FACTORS INFLUENCING CUSTOMER SATISFACTION IN

HOTEL INDUSTRY IN KENYA

BY

MERCY MUENI KINYINGI

UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

SPRING 2018

ii

FACTORS INFLUENCING CUSTOMER SATISFACTION

IN HOTEL INDUSTRY IN KENYA

BY

MERCY MUENI KINYINGI

A Research Project Report Submitted to the Chandaria School of

Business in Partial Fulfillment of the Requirement for the Degree of

Masters in Business Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

SPRING 2018

iii

STUDENT’S DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to any

other institution, or university other than the United States International University-Africa

in Nairobi for academic credit

Signed___________________ Date____________________

Mercy Mueni Kinyingi (ID 649404)

The research project has been presented for examination with my approval as the appointed

supervisor

Signed___________________ Date______________________

Dr. Joseph Ngugi Kamau

Signed___________________ Date______________________

Dean, Chandaria School of Business

iv

COPYRIGHT

All rights reserved. No part of this project report may be photocopied, recorded or,

otherwise, reproduced, stored in retrieval or transmitted in any electronic or mechanical

means without prior permission of USIU-A or the Author.

Mercy Mueni Kinyingi © 2018.

v

DEDICATION

This project is dedicated to God Almighty, He makes all things possible in His time. To

my dear late dad Christopher Peter Muthoka, who really encouraged me to take up this

course and proudly saw me through half way until his sad sudden demise before I was

through. To my dear mom Joyce Kambua Kinyingi, her loving words of encouragement,

prayers, care and every day reminder that my success was hers too. To my dear siblings

Julianne Nduku Kinyingi, Lydia Nthenya Kinyingi, Alice Ndunge Kinyingi and my dear

nephew Peter Jabali Ndeti for their spiritual, emotional and moral support during the tough

time as I completed my project.

vi

ACKNOWLEDGEMENT

My sincere appreciation goes to my supervisor, Prof. Joseph Ngugi Kamau for his support,

counsel and, guidance throughout the research period. I am also grateful to my family

members for their encouragement during the study period.

vii

ABSTRACT

The hotel industry in Kenya is one of the fastest growing sectors and thus a significant

contribution to the country’s economy. As evidenced, Kenya being the hub of business in

East Africa has had a tremendous target by international brands leading to competition with

the already existing brands in Nairobi its capital city. This vast development has therefore

created a high level of keenness by the hotels’ managements to maintain a sustainable

clientele which at the moment lacks due to lack of competitive advantage.

The general objective of this study was to find out the factors influencing customer

satisfaction and to establish if service quality influences customer satisfaction, to ascertain

if perceptions influence customer satisfaction and to determine if customer expectations

influence customer satisfaction. The researcher employed descriptive research design,

convenient sampling was used to obtain the respondents. The population was USIU-Africa

students who had visited 4 to 5-star hotel between November 2017 and April 2018.

Questionnaire was used to collect data and of 138 sample size, 97.8% responded. The

descriptive and inferential statistics was used in analyzing data.

On objective one, the service quality of customers can influence customer satisfaction (β =

.111, t = 1.257, p>.05, but it was statistically insignificant hence service quality does not

affect customer satisfaction in the hotel industry. Objective two, the perceived value of

customers can influence customer satisfaction (β = .154, t = 1.762, p>.05, but it was

statistically insignificant hence perceived quality does not affect customer satisfaction in

the hotel industry. On the last objective, the customer expectations can influence customer

satisfaction (β = .032, t = .361, p>.05, but it was statistically insignificant hence customer

expectations do not affect customer satisfaction in the hotel industry.

The study concludes, the quality of the hotel and the number of times one visited the hotel

determines the customer satisfaction more than service quality, perceived value quality and

customer expectations. The results from the study could be helpful to the management of

hotels in their policy formulation in the context of improving customer satisfaction and

hence achieve a sustainable clientele. The researcher recommended that since this study

focused only consumers of 4star and 5star hotels, future studies could look into 3star, 2star,

1 star hotels, restaurants, and getaway retreat facilities.

viii

TABLE OF CONTENTS

STUDENT’S DECLARATION ...................................................................................... iii

COPYRIGHT .................................................................................................................... iv

DEDICATION.................................................................................................................... v

ACKNOWLEDGEMENT ................................................................................................ vi

ABSTRACT ...................................................................................................................... vii

LIST OF TABLES ............................................................................................................. x

LIST OF FIGURES .......................................................................................................... xi

ABBREVIATIONS AND ACRONYMS ........................................................................ xii

CHAPTER ONE ............................................................................................................. 1

1.0. INTRODUCTION ................................................................................................... 1

1.1 Background of the Study ............................................................................................ 1

1.2. Statement of the Problem .......................................................................................... 5

1.3 General Objective ....................................................................................................... 6

1.4 Specific Objectives ..................................................................................................... 6

1.5 Significance of the Study ........................................................................................... 7

1.6 Scope of the Study...................................................................................................... 7

1.7 Definition of Terms .................................................................................................... 8

1.8 Chapter Summary ....................................................................................................... 8

CHAPTER TWO ............................................................................................................... 9

2.0 LITERATURE REVIEW ........................................................................................ 9

2.1 Introduction ................................................................................................................ 9

2.2 Effect of Service Quality on Customer Satisfaction .................................................. 9

2.3 Effects of Customer Perceived Value on Customer Satisfaction ............................. 13

2.4 Effects of Customer Expectations on Customer Satisfaction. .................................. 18

2.5 Chapter Summary ..................................................................................................... 22

CHAPTER THREE ......................................................................................................... 23

3.0 RESEARCH METHODOLOGY ......................................................................... 23

3.1 Introduction .............................................................................................................. 23

3.2 Research Design ....................................................................................................... 23

3.3 Population and Sampling Design ............................................................................. 23

3.3.2 Sampling Design ................................................................................................... 24

3.5 Data Collection Methods .......................................................................................... 25

ix

3.6 Research Procedures ................................................................................................ 26

3.7 Data Analysis Methods ............................................................................................ 27

3.8 Chapter Summary ..................................................................................................... 28

CHAPTER FOUR ............................................................................................................ 29

4.0 RESULTS AND FINDINGS ................................................................................. 29

4.1 Introduction .............................................................................................................. 29

4.2 Response Rate .......................................................................................................... 29

4.3 Demographic Characteristics ................................................................................... 29

4.4 Descriptive Analysis of Study Variables ................................................................. 34

4.5 Inferential Analysis .................................................................................................. 39

4.6 Regression Model ..................................................................................................... 44

4.7 ANOVA Tests on Demographic Information and Customer Satisfaction ............... 48

4.8 Chapter Summary ..................................................................................................... 49

CHAPTER FIVE ............................................................................................................. 50

5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS..................... 50

5.1 Introduction .............................................................................................................. 50

5.2 Summary .................................................................................................................. 50

5.3. Discussion ............................................................................................................... 52

5.4. Conclusions ............................................................................................................. 59

5.5 Recommendations .................................................................................................... 60

REFERENCES ................................................................................................................. 62

APPENDICES .................................................................................................................. 71

APPENDIX I: INTRODUCTION LETTER ................................................................. 71

APPENDIX II: NACOSTI PERMIT ............................................................................. 72

APPENDIX III: RESEARCH QUESTIONNAIRE ...................................................... 73

x

LIST OF TABLES

Table 4. 1 Response rate .................................................................................................... 29

Table 4. 2 Feedback on availability and feedback from management. .............................. 33

Table 4. 3 Service Quality on Customers. ......................................................................... 36

Table 4. 4 Perceived Value Quality. .................................................................................. 37

Table 4. 5 Customer Expectations. .................................................................................... 38

Table 4. 6 Customer Satisfaction. ...................................................................................... 38

Table 4. 7 KMO and Bartlett's Test ................................................................................... 39

Table 4. 8 Total Variance Explained ................................................................................. 40

Table 4. 9 Communalities and Pattern Matrixa .................................................................. 41

Table 4. 10 Construct Reliability ....................................................................................... 42

Table 4. 11 Item- Total Statistics. ...................................................................................... 42

Table 4. 12 Inter-item Correlation Matrix ......................................................................... 43

Table 4. 13 Normality Test ................................................................................................ 43

Table 4. 14 VIF Test .......................................................................................................... 44

Table 4. 15 Model Summary ............................................................................................. 44

Table 4. 16 ANOVA Table ................................................................................................ 45

Table 4. 17 Coefficient Table. ........................................................................................... 45

Table 4. 18 Model Summary ............................................................................................. 45

Table 4. 19 ANOVA Table ................................................................................................ 46

Table 4. 20 Coefficient Table. ........................................................................................... 46

Table 4. 21 Model Summary ............................................................................................. 46

Table 4. 22 ANOVA Table ................................................................................................ 47

Table 4. 23 Coefficient Table. ........................................................................................... 47

Table 4. 24 Regression weights summary ......................................................................... 47

Table 4. 25 ANOVA on Customer Satisfaction and Demographic Information ............... 49

xi

LIST OF FIGURES

Figure 4. 1 Gender. ............................................................................................................ 30

Figure 4. 2 Age Bracket ..................................................................................................... 30

Figure 4. 3 Residence of Living ......................................................................................... 31

Figure 4. 4 Number of Times Visited the Hotel ................................................................ 31

Figure 4. 5 Number of Days in Hotel ................................................................................ 32

Figure 4. 6 Reason of Travel.............................................................................................. 32

Figure 4. 7 Services............................................................................................................ 33

Figure 4. 8 Regression Coefficient Scatterplot. ................................................................. 48

xii

ABBREVIATIONS AND ACRONYMS

CFA Confirmatory Factor Analysis

CPV Customer Perceived Value

DINESERV Dinning Service Quality Model

GDP Gross Domestic Product

HOLSERVE Hotel Service Quality Model

LQI Lodging Quality Index

NACOSTI National Commission for Science, Technology & Innovation

SERVEQUAL Service Quality Model

1

CHAPTER ONE

1.0. INTRODUCTION

1.1 Background of the Study

Tourism industry is one of the most important players in the growth of economies both

locally and globally in the past decades. It is one of the most important industry in the

world and entails very significant infrastructure with service organizations among which

the most prominent feature is the hotel industry (Kleynhans & Zhou, 2012). The hotel

industry provides the necessary substructures for tourism, therefore the growth in tourism

industry depends on growth in Hotel industry (Mohajerani, 2012).

In 2013, Amissah states that there is an increasing demand for better quality products and

services including the hotel services internationally. Customer satisfaction is one of the

greatest tools in steering the growth of the hospitality industry. Forozia et. al.,(2013) in

their study on customer satisfaction in hospitality industry in Malaysia, hospitality is

defined as a particular type of relationship between a host and a traveler. According to (Min

et. al., 2017) hotel service is recently regarded as one of core businesses making up the

tourism complex system. As such tourist satisfaction is a key ingredient for the survival

and success of the hotel industry. Therefore, hotels need to differentiate their service

offerings by meeting the needs of their customers better by improving customer satisfaction

and delivering service quality that is higher than that provided by competitors (Amissah,

2013).

Services offering from hospitality industry are necessities because of change in lifestyle

(Mohajerani, 2012). With that customers need a service as a result of their cost in order to

get services in according with their expectations (Sukaisih & Hamid, 2015). Therefore,

hotel industry will give various best services to customers with expectations that the

customer will come back to use the same services in future. It is not easy to meet various

customers’ needs with different backgrounds, however good customer service is the life

blood of any business and although new customers are important, good customer service

will help generate customer loyalty and repeat business (Lalla et. al., 2015).

According to Eshetie, et. al., (2016) the hotel industry consists of many different services,

including accommodation, restaurants, cafes and catering. Globally, there is an increasing

2

demand for better quality products and services with hotel customers becoming much more

discerning and demanding (Amissah, 2013). Currently, hotels are experiencing the

increased competitive pressures as a consequence of the combined effect of the

globalization, economic-political integration tendencies, consolidation, and growing

supply in emerging and mature tourist destinations (Antwerp, 2013).

In a highly competitive hotel industry, individual hoteliers must find ways to make their

products and services stand out among the others. According (Length, 2014) one way to

achieve this is for hoteliers to understand their customers’ needs and then set out to meet

(or exceed) these needs. In general, service quality promotes customer satisfaction,

stimulates intention to return and encourages recommendations (Length, 2014).Customer

satisfaction also eventually increases profitability (Torres & Kline, 2013) as well as market

share and return on investment.as a result of increased importance from the service sector,

researchers are defining quality from a customer’s perspective (Length, 2014).

Forozia et. al., (2013) states that over the decades, based on the studies of the hospitality

industry, two significant areas have been introduced which are customer satisfaction and

service quality. Forozia further argues that in the hospitality business, both customer

satisfaction and service quality have muscular collision on the presentation of the business

and the treatments of customer. According to (Sukaisih & Hamid 2015) companies can

start a good relationship by creating customer’s confidence and certainty and which showed

a high commitment to provide high quality customer service can improve customer

satisfaction. In 2012, Mohajerani argues that in order to encourage the potential customers

to travel, it is necessary to make them satisfied which leads to repurchase intentions and

positive word-of-mouth. Therefore every business needs not only to retain its current

customers but also to expand customer’s base significantly and it is possible only when

target customer is fully satisfied from company on some parameters (Irfan, 2014).

Mbise (2012) explains that Tanzania had a lot to offer to international market, however the

tourism industry found itself struggling for survival. Philemon (2015) in his study on the

assessment of tourist’s perception and satisfaction of Tanzania destination, states that the

tourism industry is greatly controlled by the discernment that tourists carry with them about

that particular destination. Philemon further argues despite the well-built literature from

western world and the developing economies on tourists’ perception and satisfaction, there

seems to be unsatisfying outcomes regarding what satisfies tourists on each destination. In

3

this regard each destination is entirely unique and hence satisfaction and dissatisfaction of

individual tourists or groups differ in various destinations.

