perceptions against a standard (e.g. expectations). Research also shows that how the service was delivered is more important than the outcome of the service, and dissatisfaction towards the service often simply occurs when guest’s perceptions do not meet their expectations.
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About the Author:
Patrik Hellstrand is a recognized hospitality consultant, and is the Managing Director at SQInsight Hospitality Consulting, a firm that provides hospitality consulting services to the hotel and cruise industry.
Visit http://sqinsight.com for links to additional articles published by SQInsight Hospitality Consulting, or to get in touch with a hospitality consultant.
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