In his study, service quality and customer satisfaction in the hotel industry, (Urge, 2016)

states that customer satisfaction is significant to build long-lasting relationships with

consumers and hence a critical success factor in service oriented companies. As indicated

by (Mubiri et. al., 2016) many researchers have argued that some customers may not

appreciate some services as much as others would. Consequently, ethnic differences may

lead the hotel to modify their services to fit the social and ethnic practices of specific

consumers. Hotel businesses in developing countries also have to compete with each other

and focus on satisfying both local and worldwide customers, because, today’s customers

are more alert, educated and exposed to a lot of information through online sources , social

media , magazines etc. (Urge, 2016).

Mubiri et. al., (2016) argues that in the event consumers are satisfied with services of a

certain hotel, they are most likely to become loyal consumers and keep spreading positive

word of mouth to other consumers. In the study, service quality and customer satisfaction

in the hospitality industry in Ethiopia, (Eshetie et. al., 2016) highlights that the country has

suffered from having world class hotel chains in number and providing international service

standards. In addition, the country also suffered attracting more private hotel owners due

to different reasons and the existed hotels do not perform well as per the international hotel

standards and these clearly showed that the country does not enjoy economic contribution

from hospitality industry as expected (Lalla et. al., 2015).

In Kenya, tourism is the foremost earner of foreign exchange and it contributed to Ksh 100

billion of the GDP in 2011 (Mbuthia, Muthoni, & Muchina, 2013). According to Republic

of Kenya (2012), tourism made a direct contribution to the growth of hotel industry and

other related sectors. There has been a wide range of domestic hotels and hospitality

enterprises whose service offering not only complements those of world class hotels but

also serve the domestics guests or tourists (Mbuthia et. al., 2013). However, according to

(Watiki, 2014) the domestic hotel industry in Kenya is experiencing increasing competition

with major international hotel brands increasingly setting up operations in Kenya, which

has set to increase the competition in the hotel industry.

4

As Kenya focuses to be industrialized by 2030, research foresees the hotel industry as one

of the sectors that will contribute greatly to the industrialization (Schulz, 2012). The hotels

play a central role in the country’s tourism industry, yet the Coast lacks five- star hotels

(Waitiki, 2014) .The Kenya hotel and restaurant regulations of 1988 established standards

upon which classification of hotels is based. Internationally, the classification of hotels and

restaurants creates uniformity in the industry providing common elements in every class of

hotel and restaurant that their clients should expect.

According to (Watiki, 2014)the hotel business is regulated by two Acts of parliament

namely: Hotels and restaurants Act (Cap 494) and the tourist Licensing Act (Cap 381).

Vacation hotels, town hotels and lodges are classified into five classes denoted by stars,

five being the highest and one being the lowest. These star- rated hotels enable both the

domestic and international customers to understand the value of the services they are paying

for. The hotels that are 5-star rated are expected to offer highest standards of facilities and

services Kenya has the best developed hotel industries in Sub-Saharan Africa, offering an

average of 31,400 beds per night (Kenya economic survey 2013). As a result, there has

been unprecedented entry of international Hotel brands in the Kenyan Hotel industry.

Kenya is set to host nine new international hotels which are planning to put up 1437 hotel

rooms to cater for growing demand for travel and accommodation in the country by 2015

(Kenya economic survey 2013). These hotels include Marriot, Accor, Kempiski, Sheraton,

Four Points, Carlson Rezidor group of hotels currently operating Radisson Blue and Park

Inn, and Hilton hotels currently operating Hilton and the new Hilton Garden Inn which is

the latest.

Hotel occupancy in Kenya is relatively stable throughout the year, other than December

due to Christmas and New Year celebrations in December and January which reduce

demand during those months. Although the reasons for the visit to the country vary, with

leisure being a significant driver, the market shows limited seasonality pattern (Waitiki,

2014). The hotel industry is highly service oriented as through the experiences, customers’

form opinions by comparing the service encounters against their expectations. Therefore,

providing high standard of service quality can result in high level of customer satisfaction

(Kariru & Aloo, 2014).

5

An organisation realises that customer satisfaction is of great importance when there are no

customers to consume their products, and therefore is no business. One unsatisfied

consumer or customer can send more business away from an organisation than many

satisfied customers. Thus the more an organisation focuses is on customer retention and

customer support, the more long-term business an organisation will receive (Lalla et. al.,

2015).The qualities of brand characteristics that are offered by a company determine the

level of customer satisfaction (Khan & Afsheen, 2012). Customer satisfaction can be

defined in terms of meeting the expectations of the customers and in terms of parameters

associated with satisfaction (Malik & Ghaffor, 2012). Nomanga (2015) states that

providing the services customers prefer is a starting point for providing customer

satisfaction and in holding an essential role in creating value for customers, hence customer

satisfaction having a direct and indirect impact on business results.

Customer satisfaction as a key marketing tactic in differentiating itself from its competitors

and therefore a heightened understanding of a guest preference and total worth will enhance

a guest experience and maximize hotel revenue (Kangogo & Manyasi, 2013).To survive in

this dynamic and highly competitive business environment the hotel operators will be

forced to critically acknowledge the importance of service improvement in order to gain

competitive advantage (Waitiki, 2014).Customer satisfaction creates high loyalty intention

and that begins with good corporate image (Sukaisih & Hamid, 2015) and attracts new

customers and strengthens business relations.

1.2. Statement of the Problem

Nsobiari and Anyadighibe (2014) argues that the ability to satisfy consumers remains one

of the greatest task for any firm to achieve as customer needs and expectation are changing

at all time. Understanding customers’ expectation is crucial in service industry such as

hospitality and therefore managers should endeavor to carry out initial market surveys to

find out what the market needs which should also give an insight on the market

characteristics (Kabuitu & Ngige, 2016). According to Waitiki, (2014) the management of

organizations should seek to know the level at which the customers are satisfied with their

services and the kind of service quality levels their customers would like in order to offer

the exactly what would be taken positively.

6

Kenya is one of the countries that have been affected by terrorism and as a result the

international market has gone down, leaving the existing hotels relying on domestic

markets for survival or risk closure. Therefore, preparing and maintaining customer

satisfaction is the greatest current confronts of managements (Forozia et. al., 2013) of

various hotels and as they now adjust to the different needs and identify customers’ needs,

desires and expectations (Amissah, 2013) of both international and domestic markets to

remain relevant in the industry.

Forozia et. al., (2013) argues that customer satisfaction is the determinant and inevitable

secret of success and therefore hotels are not able to compete with other competitors

without fulfilling the satisfaction of their guests. Therefore, it is in the rapid growth of new

hotels both local brands and international brands, there has been creation of a big gap in

the hospitality industry as there is an emergence of great competition with thin the market.

The emergence of competition has created a zest in creating sustainable loyal clientele

which highly relies on the fact that customer satisfaction element be addressed in the hotels.

Customer satisfaction and service quality are the key element of attaining competitive

advantage in hospitality industry which will attract customers and maintain them and as a

result, there is great demand for customer satisfaction so as to achieve repeat purchase and

attract new customers (Forozia et. al., 2013).

1.3 General Objective

To investigate the factors that influence customer satisfaction in the hotel industry in

Kenya.

1.4 Specific Objectives

1.4.1 To establish the effect of service quality on customer satisfaction in the hotel industry

in Kenya.

1.4.2 To establish the effects of customer perceived value on customer satisfaction in the

hotel industry in Kenya.

1.4.3 To determine the effect of customer expectation on customer satisfaction in the hotel

industry in Kenya.

7

1.5 Significance of the Study

1.5.1 Significance of the Study to Stakeholders

A thorough understanding and knowledge of the factors that influence customer

satisfaction through providing clear information concerning customers’ expectation,

perception and service quality dimension is useful in guiding hotel stakeholders and owners

so as to design and deliver the right hospitality services and strategies in the current

competitive market.

1.5.2 Significance of the study to policy makers

This study is important to policy makers in the hospitality industry both in the private and

public sector as they gain significant insights from the findings of this study. The

information on service quality, customer perceptions and expectations toward their

influence on customer satisfaction enables them formulate policies that relate to the hotel

industry in Kenya

1.5.3 Significance of the Study to Scholars.

This research has future implications on future studies as it has potential to determine the

mediating role of customer satisfaction and its impact on brand or customer loyalty in

further. It is also useful for academicians to make references and provide additional

information to the body of literature in the field of service quality management and other

studies of the same impact.

1.6 Scope of the Study

This study is broad in nature and voluminous literature. It can be viewed from the banking,

manufacturing and any other service sector, however it is best studied within the hotel

sector and therefore focused on the three major influencers of customer satisfaction within

the hotel industry in Kenya with aspect within the literature. The geographical scope of this

study is Nairobi, the capital city of Kenya. The population scope of this study is USIU

students who have visited 4 and 5 star hotels in the last 6 months of the study. The study

took a timeline of 6 months. There were no limitations as the population was easily

accessible and was cost effective as there was no much travelling to access the respondents

for data collection.

8

1.7 Definition of Terms

1.7.1 Customer Satisfaction

Customer satisfaction refers to the level at which a product’s perceived performance

equals to the buyer’s expectations (Kotler & Armstrong, 2017).

1.7.2 Service Quality

Service quality refers to what the customer acquires and is ready to pay towards it in place

of what the seller puts in to sell. Consequently, service quality can be considered as the

breach between the anticipated service and the concrete perceived service (Al Ababneh,

2017).

1.7.3 Customer Perceived

Customer perceived value refers to the evaluation of the customer on difference in all the

benefits and all the costs of a market offer comparative to those of the competitor’s

offers (Kotler & Armstrong, 2017).

1.7.4 Customer Expectation

Customer expectations refers to the views about service delivery that serve as principles or

opinions in contrast with which performance is judged (Zeithalm, Bitner, & Gremler, 2013).

1.8 Chapter Summary

Chapter one of this study gives a detailed information of the background of the study,

statement of the problem and the general objective with the specific objective. Also the

chapter brings insight to the significance of the research with identification of the study,

and the definition of the terms used. Following chapter one is chapter two which focus on

the empirical review of the specific objectives. Chapter three identifies the research

methodology. Chapter four establishes the data collection and analysis as well as establish

the research findings. Finally, chapter five gives research discussion, the recommendations

and conclusion of the study of the project.

9

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

This chapter covers the relevant literature based on the research objectives in the hotel

industry. The covered topics are; effect of service quality on customer satisfaction, effects

of perceived value on customer satisfaction, and effect of customer expectation on customer

satisfaction.

2.2 Effect of Service Quality on Customer Satisfaction

2.2.1 Models of Service Quality

According to Gupta in (2017) service quality is divided into two parts; first is tangible

services (furniture, building, rooms, décor etc.) and second is intangible services (personal

touch, surprise, felling special).Gupta further argues that in today’s world all hotels are

almost same in their tangible factor, however the thing which impress the consumers are

the intangible services which attract them.

Applying to the hospitality industry, there have been numerous studies that examine

attributes that travellers may find important regarding customer satisfaction (Nomnga,

2015). Among all, three most popular models to measure customer satisfaction and service

quality in the hotel industry are SERVEQUAL, HOLSERVE, Lodging Quality Index (LQI)

and DINESERVE. Each model has its own strong point and has been used flexibly in hotel

industry to present literatures relevant to this research and to provide a theoretical

framework.

In a study conducted by (Awara & Anyadighibe, 2014) on the relationship between

customer satisfaction and loyalty: a study of selected eateries in Calabar, Cross River State,

three categories of service quality have been highlighted. Technical quality which refers to

what the customer is left with after the customer-employee interactions have been

completed. Functional quality which is the process of delivering the same service or

product a Societal (ethical) quality a credence quality, which cannot be evaluated by the

customer before purpose and is often impossible to evaluate after purchase.

10

Nomnga (2015) states that service quality is a complex, elusive, subjective and abstract

concept that means different things to different people. According to (Eshetie et. al., 2016)

the quality in a service business has become a measure of the extent to which the service

provided meets the customer’s expectations. Arguments by (Forozia et. al., 2013) are that

in most of the service industries, service quality plays a fundamental role for companies to

achieve success and therefore it is crucial for management of hotels to have a proper

consideration of what customers’ requirements are.

Poor-quality service produces customer dissatisfaction, and customers may not return to

the establishment in the future or even immediately move their business dealings to other

providers (Prentice, 2013; Cheng & Rashid, 2013). Arguments by Wu et. al., (2014) are

that both perceptions and expectations need to be measured in order to evaluate service

quality. Mauri et. al., (2013) further defines service quality as “a multidimensional concept,

assessed and perceived by consumers, according to a set of essential parts, grouped in five

categories, namely: tangibility, reliability, responsiveness, assurance and empathy”. More

so (Rauch et. al., 2015) indicates that the concept of service quality was initially used as

part of a framework of marketing strategies, by making customers the focal point.

There is abundant literature on the effects of service quality on customer satisfaction in the

hotel industry by (Rauch, Collins, Nale, & Barr, 2015; Mbuthia, Muthoni, & Muchina,

2013; Minh, Ha, Anh, & Matsui, 2017; Abukhalifeh & Mat Som, 2012; Lalla, Cowden, &

Karodia, 2015; G/Egziabher, 2015; Eshetie et. al., 2016). These studies have identified the

SERVQUAL model and highlighted its five dimensions also known as gaps namely;

tangibles, reliability, responsiveness, assurance and empathy.

A study conducted by ( Eshetie et. al., 2016) investigating literature on the Service Quality

and Customer satisfaction in hospitality industry in selected hotels in Ethiopia highlighted

the lodging quality index (LQI) which is multidimensional scale developed on the basis of

SERVQUAL model. The process of the LQI scale was argued that it began with the ten

dimensions that were originally in the first version of SERVQUAL and was highlighted

that the authors claimed that the LQI is a generic measure of hotel service quality. While

investigating their literature (Rauch et. al., 2015; Mbuthia et. al., 2013; Minh et. al., 2017)

have expounded on the LQI model and highlighted its ten dimensions as follows;

tangibility; reliability; responsiveness; competence; courtesy; credibility; security access;

communications; and understanding. The LQI, with its five-factor structure, has been

11

further validated in a study which utilized a sample of 200 Canadian respondents (Ladhari,

2012).

In a study conducted by (Tan, Oriade, & Fallon, 2014) on Service Quality and Customer

Satisfaction in Chinese Fast Food Sector, the DINESERVE scale was used to measure

service quality and was similar to the SERVEQUAL model. The DINESERV instrument

was proposed as a reliable and comparatively easy to use tool for determining how guests

evaluate restaurant service quality. The original DINESERV tool consisted of 29 items and

five SERVEQUAL dimensions( Watiki, 2014). Another study conducted by (Rauch et. al.,

2015) a service quality factor structure with three dimensions; was highlighted which

might serve as an appropriate framework by which customers assess service quality in

hotels. The three dimensions include; service product; service delivery; and service

environment.

Another study conducted by (Minh et. al., 2017), highlights the HOLSERV scale by

extending the SERVQUAL scale to include 27 items with 8 new items. The study tested

the reliability and validity of HOLSERV to which dimension is the best predictor of

overall service quality. Findings were that quality of service in the hospitality industry is

represented by three dimensions relating to employees (behaviour and appearance),

tangibles and reliability, and the best predictor of overall service quality is the dimensions

referred to “employees”.

2.2.2 SERVQUAL Model

According to (Abukhalifeh & Mat Som, 2012) SERVQUAL model allows customers to

evaluate quality of a service based on five distinct dimensions namely tangibles, reliability,

responsiveness, assurance, and empathy on which service quality and customer satisfaction

can be judged (Gupta, 2017). The model was developed by Parasuraman, Zeithaml and

Berry in 1988 as a tool of identifying service quality shortfall and is based on the premise

that customers can evaluate a firm’s service quality by comparing their perception of its

service quality with their own expectations (Waitiki, 2014).

Eshetie et. al., (2016) argues that commitment towards quality improves the guest’s level

of satisfaction and increases profits as well as consequently the benefits gained by the guest

and the employee. Eshetie et. al., (2016), further highlights that on the opposite, mistakes

in service provision cost the hotel money and its reputation may suffer. This is the “non-

quality cost” concept. The scenario created by non-quality service can be daunting for any

hotel manager. However, an unhappy guest does not usually express his or her unhappiness

12

to the management of a hotel, but will on average, inform at least nine other people about

poor service experiences. However happy guest will, by contrast, only inform three people

about his or her good service experiences in a hotel (P, 2014). Eshetie et. al., (2016) goes

ahead to argue that the SERVQUAL instrument is used to assess consumer perceptions and

expectations regarding the quality of a service. The original service dimensions used by

consumers to judge the quality of a service include as follows.

2.2.2.1 Assurance

This refers to the knowledge and courtesy of employees and their ability to inspire, convey

trust and confidence in hotel guests. The assurance dimension may be measured using

elements of knowledgeable trained professionals, communication and taking care of the

customer (Awara & Anyadighibe, 2014).

2.2.2.2 Reliability

This consists of four items, such as “My reservation was handled efficiently (Mbuthia et

al., 2013). Reliability is defined as the dependability, consistency and accuracy with which

the service is performed by the provider (Rauch et. al., 2015), as well as hotel’s ability to

perform services on time right at the first time (Minh et. al., 2017). Dependably is defined

as the service provider is able to provide what is needed and to be trusted while accurately

is defined as service provider is able to achieve the outputs that are correct(Tefera, Africa,

Govender, & Africa, 2017). High service reliability refers to the error-free performance

provided by the service provider. Reliability of service includes complaint handling, pricing

and promises delivery (Rahman et. al., 2014).Besides, customers compare the expectation

and the perception of the company’s delivery performance in order to evaluate their

acceptability (Demoulin & Djelassi, 2013).

2.2.2.3 Responsiveness

This refers to hotel’s willingness and flexibility to serve and help customers(Minh et. al.,

2017) in a timely, efficient manner and includes items such as helpfulness, friendliness and

warmth of the service staff (Rauch et. al., 2015).

2.2.2.4 Empathy

This is related to the caring personal attention extended to customers, as well as the level

of understanding personnel demonstrate relative to customer needs (Rauch et. al., 2015)

13

and the consideration, individualized attention the hotel provides to its guests (Eshetie et.

al., 2016).

2.2.2.5 Tangibles

This refers to the appearance of hotel and hotel staff, equipment personnel, physical

facilities at hotel and rooms, communication materials and visual materials for

customers(Minh et. al., 2017). Elements within the tangibles dimension are cleanliness,

space, atmosphere, appearance of server and location (Awara & Anyadighibe, 2014).

SERVQUAL model further, the model measures customer expectations and perceptions of

service quality. The quality gap (Q) is calculated by subtracting the expectation (E) from

the perception (P) value i.e. P-E=Q. Summation of all the Q values provide an overall

quality rating which is an indicator of relative importance of the service quality dimensions

that influence customers’ overall quality perceptions. SERVQUAL is a standardized

instrument that has been applied across a broad spectrum of service industries.

The SERVQUAL scale (Questionnaire) has two sections: one to measure customer

expectations in relation to a service segment and the other to measure perception regarding

the organization whose service is being assessed. SERVQUAL comprises a 22 items

(Likert-type) with five dimensions of reliability, responsiveness, assurance, empathy and

tangibles. From the 5 dimensions, 22 statements are derived, each measuring both the

expectations and perceptions of customers towards the quality of services of the

organization being assessed. The customers are required to rate, on a 5- point Likert scale,

the degree to which they feel the service provider should deliver for an excellent service.

Another identical scale is provided adjacent to the first one in which the respondents rate

the actual quality of service delivered to them by an organization based on their perceptions.

For each statement, the difference between perception and expectation is calculated; the

averages of the obtained score being the SERVQUAL score (Parasuraman et. al., 1988).

2.3 Effects of Customer Perceived Value on Customer Satisfaction

According to Chinomona et. al., (2014) the customer perceived value concept has attracted

the attention of industrial marketing scholars during the past years and has further attracted

much attention from the industry in recent decades (Tussyadiah, 2014). Customer perceived

14

value has therefore been stated by numerous authors as an aspect which has a great

influence on the decisions making process of customers (Chiang & Lee, 2013).

2.3.1 Customer Perceived Value

Perceived value is referred to the advantage, which is received by customer versus the total

costs, and is generally viewed as a comparative calculation of the costs and the rest of the

economic facets of services (Forozia et. al., 2013). Perceived value also refers to the

difference between the money paid for the service or product and the amount the customer

actually wants to pay (Gumussoy & Koseoglu, 2016). Delivering superior customer value

is an essential strategy for firms to gain competitive advantage and long term success

(Asgarpour, Hamid, Sulaiman, & Asgari, 2015) and in addition, customers make

purchasing decisions based on perceived value, or the degree to which their needs and

expectations about product quality, service quality, and or price are satisfied.

Demirgüneş (2015) states that the concept of “value” is a key-element in marketing and

maintaining customers. Customer perceived value is a concept which has drawn the

attention of industrial marketing researchers during the past years (Chinomona, Masinge &

Sandada, 2014; Vazifehdust, Amaleh, Esmaeilour & Khadang, 2014; Chen, Tsai, Hsu &

Lee, 2013; Razavi, Safari, Shafie & Khoram, 2012). According to (Asgarpour et. al.,

2015), having an understanding of a company’s mission, goals, and strategies and of its

customers’ needs and expectations, the company can develop a value proposition for

delivering superior value to its customers. This therefore the company has to attract new

customers, retain existing customers, and deliver significant profits, hence if a company

maximizes value for its customers, success follows (Asgarpour et. al., 2015).

Several researches according to (Waheed & Hassan, 2016) ,done on customer perceived

value around the world have been shedding more clarity of research measurement scales

over the researches that have been conducted. It helps organizations understand what the

customer expects from what they have purchased (Raza, et. al., 2012). In the past in many

researchers attempted to identify the customer perceived values associated with tourism

and its related services in various countries such as Spa Industry of Thailand (Setiowati &

Putri, 2012), Tourism industry of Malaysia (Haque & Khan, 2013), Hotel and Tourism

industry of China (Chiang & Lee, 2013) and in customer perceived value associated with

tourism in Pakistan examined by Raza et. al., (2012).

15

Further, perceived value has been examined by various authors as a factor which has a great

influence on the decisions making process of customers(Chiang & Lee, 2013).In the study

of the examination of perceived value dimensions of hotel visitors using exploratory and

confirmatory factor analyses (Chiang & Lee, 2013) suggests that the perceived value of

customer play a significant role in determining customer satisfaction, decision making and

purchase behaviours. In addition, the reviewed study on perceived value by Chiang and

Lee in 2013 indicates that perceived value is considered as a significant element in affecting

consumers’ consumption and decision making. Another study carried out on the influence

of e-service quality on customer perceived value , customer satisfaction and loyalty in

South Africa indicates that it’s a practical rule in presenting the customer with high value

hence a key factor in establishing and maintaining long term customer relations (Razavi et.

al., 2012).

In the study conducted by (Shen, 2016) perceived value in tourism experience, perceived

value is defined as the utility individuals derive from tangible products or intangible

services and it consists of what benefits individuals get and what costs they pay.

Researchers interpret perceived value from two perspectives; one-dimensional and multi-

dimensional, the former shows that value is a consumer’s overall evaluation of a product

or service (Yi, Day & Cai, 2014).In the study by (Chiang & Lee, 2013) an examination of

perceived value dimensions of hotel visitors using exploratory and confirmatory factor

analyses, customer perceived value can be described as the evaluation of comparing the

perception of typical perceived value and real outcome of purchase experience. On this

basis, the tourist is probable to interrelate with various components of the tourism product,

evaluate these tourism experiences and form their impression of the trip related experience.

A study carried out by (Demirgüneş, 2015) on the international review of management and

marketing relative importance of perceived value, satisfaction and perceived risk on

willingness to pay more consumers can either sustain the economic benefits of a purchase

process, or can get a better service adapted to their own needs (Morar, 2013). Other benefits

enjoyed by consumers during their purchase processes are the social ones which arise from

the establishment of a specific relationship. Accordingly, keeping a consumer satisfied may

be ten times cheaper than acquiring a new one. So, companies need to make efforts for

retaining customers and must concentrate on managing value perceived by them (Morar,

2013).

16

Demirgüneş (2015) maintains that companies must provide the value which will increase

the shopping intention of consumers by creating and delivering good shopping experiences.

Hence, providing superior value has become important for a company to maintain long-

term relationships with their customers (Ivanauskiene et. al., 2012). According to the study

on importance of perceived value, value is given when a product or service has the ability

to satisfy customer’s needs (Morar, 2013). Companies are operating in a complex

competitive environment and increasing number of customers are demanding the creation

of value. This has created a growing interest in providing greater value to the customer and

hence customer’s perceived value can be defined further from the perspectives of money,

quality, benefit, and social psychology, in which normally from monetary aspect value is

said to be generated when less is paid for goods (Yeh, 2013).

Demirgüneş (2015) explains that the concept of value represents the perception of the utility

that the relationship with the establishment brings. Enriching the relationships with

customers increase their attitudinal loyalty for example; intentions of customers to continue

shopping and a positive impact on the duration and strength of the relationship (Rubio et.

al., 2013). Thus the relationship between perceived value and customer satisfaction has

revealed that customer satisfaction is the result of a customer’s perception of value

received. Perceived value is considered as a construct that captures any benefit-sacrifice

discrepancy in the same way that disconfirmation does for variations between expectations

and perceived performance (Kassim et. al., 2014).

2.3.2 Perceived Value Model

Perceived value is one of the important elements for gaining competitive edge and is

considered to be a significant predictor of customer satisfaction (Demirgüneş,

2015).Various theoretical models and frameworks were developed and empirically tested

to assess the relationship between customer perceived value (CPV) and customer

satisfaction. Some research was purely based on tourism sector. One of the pioneering

model is Dodds and Monroe (1985) Price Quality Model. This framework emphasis on

quality and price.

Trade off model by Zeithaml (1988), is a unidimensional model to measure perceived value

by using quality and price as key variables to measure the customer perception toward the

products and services (Waheed & Hassan, 2016). It is one of the most widely used term of

perceived value which is defined as “the consumer’s overall assessment of the utility of a

17

product (or service) based on perceptions of what is received and what is given”. Within

this definition, Zeithaml (1988) identified four diverse meaning of value: Value is low

price, value is whatever consumer want in a product, value is the quality consumer get for

the price paid and value is what consumer gets for what they give.

The majority of past research on perceived value has focused on the fourth definition

(Bojanic, 1996; Zeithmal, 1985). The most common definition of value is the ratio or trade-

off between quality and price (Monroe, 1991), which is a value-for-money

conceptualization. Clearly, these two components (quality and price) have different and

differential effects on perceived value for money. Zeithaml (1988) argued that some

consumers perceive value when there is a low price, others perceive value when there is a

balance between quality and price. Thus, for different consumers, the components of

perceived value might be differentially weighted. Additionally, Zeithaml (1988) found that

some consumers obtained value from all relevant ‘get’ and ‘give’ components, leading to

her definition of perceived value. In other words, perceived service value is trade-offs of

customer perceptions between what they (customers) give for the service they receive.

Petrick (2002) has produced a multidimensional scale (SER-PERVAL) for measuring the

perceived value of services, based on the Zeithmal (1998) model. There are five dimensions

that has been constructed to measure this scale which are quality, monetary price, behaviour

price, reputation and emotional responses (Petrick, 2002)

Multi-dimensional approaches of assessing CPV associated with services or tangible

products are proposed with the emergence of service sector (Waheed & Hassan, 2016).

Typology for Consumer Value introduced by Holbrook (1999) incorporated variables such

as efficiency, excellence, play, aesthetics, ethics, status, esteem and spirituality as part of

CPV. The Value Hierarchy Model by Woodruff (1997), a widely adopted multi-

dimensional model to assess Customer Perceived Value related with services. The model

identifies about the value perception that keeps on changing and the need to understand the

buyer behaviour of decision making. The model has been used on products and

organizations to understand measures of value in these areas (Moosa & Hassan, 2015).

Alternatively, Consumption Value framework developed by Seth, Norman and Newman

(1991) is a multi-dimensional theory with five consumption values that influences

consumer choice behaviour.

18

A study conducted by (Guterman, 2015) elaborates that customer perceived value is a

customer’s assessment of all the advantages and disadvantages of the offer based on the

real perception of what is given (Zeithaml 1988, 14; Kotler & Armstrong 2010). Also, the

most often perceived value is understood as the trade-off between gains and charges,

therefore, customer satisfaction appears when the total customer benefit adequately

correlates with the total customer cost.

2.4 Effects of Customer Expectations on Customer Satisfaction.

Customers are viewed as champions in modern marketing as they seek to satisfy a set of

needs and wants that are partly related to the essential services offered .Further it is in the

customer expectations on how these needs and wants are met consistently form

impressions about the actual service offered them in comparing with their own

expectations (William, Appiah, & Botchway, 2016). Arguably, the performance of every

organization depends on how well it satisfies its sophisticated customers. Unsatisfied

customers with a product or service are customers that can opt for another company or

spread negative advertising by ‘word-of-mouth’. Aside from customer dissatisfaction, there

are more finally satisfied or indifferent customers that can be drawn to the competition.

In the study by (Forozia et. al., 2013) on customer satisfaction in hospitality industry case

study of middle east tourists at 3star Hotels in Malaysia, customer expectation is defined

as beliefs and sensitivities that each customer has about service derived from what they

require from it and supposes it to do. According (Amissah, 2013) in the academic study

on tourist satisfaction with hotel services in Cape Coast and Elmina, Ghana, expectations

is described as the desires or wants and are in most cases different from what the customer

gets.

A study conducted by (Campos & Marodin, 2012) offers a description of the process in

which the customers create their expectations in relation to the performance of their

providers. According to (Campos & Marodin, 2012) dissatisfaction in services is caused by

existing gaps between the expectations and the results perceived and they identified the

five potential gaps in services as derived by Parasuraman, Zeithaml and Berry (1985) as

follows: consumer expectations and management of perception of expectations;

perceptions of management of consumer expectations and specifications of quality in

services; between the specifications about the quality of service and the service in fact

given; between the service offered to the client and that which is communicated about the

19

service; between the expectations of the consumer and the perceptions of the service

received.

2.4.1 Levels of Customer Expectation

Study conducted by (Yongchaitrakool, 2014) on the effect of customer expectation ,

customer experience and customer price perception on customer satisfaction in hotel

industry indicates that in any service oriented industry, the element of customer

expectation is significant in order to provide quality service. Further in his study

(Yongchaitrakool, 2014) argues that there are two levels of customer expectation, desired

and adequate. The desired expectation is what customers expect to receive from the service

providers, whereas adequate expectation is defined as the service performance that

customers can accept. The desired expectation is in the higher level than the adequate

expectation. It is related to the customers’ evaluation (Yongchaitrakool, 2014).

Brink and Berndt (2008) came up with the explanations that the gap between the desired

and adequate service is called zone of tolerance and that customers are able to accept the

zone of tolerance at different levels, depending on the provided service and other

conditions. For example, if the price is increased, customers tend to have more desired

expectation (zone of tolerance is decreased) which means that they expect to receive more

service. An argument by (Yongchaitrakool, 2014) states scholars mention the relationship

between customer expectation and satisfaction in that customers will be satisfied if a

company or hotel provides services above their expectation as customers who pay for

service or product, normally expect that this service or product is worth their payment.

Mason and Simmons (2012) also connect service quality with customer expectation as they

found that customer expectation occurs when customers predict the service quality by using

their own characteristics, attitudes and preference. Customers perceive the services

differently depending on their perception and expectation whilst customer satisfaction will

be judged by the provided service and customer expectation(Yongchaitrakool, 2014).

According to a study by (William et. al., 2016) on assessment on customer expectations

in service quality, customer expectations are beliefs on service delivery that serve as

standard against the performance done. Further, customers develop a certain set of

expectations based on a variety of inputs and consider their previous experiences with

services in general and with each specific kind of service they have encountered.(William

et. al., 2016) .Customers also develop expectations when they hear about services from

20

others. If you hear that your friend was delighted with her stay at a particular hotel, you are

more likely to expect that same level of service if you stay there. Customers also form

expectations based on service provider’s advertisement and promotions (William et. al.,

2016).

In the study conducted by (Mohajerani, 2012) on customer satisfaction modelling in hotel

industry a case study of Kish Island in Iran customer expectation is described as mutable

internal standard which is based on a multitude of factors including needs, objectives, past

personal or vicarious experiences with the same establishment Hotel, with similar

establishments, and the availability of alternatives. (Mohajerani, 2012) goes ahead to adopt

the customer expectation scale had been adopted from a study from Turkyilmaz and Ozkan

in 2007 indicating that customer expectation had four parts which were: Expectation for

fulfilment of personal need; Expectation for overall quality; Expectation for product quality

and expectation for service quality.

An underpinning theory drawn by Oliver (1977 and 1980) on expectation disconfirmation

theory. This theory posits that expectations, coupled with perceived performance, lead to

post-purchase satisfaction. This effect is mediated through positive or negative

disconfirmation between expectations and performance. If a product or service outperforms

expectation post-purchase satisfaction will result (positive disconfirmation). If a product or

service falls short of expectations the consumer is likely to be dissatisfied (negative

disconfirmation). The dominant model of customer satisfaction is the expectation

disconfirmation theory. Disconfirmation theory declares that satisfaction is mainly defined

by the gap between perceived performance and expectation which is promising approach

to explain satisfaction (Awara & Anyadighibe, 2014).

Expectations are formed by personal experience and understanding of environment, taking

into account practice feasibility based on expectancy theory. Perceived performance is a

relatively less influenced estimation of performance based on objective judgement rather

than emotional reactions. Expectation disconfirmation occurs in three forms: Positive

disconfirmation which occurs when perceived performance exceeds expectations;

Confirmation which occurs when perceived performance meets expectations; Negative

disconfirmation which occurs when perceived performance does not meet and is less than

the expectations (Awara & Anyadighibe, 2014).

21

Further Awara and Anyadighibe argues in 2014 that, it is more feasible for customers to be

satisfied if the service performance meets (validation) or exceeds (positive confirmation)

their expectations. Quite the reverse customers are more likely to be dissatisfied if the

service performance is less than what they expected (negative disconfirmation) discuss that

taking expectation disconfirmation as the only determinant of satisfaction. Therefore, this

theory does not cause the fact that if high expectations are confirmed, it would much more

lead to satisfaction than confirmation of low expectations. To resolve this drawback

perceived performance is included as an additional determinant of satisfaction. In other

words, the only way to really ensure satisfaction is to empirically create disconfirmation by

manipulating expectations and performance (Awara & Anyadighibe, 2014).

2.4.2. Roles of Customer Expectation.

A Study conducted by (Ali, Leifu, Yasirrafiq, & Hassan, 2015) on the roles of customer

expectation on customer satisfaction shows that information of customer expectation is

important because this factor influences the customer behaviour and management within

the limited resources can manage the expectations of the customers. Normally expectations

a customer have about a product or service depend upon the information gathered from the

available resources. Customer expectations could be influenced by the advertising,

promotions and positive word of mouth. When customers have high expectations, and the

reality fall short, they will be disappointed and will likely rate their experience as less than

satisfying. For this reason, a luxury resort, for example, might receive a lower satisfaction

rating than a budget motel even though its facilities and service would be deemed superior

in ‘absolute’ terms.” (Mubiri, 2016).

According to (Ali et. al., 2015) there are many quotations expressing the customer

expectations in different ways like “It is necessary to exceed customer expectations”. It is

very important that if the product or service fulfils the expectation of the customer they will

give more preference of that product or service next time. There is one famous statement

regarding this as “If a customer expects a bad level of quality and receives it, he or she will

reduce his or her level of preference for the brand”. Excellent customer service and high

customer satisfaction begins with understanding customer expectations. It has to be noted

who your customers are and what they want. (Mubiri, 2016).This is why customer

expectation could not be ignored while studying the customer satisfaction because it plays

vital role in customer behaviour regarding future repurchases decision (Ali et. al., 2015).

22

A study conducted by (William et. al., 2016) explains that customers develop a certain set

of expectations based on a variety of inputs and consider their previous experiences with

services in general and with each specific kind of service they have encountered. Customers

also develop expectations when they hear about services from others. If you hear that your

friend was delighted with her stay at a particular hotel, you are more likely to expect that

same level of service if you stay there. Customers also form expectations based on service

provider’s advertisement and promotions. From the same study several levels of customer

expectations have been highlighted as adapted by (Zeithaml and Bitner, 1996; Kurtz and

Clow, 1998) as follow: first, Ideal service level is the highest level of service expectations

defined as the ‘wished-for’ level of service, which customers hope to receive in an idealised

way, secondly the desired service level is lower than the ideal service level. However, it is

the level of performance the customer wants to receive from the service and a blend of what

customers believe can be and should be delivered.

Thirdly, adequate service level which is the lowest level of service expectations defined as

the minimum level of service the customer will tolerate and accept without being frustrated.

Further Willian et. al., (2016) discusses the zone of tolerance referring to the gap between

desired service and adequate service levels. Services performed in this zone will be

accepted as heterogeneity by the customers. If the performance is above the ideal service

level, customer will be very pleased. When the performance falls below the adequate

service level, customers will be dissatisfied and have a negative impression. Lastly,

predicted service level is the level of service customers actually expect from the service

organisation. The predicted service level can range from the ideal level of service to the

adequate level of service by modifying the customers’ expectations accordingly in all

circumstances of service.

2.5 Chapter Summary

Chapter two of this study gives in-depth literature review of the objectives of the study as

well as identifying the depended and independent variables of the study. A review of the

literature indicates that dimensions and models of service quality, perceived value and

customer expectations have an impact on customer satisfaction and how customer

satisfaction is depended on these dimensions. Following chapter two is chapter three which

identify the research methodology and discuss further on the sampling design techniques

and data collection methods and procedures

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CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter sets out various stages that were followed in completing the study. These

stages are research design, target population, sampling design, data collection instruments,

data collection procedures and data analysis.

3.2 Research Design

Researchers have defined research design in different ways but depicting similarity.

According to (Sekaran, 2013),it involves a sequence of coherent decision-making choices.

It is defined as a blue print for data collection, types of measurement and types of analysis

to be conducted. Also, research design as procedure to be followed when conducting a

study which informs when the study is to be conducted, from whom data will be collected,

and the condition that the data will be obtained (Cooper & Schindler, 2008) There are a

number of research designs with the main categories; exploratory, descriptive, causal and

correlational design (Sekaran, 2013).

Sekaran (2013) explains that descriptive studies are undertaken to understand the

characteristics of organizations that follow certain common practices. Therefore, offers the

researcher a profile on relevant aspects of the phenomena of interest from an individual,

organizational, industry-oriented, or other perspective. Thus, such information may be vital

before even considering certain corrective steps, for instance if the organization consider

changing its practices. This study adopted descriptive research design and the phenomena

of study were the service quality, customer perceived value and customer expectation. The

main data collection instruments were Questionnaires and developed based on the

components of the SERVQUAL Model.

3.3 Population and Sampling Design

3.3.1 Population

Sekaran (2013) , defines a population as the entire group of people, events, or things of

interest that the investigator wishes to investigate.The target population for a study is the

entire set of units for which the survey data are to be used to make references (Cooper &

24

Schindler, 2008). The target population of this study was USIU-Africa community who

had stayed in 4-5 star hotels between November 2017 and April 2018 (last 6 months as to

the date of data collection).

3.3.2 Sampling Design

3.3.2.1 Sampling Frame

The Sampling frame consist of all USIU-Africa students and faculty who had stayed in 4

to 5-star hotel six months prior to the research. Due to the nature of research, the region of

stay was an important aspect of the population hence the population of student was

classified under region. This was captured from USIU Africa fact sheet (2016) and

presented as on table 3.1. The questionnaires were distributed conveniently to students and

faculty at the time of data collection.

Table 3. 1 Sample Frame

Classification Number Percentage

Domestic students 5021 81.3%

International students 917 14.8%

Faculty 241 3.9%

Total 6179 100%

Source: USIU Africa (2017)

3.3.2.2 Sampling Technique

Convenience sampling is a method that includes elements that were met at the appropriate

time in the location of information collection (Gravetter & Forzano, 2015). It is one of the

types of random sampling since the selection of samples is carried out in a random manner.

It selects the elements that are or appear to be most readily available at the time of data

collection. Convenient sampling has been used in the service industry such as marketing

and customer satisfaction to gather the most updated information as it is collected usually

during or not a long time after the product or service consumption as a feedback mechanism

(Guterman, 2015). Further, previous studies have shown the method is very popular

especially in the tourism industry as it is very easy and cheap to conduct it (Gravetter &

Forzano, 2015). In such it is estimated in a muddle class economic set up, 70 to 90% of the

population have used or experienced 4 to 5 start hotel services. Convenience sampling in

25

this study was used to identify only those who had stayed in the hotel for the last six months

prior to the study.

3.4 Sample Size

This study adapted the formula developed by Cochran to determine the sample size (Glenn,

2009).

Where: e is the desired level of precision or margin of error, p is the (estimated) proportion

of the population which has the attribute in question, and q is 1 – p. With the assumption

of 90% of the population have used 4-5star hotels, so p = 0.9. 95% confidence, (gives us Z

values of 1.96) and at least 5 percent—plus or minus—precision. The q value is 1-0.9=0.1

((1.96)2 (0.9) (0.1)) / (0.05)2 = 138.

The total sample size = 138 as presented on the following table

Table 3. 2a Sample Size

Classification Number Percentage Sample size

Domestic students 5021 81.3% 112

International students 917 14.8% 20

Faculty 241 3.9% 6

Total 6179 100% 138

Source: USIU Africa (2017)

3.5 Data Collection Methods

Primary data was used for this study. The data was collected using a standardized

questionnaire comprising of 22 statements derived from the works of Cronin and Taylor

(1992) which involved the modification of SERVQUAL. The questionnaire was modified

to include a section that was used to measure factors influencing customer satisfaction. The

questionnaire comprised of three parts. The first part required the respondents to give their

demographic information. The aim of this part was to provide information on the type of

26

the customer. The second part required the respondents to rate the extent to which they

believed the indicated factors influences customer satisfaction. Part three of the

questionnaire require the respondents to rate their perception levels with the services

provided by the hotels. Likert type scale ranging from 1 to 5 was adopted.

3.6 Research Procedures

3.6.1 Pilot Study

Pilot testing is a vital step before conduct the actual survey process. It examined the

reliability and effectiveness of questionnaire that certify the good quality of the survey

(Trakulmaykee, Lim, & Trakulmaykee, 2013). Small quantity and potential respondents

who have similarity with each other should done the pilot testing. Prior to the actual data

collection, the supervisor approved the questionnaire. Amendments for changes was made

in order to have a better understanding for future respondents. The revised questionnaires

were handed out to 10 respondents for pilot and their feedback was used to correct the

questionnaire before the final data collection.

3.6.2 Reliability of Instruments

The internal consistency of a measurement scale could be determined in many ways, but

the most frequently used is the Cronbach’s coefficient alpha. The value of 0.7 is deemed

acceptable, depending on the nature and purpose of the scale as cited by Pallant (2013).

This was used as the measurement index and of the pilot, the value was 0.81. This was

higher than the reliability of the final data presented on table 4.9.

3.6.3 Validity of Instruments

Confirmatory Factor Analysis (CFA) was conducted using maximum likelihood

estimation, to validate the 5 service quality attributes of the SERVQUAL instrument;

reliability, assurance, tangibles, empathy, and responsiveness (Tefera et. al., 2017).

3.6.4 Administration of Instruments

A questionnaire design can affect the overall quality of research conclusions. A well

questionnaire design is determined by the quality of data that are getting from questionnaire

(Makienko & Bernard, 2012). The questionnaire was adopted from prior research studies

to guarantee the high validity of the questionnaire. The questionnaire had Section A and B.

Section A was the respondents’ demographic profile with 10 questions: gender, age,

27

residency, reason for travel, preferred food and drinks, suggestions and response to

suggestions, number of times stayed in the hotel, number of days in the hotel, and lastly the

services consumed in the hotel. Section A applied nominal and ordinal scale. Section B was

about the independent variables and dependent variable which were reliability, assurance,

tangibles, empathy, responsiveness, toward 4-5 star hotels in Nairobi and Mombasa. Three

IVs consist 5 questions and another three IVs consist 4 questions which discusses about the

elements that influence local tourist satisfaction toward budget hotel by using the Likert

Scale (non-comparative techniques) which is interval scale of measurement. It made up of

an extent of 1-5 starting (1=Strongly Disagree; 2=Disagree; 3=Neutral; 4=Agree;

5=Strongly Agree). DV include 4 questions in the questionnaire. All questions were

designed with closed-ended questions to compute the responses easily.

3.6.5 Ethical Considerations

It is crucial that all researchers are aware of research ethics. Ethics relate to the researcher

who is conducting the study and should be aware of basic responsibilities and obligations

and the respondent who has an obligation to cooperate and be truthful to a survey or

interview. (Sekaran, 2013). The study therefore was conducted with fairness and justice

by eliminating all potential risks. Permission to conduct the study was required from USIU-

Africa research office and from individuals involved. Respect for persons involved was

obtained as they had the right to choose to either participate or not. Confidentiality and

anonymity of respondents was highly considered as well as informed consent. After a full

explanation of the nature of the study, participants were asked to give either verbal consent

of their willingness to participate in the study.

3.7 Data Analysis Methods

Data analysis is a way of gathering, modelling and transforming data with the aim of

highlighting information. It is a practice in which raw data is ordered and organized so that

useful information can be extracted from it (Cooper & Schindler, 2005). Charts, graphs,

and textual write ups formed part of the data analysis for this study. After collecting the

data, was analysed by using Statistic Package for Social Sciences program (SPSS). To deal

with the large numbers, descriptive statistics was used to analyse the effect of service

quality, customer expectation, experience and perceived value on customer satisfaction.

Further, inferential statistics was used to test the relationship between the dependent and

independent variables (Yongchaitrakool, 2014).

28

3.8 Chapter Summary

This chapter has described and justified the research methodology to be used for the

research. The chapter has explained the research design, the sampling design including

population, sampling technique, sampling frame and sample size. The chapter has also

defined the data collection method and detailed the research procedures. Lastly, it has

considered the data analysis techniques used. The next chapter present the analysis of the

study findings. Subsequently, the findings are discussed in chapter five together with

conclusions and recommendations.

29

CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction

The general objective of this study was to investigate the factors influencing customer

satisfaction in the hotel industry in Kenya. This chapter presents the research findings based

on the data collected from university students and staffs that had visited 4 to 5 start hotels

for the last six months from the date of the research on April 2018. The presentation is done

based on the demographic information and specific study objectives.

4.2 Response Rate

Total of 138 questionnaires were given out and 135 were collected back. This presents

97.8% of the response rate as indicated on table 4.1.

Table 4. 1 Response Rate

Questionnaires Frequency Percentage

Responded 135 97.7%

Did not respond 3 2.3%

Total 138 100.0%

4.3 Demographic Characteristics

Demographic information captured during the study includes: gender, age, residency,

reason for travel, preferred food and drinks, suggestions and response to suggestions,

number of times stayed in the hotel, number of days in the hotel, and lastly the services

consumed in the hotel. This section outlines the findings of each of the demographics of

the respondents.

4.3.1 Gender of Respondents

The number of males participated in the study were more than the number of female at 58%

and 42% respectively. Figure 4.1. Indicates this.

30

Figure 4. 1 Gender.

4.3.2 Age Bracket

The age bracket for the respondents was: 18 to 35 years, 36 to 55 years, 56 to 75 years and

75 years and above. As indicated on figure 4.2, most (96.3%) of the 4 to 5 start hotel users

involved in the study were youths at age 18 to 35 years followed by 3.7% of users aged 36

to 5 5years.

Figure 4. 2 Age Bracket

4.3.3. Residency of Living

On the residence of stay, 75.6% were Kenyan followed by respondents who resided

internationally at 13.4% and lastly, 11.0% were east African residents. This shows the

respondents were varied and presents different views as indicated on figure 4.3.

Male58%

Female42%

18-35 years, 96.30%

36-55 years, 3.70%

31

Figure 4. 3 Residence of Living

4.3.4 Number of Times Visited the Hotel

Respondents were asked to state approximate number of times they have visited hotel for

the last 6 months. There was clear sequence on the dropping of percentage; majority had

visited the hotel for the first time 47.8%, followed by two times at 24.6%, those who had

visited for three times were 13.4%, and the rest was less than 10%: 5 to 10 times at 9%,

weekly at 1.5%, every time one tours the country at 2.2% and monthly at 1.5%. Figure 4.4

shows this.

Figure 4. 4 Number of Times Visited the Hotel

Kenyan, 75.6

East Africa, 11.0

International, 13.4

47.80%

24.60%

13.40%

9%

1.50% 2.20% 1.50%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

First visit Second visit Third visit 5-10 visits Weekly Every time Ihave touredthis country

Once in amonth

32

4.3.5 Number of Days in the Hotel

On the number of days that one had spent on the hotel, 39% had spent 3 to 5 days, 36% had

spent less than 3days, 24% had spent 1 to 2 weeks and only 1% had spent 1 month in the

hotel. This shows majority of the hotel visitors were there for shorter period of time as

indicated on figure 4.5.

Figure 4. 5 Number of Days in Hotel

4.3.6 Reason of Travelling

The reason for travel varied from an individual to another. The accumulation of multi-

respondents showed 30.1% travelled for pleasure, 19.2% for work, 12.8% for business,

12.2% for other reasons. Those who travelled for less than 10% travelled for holiday (95)

and visiting people (5.8%). These findings are presented on figure 4.6.

Figure 4. 6 Reason of Travel

Less than 3 days36%

3 to 5 days39%

1 to 2 weeks24%

1 month1%

19.20%

30.10%

9.00%

12.80%10.90%

5.80%

12.20%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Work Pleasure Holiday Business Adventure Visitingpeople

Other

33

4.3.7 Feedback on Expectation.

There was a question on feedback from the services of the hotel. 74.1% indicated they got

the preferred kind of food and drinks in the hotel. 29.5% indicated they had raised

suggestions, complements or complains to the management of the hotel. While 43.4%

suggested the management took action on their complains, suggestions or complements

during their period of stay. Table 4.2 indicates this.

Table 4. 2 Feedback on Availability and Feedback from management.

Yes No

Get preferred kind of foods and drinks in the hotel 74.1% 25.9%

Raised suggestions, complains, complements to the management of

the hotel

29.5% 70.5%

Management take any action on suggestions, complains, complements 43.4% 56.6%

4.3.8 Services Majorly Used.

Besides accommodation and meals, figure 4.7 shows other services that the visitors used in

the hotel. They include swimming pool at 33.9%, SPA at 15.4%, fitness center at 11.5%

and others were below 10%. They include transport services at 8.8%, club at 8.4%,

conference at 6.2%, business at 5.7%, casino at 4.8%, kids friendly services at 4.4.%, and

other services at .9%.

Figure 4. 7 Services

Transport

CasinoSwimming pools

Kidsfriendlyservices

SPAConfere

nceBusinesscentre

Fitnesscentre(gym)

Club Others

Services 8.80% 4.80% 33.90% 4.40% 15.40% 6.20% 5.70% 11.50% 8.40% 0.90%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

34

4.4 Descriptive Analysis of Study Variables

4.4.1 Hotel Service Quality

Hotel quality had five categories of questions each on a scale of 1 to 5: 1 being strongly

agree, 2 agreed, 3 as neutral, 4 as disagree and lastly 5 as strongly disagree. The categories

of questions were on tangibility (T), reliability (R), responsiveness (RE), assurance (AS)

and empathy (EM). The question and response on tangibility were: Does the hotel have

modern equipment e.g. furniture, telephones, flat screen, cutlery, safe box etc. response,

Strongly Agree at 62.1% and Agree at 21.2%; The physical facilities at the hotel are

visually appealing, response of Strongly Agree at 60.8% and Agree at 23.1%. The menu

offers a wide variety of foodstuff to choose from, response of Strongly Agree at 48.8% and

Agree at 22.5%; Value added activities such as live bands, music etc. are of great quality,

response of Strongly Agree at 38.9% and Agree at 22.1%; and lastly, the hotel has a serene

environment with great ambience, response of Strongly Agree at 55.0% and Agree at

24.4%. In all, strongly agree and agree were highly ranked.

The response on questions on reliability were also highly ranked as strongly agreed and

agreed as follow: Orders are served in a timely manner, response of Strongly Agree at

30.3% and Agree at 44.7%; Hotel management shows interest in solving customer issues

once raised, response of Strongly Agree at 37.9% and Agree at 37.1%; Personnel responds

to customers promptly, response of Strongly Agree at 30.5% and Agree at 42.0%; and

lastly, Hotels services and menus are available at the right place, response of Strongly

Agree at 40.9% and Agree at 33.3%.

Questions on responsiveness were also highly ranked as agreed and strongly agreed as

follow; Personnel in the hotel communicate to customers exactly when services will be

performed, response of Strongly Agree at 20.8% and Agree at 43.9%; Hotel staff give

prompt service to customers, response of Strongly Agree at 22.0% and Agree at 43.9%;

Personnel are always willing to help customers, response of Strongly Agree at 34.8% and

Agree at 40.2%; Hotel staff are never too busy to respond to customers’ requests, response

of Strongly Agree at 24.2% and Agree at 41.7%.

Questions on assurance and response were, I find the hotel facilities to be secure, response

of Strongly Agree at 48.5% and Agree at 34.1%; Food’s well cooked with wide varieties

for selection, response of Strongly Agree at 40.3% and Agree at 34.3%; Personnel are

consistently courteous with customers, response of Strongly Agree at 38.1% and Agree at

35

38.1%; The staff are very helpful to customers and competent in their work, response of

Strongly Agree at 37.6% and Agree at 38.3%; and food is handled and served in clean

environment as well as the rooms are consistently kept clean with the rest of the hotel

premises, response of Strongly Agree at 44.0% and Agree at 38.1%.

Lastly, questions on empathy and responses were: the hotel staff gives customers individual

attention, response of Strongly Agree at 41.8% and Agree at 34.3%; Hotel staff are always

available to serve customers anytime, response of Strongly Agree at 40.2% and Agree at

33.3%; The hotel treats each customer with respect, response of Strongly Agree at 51.1%

and Agree at 23.3%; The hotel has the customers best interests at heart, response of

Strongly Agree at 42.5% and Agree at 33.6%; and the hotel staff understand the specific

needs and preferences of their customers, response of Strongly Agree at 42.5% and Agree

at 29.9%.

All the responses were high as strongly agreed and agreed and were as indicated on table

4.3.

36

Table 4. 3 Service Quality on Customers.

SA A N D SD

T1 Does the hotel have modern equipment e.g.

furniture, telephones, flat screen, cutlery, safe

box

62.1 21.2 7.6 4.5 4.5

T2

The physical facilities at the hotel are visually

appealing

60.8 23.1 8.5 4.6 3.1

T3 The menu offers a wide variety of foodstuff to

choose from

48.8 22.5 17.1 7.8 3.9

T4 Value added activities such as live bands, music

etc are of great quality

38.9 22.1 23.7 6.9 8.4

T5 The hotel has a serene environment with great

ambience

55.0 24.4 8.4 6.9 5.3

R1 Orders are served in a timely manner 30.3 44.7 18.2 3.0 3.8

R2 Hotel management shows interest in solving

customer issues once raised

37.9 37.1 16.7 5.3 3.0

R3 Personnel responds to customers promptly 30.5 42.0 19.8 3.8 3.8

R4 Hotels services and menus are available at the

right place

40.9 33.3 15.2 6.8 3.8

RE1 Personnel in the hotel communicate to customers

exactly when services will be performed

28.0 43.9 20.5 6.1 1.5

RE2 Hotel staff give prompt service to customers 22.0 43.9 22.7 7.6 3.8

RE3 Personnel are always willing to help customers 34.8 40.2 15.9 6.1 3.0

RE4 Hotel staff are never too busy to respond to

customers’ requests

24.2 41.7 19.7 7.6 6.8

AS1 I find the hotel facilities to be secure. 48.5 34.1 10.6 3.0 3.8

Service quality on customer – table continuation SA A N D SD

AS2 Food’s well cooked with wide varieties for

selection

40.3 34.3 14.2 8.2 3.0

AS3 Personnel are consistently courteous with

customers

38.1 38.1 16.4 4.5 3.0

AS4 The staff are very helpful to customers and

competent in their work

37.6 38.3 13.5 8.3 2.3

AS5 Food is handled and served in clean environment

as well as the rooms are consistently kept clean

with the rest of the hotel premises.

44.0 38.1 8.2 3.0 6.7

EM1 The hotel staff gives customers individual

attention

41.8 34.3 12.7 5.2 6.0

EM2 Hotel staff are always available to serve

customers anytime

40.2 33.3 17.4 5.3 3.8

EM3 The hotel treats each customer with respect 51.1 23.3 14.3 6.0 5.3

EM4 The hotel has the customers best interests at heart 42.5 33.6 12.7 8.2 3.0

EM5 The hotel staff understand the specific needs and

preferences of their customers

42.5 29.9 12.7 6.0 9.0

37

4.4.2 Hotels Perceived Value Quality

The description on the hotel perceived value quality had two sets of questions; functional

value and the symbolic value. Unlike questions on service quality that were highly ranked

as strongly agreed and agreed, the questions on perceived value quality were different.

Questions on functional value were; Hotel services are worth the money ranked highly as

agreed at 37.6% followed by strongly agreed at 28.6%. other questions were ranked

differently: hotel services are fairly priced highly ranked as agreed at 36.4% and neutral at

32.6%; hotel services are reasonably priced highly ranked as agreed at 37.1% and neutral

at 31.1%; and lastly, hotel is economical highly ranked as neutral at 41.2% and agreed at

28.2%.

Questions on symbolic value were ranked as strongly agreed and agreed as follow: Hotel

has good reputation, strongly agreed at 53.5% and agreed at 31.0%; Quality of hotel is

outstanding strongly agreed at 45.3% and agreed at 35.9% and lastly, hotel is well thought

off as strongly agreed at 46.1% and agreed at 32.8%. As indicated on table 4.4.

Table 4. 4 Perceived Value Quality.

SA A N D SD

FV1 hotel services are worth the money 28.6 37.6 24.1 6.8 3.0

FV2 hotel services are fairly priced 15.9 36.4 32.6 9.1 6.1

FV3 hotel services are reasonably priced 16.7 37.1 31.1 10.6 4.5

FV4 Hotel is economical 12.2 28.2 41.2 10.7 7.6

SV1 Hotel has good reputation 53.5 31.0 10.1 1.6 3.9

SV2 Quality of hotel is outstanding 45.3 35.9 13.3 2.3 3.1

SV3 Hotel is well thought off 46.1 32.8 10.9 5.5 4.7

4.4.3 Effect of Customer Expectations

Questions on customer expectations were highly ranked as either strongly agreed and

agreed only. The hotel is of good value for the money was rated strongly as agreed at 41.6%

and strongly agreed at 32.8%. Hotel premises are safe and secure was, agreed at 45.7% and

strongly agreed at 38.0%; Employees are never too busy to respond was, agreed at 39.8%

and strongly agreed at 29.7%; the hotel staff is friendly was, agreed at 42.5% and strongly

agreed at 39.4%. Efficiency at the check-in and check-out of the accommodation was rated

strongly as strongly agreed at 42.9% and the hotel has a variety of restaurants, bars,

entertainment and other activities as also strongly agreed at 41.1% and agreed at 33.3%.

Lastly, the hotel meals are of high quality and the hotel is easily accessible were ranked

strongly as a greed and strongly agreed as indicated on table 4.5.

38

Table 4. 5 Customer Expectations.

SA A N D SD

CE1 The Hotel is of good value for

money

32.8 41.6 16.0 7.2 2.4

CE2 Hotel premises are safe and secure 38.0 45.7 9.3 3.1 3.9

CE3 Employees are never too busy to

respond

29.7 39.8 20.3 5.5 4.7

CE4 The hotel staff is friendly 39.4 42.5 10.2 3.9 3.9

CE5 Efficiency at the check-in and

check-out of the accommodation

42.9 35.7 12.7 5.6 3.2

CE6 The hotel has a variety of

restaurants, bars, entertainment

and other activities.

41.1 33.3 17.1 5.4 3.1

CE7 The hotel meals are of high quality 37.2 42.6 12.4 5.4 2.3

CE8 The hotel is easily accessible 34.9 42.6 14.7 4.7 3.1

4.4.4 Customer Satisfaction

On the dependent variable, respondents were asked to rank the factors based on; very

dissatisfied (VD), dissatisfied (D), Neutral (N), satisfied (S) and lastly, very satisfied (VS).

The respondents highly selected satisfied and very satisfied as follow: physical facilities

response were ranked highly as very satisfied at 39.5%, and satisfied at 34.1%. Others

ranked as very satisfied and satisfied were environment at 44.5% (VS) and 32.0% (S) and

services at 37.2% (VS) and 34.9% (S). Equipment were ranked as 41.4% (S) and 32.0%

(VS); personnel at 47.3% (S) and 25.6% (VS); Menu was ranked at 37.1% (S) and 29.0%

(VS). Table 4.6 shows the output.

Table 4. 6 Customer Satisfaction.

VD D N S VS

CS1 Physical facilities 7.0 9.3 10.1 34.1 39.5

CS2 Equipment 7.0 7.8 11.7 41.4 32.0

CS3 Personnel 5.4 9.3 12.4 47.3 25.6

CS4 Menu 4.8 9.7 19.4 37.1 29.0

CS5 Environment 10.2 3.9 9.4 32.0 44.5

CS6 Service 7.0 9.3 11.6 34.9 37.2

CS7 Value added services 5.5 12.5 16.4 39.8 25.8

CS8 Overall rating 4.7 6.2 10.9 41.9 36.4

39

4.5 Inferential Analysis

Inferential statistical was carried out to understand the data in deeper meaning. Also,

different tests were conducted as statistical assumption before testing the specific

objectives. The tests conducted were Factor analysis, Cronbach’s alpha, Inter-item

correlation, while statistical assumptions test were Normality test, and Multi-collinearity

tests. Other tests were correlation and regression model analysis.

4.5.1. Factor Analysis

Under factor analysis, three key tests were conducted; exploratory factor analysis (EFA),

factor pattern loading and lastly, commonality and rotational method by promax with

Kaiser Normalization.

4.5.1.1 Exploratory Factor Analysis

To determine the data factorability, Kaiser Meyer-Olin Measure of Sampling Adequacy,

Bartlett’s Test of Sphericity and communalities was done. Questions that did not relate to

construct were extracted from the analysis. As indicated in table 4.7, the factor derived had

a strong Kaiser-Meyer result of 0.913 (the closer to 1, the stronger the adequacy). The

Bartlett’s test of Sphericity was significant at X2 (1035, N=46) = 5676.178, p<.05. The

factor was adequate for extraction of the component since Kaiser-Meyer-Olkin Measure

was greater than 0.6 and the Bartlett’s test was significant (p<.05).

Table 4. 7 KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .913

Bartlett's Test of Sphericity

Approx. Chi-Square 5676.178

Df 1035

Sig. .000

4.5.1.2 Total Variance Explained

As indicated on table 4.8, only four factors were extracted from the study which represented

an accumulation of 70.998% on the sum of square loading. Of the four factors, the

eigenvalue is greater than 4.0 with total eigenvalue of not less than 2. This shows the four

factors are strong and represents 70.998% of the total variable of the study involved in this

40

study. The factors extracted were; service quality (SQ), perceived value quality (PQ),

customer expectation (CE) and customer satisfaction (CS).

Table 4. 8 Total Variance Explained

Component Initial Eigenvalues Extraction Sums of Squared

Loadings

Rotation

Sums of

Squared

Loadings a

Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative

%

Total

1 21.603 46.963 46.963 21.603 46.963 46.963 19.420

2 6.448 14.017 60.980 6.448 14.017 60.980 14.715

3 2.655 5.771 66.752 2.655 5.771 66.752 6.631

4 1.954 4.247 70.998 1.954 4.247 70.998 15.561

Extraction Method: Principal Component Analysis.

a. When components are correlated, sums of squared loadings cannot be added to obtain

a total variance.

4.5.1.3 Communality and Pattern Matrix

The pattern matrix indicates the exact variables extracted from each factor identified on the

total variance explained matrix. The pattern matrix indicates the exact variable to be used

on each factors. While communality measures the percent of variance in a specified

variable and is interpreted as the reliability of the indicator. A low value could indicate that

the variable does not fit well with other variables in its component, and it is unwanted. The

standard measure is above 0.32 but as indicated the values for communalities were above

0.5 demonstrating acceptable factorability for all items. The four component with factor

loading of greater than .5: service quality, perceived value quality, customer satisfaction

and customer expectation as indicated on table 4.9.

41

Table 4. 9 Communalities and Pattern Matrix

Component

Service

quality

Perceived

value

quality

Customer

satisfaction

Customer

expectation Communalities

T1 .807 .772

T2 .885 .834

T3 .771 .724

T4 .786 .528

T5 .830 .832

R1 .870 .670

R2 .545 .693

R3 .744 .685

R4 .560 .667

RE1 .697 .603

RE3 .687 .676

AS1 .828 .727

AS2 .809 .721

AS3 .720 .773

AS4 .741 .703

AS5 .761 .759

EM1 .578 .746

EM3 .561 .728

EM5 .635 .740

FV1 .551 .661

FV2 .825 .654

FV3 .896 .729

FV4 .892 .579

SV1 .666 .670

SV2 .681 .738

SV3 .606 .701

CE1 .748 .556

CE2 .948 .690

CE4 .932 .729

CE5 .640 .657

CE7 .622 .663

CE8 .939 .619

CS1 .886 .827

CS2 .885 .807

CS3 .923 .859

CS4 .813 .690

CS5 .914 .834

CS6 .898 .802

CS7 .856 .721

CS8 .922 .848

Extraction Method: Principal Component Analysis.

Rotation Method: Promax with Kaiser Normalization. a. Rotation converged in 6 iterations.

42

4.5.2 Construct Reliability

Construct reliability was assessed by the measure of Cronbach’s alpha. In this study, the

Cronbach alpha was .746 which was greater than .7 thresholds. This means the variables in

the study demonstrated construct reliability as indicated in table 4.10

Table 4. 10 Construct Reliability

Cronbach's Alpha Cronbach's Alpha Based on

Standardized Items

N of Items

.723 .746 4

4.5.3 Convergent Validity.

To evaluate convergent validity, the variance if item is deleted was used as outlined on

table 4.11. From the table, there is no significant variance on the scale mean if item is

deleted and the alpha value if item is deleted; variance of 0.4. However, on the item total

correlation, the item on customer satisfaction was very low at 1.49 indicating greater

variance on the comparison based on correlation of the items. However, the correlation

table shows the individual variable correlation that explained this result.

Table 4. 11 Item- Total Statistics.

Scale Mean if

Item Deleted

Scale Variance

if Item Deleted

Corrected

Item-Total

Correlation

Squared

Multiple

Correlation

Cronbach's

Alpha if Item

Deleted

SQ 6.2945 4.397 .700 .655 .566

PQ 5.9597 4.180 .673 .572 .566

CE 6.3693 3.924 .661 .583 .565

CS_A 6.0740 5.587 .149 .027 .877

4.5.4 Correlation Coefficient.

Correlation analysis was conducted to test the significant association between customer

satisfaction variable as dependent and the three independent variables. As shown in table

4.12, all the independent variables were not statistically correlated with the dependent

variables. ‘Customer satisfaction (CS)’ was not correlated with ‘SQ’ r =.111, p>.05; ‘PQ’

r =.154, p>.05; and ‘CE’ r =.719, p>.05.

43

Table 4. 12 Inter-item Correlation Matrix

SQ PQ CE CS

SQ Pearson Correlation 1

Sig. (2-tailed)

PQ Pearson Correlation .741** 1

Sig. (2-tailed) .000

CE Pearson Correlation .895** .727** 1

Sig. (2-tailed) .000 .000

CS Pearson Correlation .111 .154 .032 1

Sig. (2-tailed) .211 .080 .719

**. Correlation is significant at the 0.01 level (2-tailed).

4.5.5 Normality Test

Though there was no correlation between the dependent and the independent variable, the

skewness and kurtosis statistics used to test the normality had mixed results. Normality is

positive when Skewness and kurtosis statistics in the range -1.0 and + 1.0. As indicated on

table 4.13, SQ and CE failed the normality test while PQ and CS passed the normality test.

Table 4. 13 Normality Test

SQ PQ CE CS_A

N Valid 134 134 132 129

Missing 1 1 3 6

Skewness 1.581 1.013 1.442 1.303

Std. Error of Skewness .209 .209 .211 .213

Kurtosis 2.529 .750 1.440 .830

Std. Error of Kurtosis .416 .416 .419 .423

4.5.6 Multicollinearity Test

Multicollinearity test was performed to determine if the values of independent variables

and dependent variables had higher similarity that will affect their regression analysis. As

indicated on table 4.14, this was tested by the Variance Inflation Factor (VIF); VIF values

were more than 1 and less than 10 hence the factors were not multi-collerated.

44

Table 4. 14 VIF Test

Model Collinearity Statistics

Tolerance VIF

1

SQ .345 2.897

PQ .432 2.317

CE .418 2.390

a. Dependent Variable: CS_A

4.6 Regression Model

Having passed the test of multicollinearity, normality and linearity, regression model was

adopted to the test the study specific objectives. However, the correlation test was not

statistically significant. Regression analysis determine the relationship, magnitude of the

influence and projection of the influence of personnel expertise, management capability,

and infrastructure flexibility on firms’ performance. The regression weight of the linear

regression was used to test the specific research objectives. The regression weight results

were indicated on table 4.15. The research objectives were:

a. To establish the effect of service quality on customer satisfaction in the hotel

industry in Kenya.

b. To establish the effects of perceived value on customer satisfaction in the hotel

industry in Kenya.

c. To determine the effect of customer expectation on customer satisfaction in the hotel

industry in Kenya.

4.6.1. Effect of Service Quality on Customer Satisfaction in the Hotel Industry

From the model summary table 4.15, the value of variance R2 = 0.012, F (1, 127) =1.579,

p-value >.05. This shows the prediction on the rate at which service quality (SQ) affects

customer satisfaction (SC) cannot be done since its statically insignificant (p>.05).

Table 4. 15 Model Summary

Model R R

Square

Adjusted

R Square

Std.

Error of

the

Estimate

Change Statistics

R Square

Change

F

Change

df1 df2 Sig. F

Change

1 .111a .012 .005 1.02197 .012 1.579 1 127 .211

a. Predictors: (Constant), SQ

45

ANOVA shows whether the regression model was fit to determine the predictor than using

the mean comparison. From the ANOVA table 4.16, the regression model was not suitable

for predicting the outcome variable since p>.05.

Table 4. 16 ANOVA Table

Model Sum of Squares df Mean Square F Sig.

1

Regression 1.649 1 1.649 1.579 .211b

Residual 132.640 127 1.044

Total 134.290 128

a. Dependent Variable: SC_1

b. Predictors: (Constant), SQ

Table 4.17 shows the regression weight coefficients model in this study was not significant.

The analysis showed though the service quality of customers can influence customer

satisfaction (β = .111, t = 1.257, p>.05, it was statistically insignificant hence service

quality does not affect customer satisfaction in the hotel industry.

Table 4. 17 Coefficient Table.

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

B

1 (Constant) 1.881 .238 7.900 .000 1.410 2.353

SQ .143 .114 .111 1.257 .211 -.082 .368

a. Dependent Variable: SC_1

4.6.2 Effects of Perceived Value on Customer Satisfaction in the Hotel Industry.

From the model summary table 4.18, the value of variance R2 = 0.024, F (1, 127) =3.105,

p-value >.05. This shows the prediction on the rate at which perceived value (PQ) on

customer affects customer satisfaction (SC) cannot be done since its statically insignificant

(p>.05).

Table 4. 18 Model Summary

Model R R

Square

Adjusted

R Square

Std.

Error of

the

Estimate

Change Statistics

R Square

Change

F

Change

df1 df2 Sig. F

Change

1 .154a .024 .016 1.01595 .024 3.105 1 127 .080

a. Predictors: (Constant), PQ

46

ANOVA shows whether the regression model was fit to determine the predictor than using

the mean comparison. From the ANOVA table 4.19, the regression model was not suitable

for predicting the outcome variable since p>.05.

Table 4. 19 ANOVA Table

Model Sum of Squares df Mean Square F Sig.

1

Regression 3.205 1 3.205 3.105 .080b

Residual 131.084 127 1.032

Total 134.290 128

a. Dependent Variable: SC_1

b. Predictors: (Constant), PQ

Table 4.20 shows the regression weight coefficients model in this study was not significant.

The analysis showed though the perceived value of customers can influence customer

satisfaction (β = .154, t = 1.762, p>.05, it was statistically insignificant hence perceived

value quality does not affect customer satisfaction in the hotel industry.

Table 4. 20 Coefficient Table.

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

B

1 (Constant) 1.748 .250 7.004 .000 1.254 2.242

PQ .181 .103 .154 1.762 .080 -.022 .383

a. Dependent Variable: SC_1

4.6.3 Effect of Customer Expectation on Customer Satisfaction in the Hotel Industry.

From the model summary table 4.21, the value of variance R2 = 0.001, F (1, 127) =0.130,

p-value >.05. This shows the prediction on the rate at which customer expectation (CE) on

customer affects customer satisfaction (SC) cannot be done since its statically insignificant

(p>.05).

Table 4. 21 Model Summary

Model R R

Square

Adjusted

R Square

Std.

Error of

the

Estimate

Change Statistics

R Square

Change

F

Change

df1 df2 Sig. F

Change

1 .032a .001 -.007 1.02777 .001 .130 1 127 .719

a. Predictors: (Constant), CE

47

ANOVA shows whether the regression model was fit to determine the predictor than using

the mean comparison. From the ANOVA table 4.22, the regression model was not suitable

for predicting the outcome variable since p>.05.

Table 4. 22 ANOVA Table

Model Sum of Squares df Mean Square F Sig.

1

Regression 3.205 1 3.205 3.105 .080b

Residual 131.084 127 1.032

Total 134.290 128

a. Dependent Variable: SC_1

b. Predictors: (Constant), PQ

Table 4.23 shows the regression weight coefficients model in this study was not significant.

The analysis showed though the customer expectations can influence customer satisfaction

(β = .032, t = .361, p>.05, it was statistically insignificant hence customer expectations

does not affect customer satisfaction in the hotel industry.

Table 4. 23 Coefficient Table.

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

B

1 (Constant) 2.080 .235 8.862 .000 1.616 2.545

CE .040 .110 .032 .361 .719 -.177 .257

a. Dependent Variable: SC_1

The following table 4.24 shows summary of the regression analysis output in a regression

weight summary table.

Table 4. 24 Regression Weights Summary

Dependen

t

Independen

t

unstandardize

d estimate

Standar

d Error

Standardize

d estimate

T

value

P

value

CS SQ .143 .114 .111 1.257 .211

CS PQ .181 .103 .154 1.762 .080

CS CE .040 .110 .032 .361 .719

48

The regression standard predictor was presented on the following figure which shows there

was no regression

Figure 4. 8 Regression Coefficient Scatterplot.

4.7 ANOVA Tests on Demographic Information and Customer Satisfaction

Having failed the regression model test, further analysis was conducted to determine factors

that affects customer satisfaction based on the demographic information of the respondents.

the findings were: on the gender, F (36) = 1.040, p=.427 > .05; on age, F (36) = .798,

p=.775 > .05; on residency, F (35) = 1.134, p=.314 > .05; on quality of hotel, F (35) =

1.536, p=.0001 < .05; preferred quality of foods and drinks, F (36) = 1.525, p=.055 > .05;

on complains raised, F (34) = 1.327, p=.146 > .05; on number of complains raised, F (32)

= 1.386, p=.152 > .05; number of times visited the hotel, F (36) = 4.398, p=.001 < .05; and

lastly, the average number of days spend in the hotel, F (36) = .592, p=.654 > .05.

This means, only the quality of hotels and the number of times that client has visited the

hotel for the last six months affects customer satisfaction. Other factors on the

demographics does not affect customer satisfaction. Table 4.25 shows the results.

49

Table 4. 25 ANOVA on Customer Satisfaction and Demographic Information

Sum of

Squares df

Mean

Square F Sig.

Gender Between Groups 9.035 36 .251 1.040 .427

Within Groups 22.190 92 .241

Age Between Groups 1.144 36 .032 .798 .775

Within Groups 3.663 92 .040

Residency Between Groups 19.045 35 .544 1.134 .314

Within Groups 41.752 87 .480

Quality of hotel Between Groups 53.777 35 1.536 3.552 .000

Within Groups 38.495 89 .433

Get preferred kind of foods

and drinks in the hotel

Between Groups 8.993 36 .250 1.525 .055

Within Groups 15.069 92 .164

Raised suggestions,

complains, complements to

the management of the hotel

Between Groups 8.662 34 .255 1.327 .146

Within Groups 17.473 91 .192

Management take any action

on suggestions, complains,

complements

Between Groups 9.612 32 .300 1.386 .152

Within Groups 10.188 47 .217

Number of times visited the

hotel for the last 6 months

Between Groups 158.342 36 4.398 2.347 .001

Within Groups 172.418 92 1.874

Average number of days

spend in the hotel

Between Groups 21.306 36 .592 .884 .654

Within Groups 61.578 92 .669

4.8 Chapter Summary

This chapter presents the findings of the study. The demographic presentation covered

gender, age, residency, reason for travel, preferred food and drinks, suggestions and

response to suggestions, number of times stayed in the hotel, number of days in the hotel,

and lastly the services consumed in the hotel. The first objectives finding indicated; service

quality of customers does not affect customer satisfaction. The second objective indicated;

the perceived value of customers does not influence customer satisfaction. Last objective

indicated the customer expectations does not influence customer satisfaction. From the

ANOVA equations, only quality of hotel and number of times visited the hotel, affects

customer satisfaction.

The next chapter gives the chapter summary, discusses the research findings,

recommendations and conclusion of the study.

50

CHAPTER FIVE

5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS.

5.1 Introduction

This chapter presents the discussion of findings based on literature review, the conclusion

and recommendations based on the findings: recommendations on areas of improvement

and recommendations on further studies. The presentations are informed by the research

output outlined on chapter four.

5.2 Summary

The general objective of this study was to investigate the factors that influenced customer

satisfaction in the hotel industry in Kenya. The specific objectives were: to establish the

effect of service quality on customer satisfaction in the hotel industry in Kenya; to establish

the effects of perceived value on customer satisfaction in the hotel industry in Kenya and

lastly to determine the effect of customer expectation on customer satisfaction in the hotel

industry in Kenya. The research was significant to scholars, practitioners and decision

makers in the hotel industry in Kenya.

The study adopted descriptive study as it is considered as the most suitable research design

to be descriptive by its nature, because of its high degree of representativeness and the ease

in which a researcher could obtain the participants’ opinion. The main data collection

instruments were Questionnaires and it has been developed based on the components of the

SERVEQUAL Model. The target population of this study was USIU-Africa staff and

students who had travelled and spent at a 4-5 star hotels for the last six months before the

research date: between November 2017 and April 2018; 6 months’ period before the study.

Convenience sampling was used in the study while sample size was obtained by use of

Cochran. Total of 138 questionnaires were distributed and only 135 collected representing

97.8% response rate. Both descriptive and inferential statistics were used to obtain the

output.

Objective one covered the service quality on customer satisfaction. The categories of

questions on objective one were on tangibility (T), reliability (R), responsiveness (RE),

assurance (AS) and empathy (EM). All the questions, strongly agree and agree were highly

ranked at more than 50%. On the inferential, the independent variable was not statistically

51

correlated with the dependent variables. ‘Customer satisfaction (CS)’ was not correlated

with ‘service quality (SQ)’ r =.111, p>.05. The coefficient for the relationship between

service quality and customer satisfaction in the hotel industry in Kenya was positive but

insignificant. The service quality of customers can influence customer satisfaction (β =

.111, t = 1.257, p>.05, but it was statistically insignificant hence service quality does not

affect customer satisfaction in the hotel industry.

Objective two was on perceived value quality. The description on the hotel perceived

quality had two sets of questions; functional value and the symbolic value. Unlike questions

on service quality that were highly ranked as strongly agreed and agreed, the questions on

perceived quality had varied response. Questions highly ranked as agreed or strongly

agreed were; ‘Hotel services are worth the money’ (agreed at 37.6% and strongly agreed at

28.6%). Questions highly ranked as agreed and neutral were; ‘hotel services are fairly

priced’ (agreed at 36.4% and neutral at 32.6%), ‘hotel services are reasonably priced’

(agreed at 37.1% and neutral at 31.1%), and lastly, ‘hotel is economical’ (neutral at 41.2%

and agreed at 28.2%). On the inferential statistics, the independent variable was not

statistically correlated with the dependent variables. ‘Customer satisfaction (CS)’ was not

correlated with ‘PQ’ r =.154, p>.05. The coefficient for the relationship shows the

perceived value of customers and customer satisfaction in the hotel industry in Kenya was

positive but insignificant. The perceived value of customers can influence customer

satisfaction (β = .154, t = 1.762, p>.05, but it was statistically insignificant hence perceived

quality does not affect customer satisfaction in the hotel industry.

The last objective was on customer expectation. The hotel is of good value for the money

was agreed at 74.4%; Hotel premises are safe and secure was, agreed at 83.7%; Employees

are never too busy to respond was agreed at 69.5%; the hotel staff is friendly was agreed at

81.9%; Efficiency at the check-in and check-out of the accommodation was agreed at

42.9% and the hotel has a variety of restaurants, bars, entertainment and other activities as

also strongly agreed at 74.4%. On the inferential statistics, the independent variable was

not statistically correlated with the dependent variables. ‘Customer satisfaction (CS)’ was

not correlated with ‘customer expectation (CE)’ r =.719, p>.05. The coefficient for the

relationship shows the customer expectations and customer satisfaction in the hotel industry

in Kenya was positive but insignificant. The customer expectations can influence customer

satisfaction (β = .032, t = .361, p>.05, but it was statistically insignificant hence customer

expectations does not affect customer satisfaction in the hotel industry.

52

5.3. Discussion

5.3.1. Effect of Service Quality on Consumer Satisfaction in the Hotel Industry in

Kenya.

On the inferential, the independent variable was not statistically correlated with the

dependent variables. ‘Customer satisfaction (CS)’ was not correlated with ‘service quality

(SQ)’ r =.111, p>.05. The coefficient for the relationship between service quality and

customer satisfaction in the hotel industry in Kenya was positive but insignificant. The

service quality of customers can influence customer satisfaction (β = .111, t = 1.257, p>.05,

but it was statistically insignificant. Hence service quality does not affect customer

satisfaction in the hotel industry in Kenya.

The service quality was divided into two parts; first is tangible services (furniture, building,

rooms, décor etc.) and second is intangible services (personal touch, surprise, felling

special). According to Gupta service quality is almost the same in all the hotels in today’s

as a tangible factor due to this, Gupta (2017) concluded one thing which impress the

consumers are the intangible services which attract them. This he also argues depends on

the customer needs, perception and other individual factors which may not be acquired by

the hotels. Nomnga (2015), argue there have been numerous studies that examine attributes

that travellers may find important regarding customer satisfaction but some individuals

factors and expectations that influence their satisfactions are not among these factors and

cannot be measured by standard tool since they are skewed since each model has its own

strong point (Nomnga, 2015). Based on the result of this study, it’s likely the model did not

capture the individuals’ needs that accounts to their satisfaction.

However, some studies favours on this. A study conducted by Awara & Anyadighibe in

2014 on the relationship between customer satisfaction and loyalty: a study of selected

eateries in Calabar, Cross River State, three categories of service quality were highlighted.

The study found out the technical quality which refers to what the customer is left with

after the customer-employee interactions have been completed and functional quality

which is the process of delivering the same service or product a Societal (ethical) quality a

credence quality, cannot be evaluated by the customer before purpose and is often

impossible to evaluate after purchase. Such service quality cannot be attributed to customer

satisfaction if only measured at the end of their interactions ( Awara & Anyadighibe, 2014).

53

Eshetie et. al., (2016), discussed the dissatisfaction of customers. The highlight that on the

opposite, mistakes in service provision cost the hotel money and its reputation may suffer

which is “non-quality cost” concept. The scenario created by non-quality service can be

daunting for any hotel manager. However, an unhappy guest does not usually express his

or her unhappiness to the management of a hotel, but will most likely focus on what made

them happy at the hotel especially on high ends hotels. Although poor-quality service

produces customer dissatisfaction, and customers may not return to the establishment in the

future or even immediately move their business dealings to other providers (Prentice,

2013& Cheng and Rashid, 2013) this is true to the findings as the ANOVA indicated the

rate of the hotel and the number of visits depicted the customer satisfaction.

A study conducted by (Eshetie et. al., 2016) investigating literature on the Service Quality

and Customer satisfaction in hospitality industry in selected hotels in Ethiopia highlighted

the lodging quality index (LQI) which is multidimensional scale developed on the basis of

SERVQUAL model. The process of the LQI scale was argued that it began with the ten

dimensions that were originally in the first version of SERVQUAL and was highlighted

that the authors claimed that the LQI is a generic measure of hotel service quality. While

investigating their literature (Rauch et. al., 2015; Mbuthia et. al., 2013; Minh et. al., 2017)

have expounded on the LQI model and highlighted its ten dimensions as follows;

tangibility; reliability; responsiveness; competence; courtesy; credibility; security access;

communications; and understanding. The LQI, with its five-factor structure, has been

further validated in a study which utilized a sample of 200 Canadian respondents (Ladhari,

2012). The aspect of LQI determines the number of visits and frequency of a customer that

marks the satisfaction on individual’s needs.

However, other studies are positive on how service quality affects customer satisfaction. In

a study conducted by (Tan et. al., 2014) on Service Quality and Customer Satisfaction in

Chinese Fast Food Sector, the DINESERVE scale was used to measure service quality and

was similar to the SERVEQUAL model. The DINESERV instrument was proposed as a

reliable and comparatively easy to use tool for determining how guests evaluate restaurant

service quality. The original DINESERV tool consisted of 29 items and five SERVEQUAL

dimensions (Waitiki, 2014). Another study conducted by (Rauch et. al., 2015)a service

quality factor structure with three dimensions; was highlighted which might serve as an

appropriate framework by which customers assess service quality in hotels. The three

dimensions include; service product; service delivery; and service environment.

54

Another study conducted by (Minh et. al., 2017), highlights the HOLSERV scale by

extending the SERVQUAL scale to include 27 items with 8 new items. The study tested

the reliability and validity of HOLSERV to which dimension is the best predictor of overall

service quality. Findings were that quality of service in the hospitality industry is

represented by three dimensions relating to employees (behaviour and appearance),

tangibles and reliability, and the best predictor of overall service quality is the dimensions

referred to “employees”. The researcher concludes it not in all the aspects that the service

quality of hotels attracts and fulfil the customer satisfaction. Other factors determine the

customer satisfaction.

5.3.2. Effect of Perceived Value Quality on Consumer Satisfaction in the Hotel

Industry in Kenya.

On the inferential statistics, the independent variable was not statistically correlated with

the dependent variables. ‘Customer satisfaction (CS)’ was not correlated with ‘PQ’ r =.154,

p>.05. The coefficient for the relationship shows the perceived value of customers and

customer satisfaction in the hotel industry in Kenya was positive but insignificant. The

perceived value of customers can influence customer satisfaction (β = .154, t = 1.762,

p>.05, but it was statistically insignificant hence perceived quality does not affect customer

satisfaction in the hotel industry.

Demirgüneş (2015) states that the concept of “value” is a key-element in marketing and

maintaining customers. Customer perceived value is a concept which has drawn the

attention of industrial marketing researchers during the past years (Chinomona et. al.,2014

; Vazifehdust et. al., 2014; Chen et. al., 2013; Razavi, et. al., 2012). According to

(Asgarpour et. al., 2015), having an understanding of a company’s mission, goals, and

strategies and of its customers’ needs and expectations, the company can develop a value

proposition for delivering superior value to its customers. This therefore the company has

to attract new customers, retain existing customers, and deliver significant profits, hence if

a company maximizes value for its customers, success follows (Asgarpour et. al., 2015).

However, customer perceived value has therefore been stated by numerous authors as an

aspect which has a great influence on the decisions making process of customers (Chiang

& Lee, 2013) but it does not influence the customer satisfaction at all level.

The act of perception differs with the needs of the customer as discussed by different

researcher on what defines perceived value. Perceived value is referred to the advantage,

55

which is received by customer versus the total costs, and is generally viewed as a

comparative calculation of the costs and the rest of the economic facets of services (Forozia

et. al., 2013). Perceived value also refers to the difference between the money paid for the

service or product and the amount the customer actually wants to pay (Gumussoy &

Koseoglu, 2016). Delivering superior customer value is an essential strategy for firms to

gain competitive advantage and long term success (Asgarpour et. al., 2015) and in addition,

customers make purchasing decisions based on perceived value, or the degree to which

their needs and expectations about product quality, service quality, and or price are

satisfied.

However, most researches have indicated more and more research on how perceived value

informs the customer satisfaction which was negative to this study. According to Waheed

and Hassan (2016) customer perceived value around the world have been shedding more

clarity of research measurement scales over the researches that have been conducted. It

helps organizations understand what the customer expects from what they have purchased

(Raza, et. al., 2012). Further, perceived value has been examined by various authors as a

factor which has a great influence on the decisions making process of customers(Chiang &

Lee, 2013).

In the study of the examination of perceived value dimensions of hotel visitors using

exploratory and confirmatory factor analyses (Chiang & Lee, 2013) suggests that the

perceived value of customer play a significant role in determining customer satisfaction,

decision making and purchase behaviours. In addition, the reviewed study on perceived

value by Chiang and Lee in 2013 indicates that perceived value is considered as a

significant element in affecting consumers’ consumption and decision making. Another

study carried out on the influence of e-service quality on customer perceived value ,

customer satisfaction and loyalty in South Africa indicates that it’s a practical rule in

presenting the customer with high value hence a key factor in establishing and maintaining

long term customer relations (Razavi et. al., 2012).

In the study conducted by (Shen, 2016) perceived value in tourism experience, perceived

value is defined as the utility individuals derive from tangible products or intangible

services and it consists of what benefits individuals get and what costs they pay.

Researchers interpret perceived value from two perspectives; one-dimensional and multi-

dimensional, the former shows that value is a consumer’s overall evaluation of a product

56

or service (Yi et. al., 2014).In the study by (Chiang & Lee, 2013) an examination of

perceived value dimensions of hotel visitors using exploratory and confirmatory factor

analyses, customer perceived value can be described as the evaluation of comparing the

perception of typical perceived value and real outcome of purchase experience.

Tourism and hospitality industry t is probable to interrelate with various components of the

tourism product, evaluate these tourism experiences and form their impression of the trip

related experience. Further, benefits enjoyed by consumers during their purchase processes

are the social ones which arise from the establishment of a specific relationship.

Accordingly, keeping a consumer satisfied may be ten times cheaper than acquiring a new

one. So, companies need to make efforts for retaining customers and must concentrate on

managing value perceived by them (Morar, 2013).

This study concludes though perceived value differs from an individual to another, most

research indicates the perceived value affects the customer satisfaction. However, this study

found out the opposite hence adds knowledge and a point of reference where the hotel

perceived value does not affect the customer satisfaction.

5.3.3. Effect of Customer Expectation on Consumer Satisfaction in the Hotel Industry

in Kenya.

On the last objective, the inferential statistics, the independent variable was not statistically

correlated with the dependent variables. ‘Customer satisfaction (CS)’ was not correlated

with ‘customer expectation (CE)’ r =.719, p>.05. The coefficient for the relationship shows

the customer expectations and customer satisfaction in the hotel industry in Kenya was

positive but insignificant. The customer expectations can influence customer satisfaction

(β = .032, t = .361, p>.05, but it was statistically insignificant hence customer expectations

does not affect customer satisfaction in the hotel industry.

Hotel and generally in service industry, the providers of the service are known to champion

their services in the modern marketing as they seek to satisfy a set of needs and wants that

are partly related to the essential services based on the customer expectations. Further it is

in the customer expectations on how these needs and wants are met consistently form

impressions about the actual service offered them in comparing with their own

expectations (William et. al., 2016). Arguably, the performance of every organization

depends on how well it satisfies its sophisticated customers. However, this has been argued

57

the satisfaction based on the customers expectation are minimal as the standards set by the

high ends hotels are beyond the expectation of customers.

In the study by (Forozia et. al., 2013) on customer satisfaction in hospitality industry case

study of middle east tourists at 3star Hotels in Malaysia, customer expectation is defined

as beliefs and sensitivities that each customer has about service derived from what they

require from it and supposes it to do. According (Amissah, 2013) in the academic study

on tourist satisfaction with hotel services in Cape Coast and Elmina, Ghana, expectations

is described as the desires or wants and are in most cases different from what the customer

gets. This depends on the level of expectation of the customers; there the expectation is

low, customers will be satisfied by the high standards in the hotel but when the expectation

is higher than what they receive in the hotel, they also tend to get satisfied as they level

their expectation on what they have received.

A study conducted by (Campos & Marodin, 2012) offers a description of the process in

which the customers create their expectations in relation to the performance of their

providers. According to (Campos & Marodin, 2012) dissatisfaction in services is caused by

existing gaps between the expectations and the results perceived. According to a study by

(William et. al., 2016) on assessment on customer expectations in service quality, customer

expectations are beliefs on service delivery that serve as standard against the performance

done. Further, customers develop a certain set of expectations based on a variety of inputs

and consider their previous experiences with services in general and with each specific kind

of service they have encountered (William et. al., 2016).Customers also develop

expectations when they hear about services from others. If you hear that your friend was

delighted with her stay at a particular hotel, you are more likely to expect that same level

of service if you stay there. Customers also form expectations based on service provider’s

advertisement and promotions (William et. al., 2016).

Expectations are formed by personal experience and understanding of environment, taking

into account practice feasibility based on expectancy theory. Perceived performance is a

relatively less influenced estimation of performance based on objective judgement rather

than emotional reactions. Expectation disconfirmation occurs in three forms: Positive

disconfirmation which occurs when perceived performance exceeds expectations;

Confirmation which occurs when perceived performance meets expectations; Negative

disconfirmation which occurs when perceived performance does not meet and is less than

58

the expectations. This study was conducted in a university environment while it does not

ignore the level of expectation developed by students in hotels, it depict a picture where the

expectation of students might be low ever than what high ends hotel provides.

However other studies shows expectation influences the customer satisfaction. It is more

probable for customers to be satisfied if the service performance meets (confirmation) or

exceeds (positive confirmation) their expectations. On the contrary customers are more

likely to be dissatisfied if the service performance is less than what they expected (negative

disconfirmation) discuss that taking expectation disconfirmation as the only determinant of

satisfaction; this theory does not cause the fact that if high expectations are confirmed, it

would much more lead to satisfaction than confirmation of low expectations (Awara &

Anyadighibe, 2014). Brink and Berndt (2008) came up with the explanations that the gap

between the desired and adequate service is called zone of tolerance and that customers are

able to accept the zone of tolerance at different levels, depending on the provided service

and other conditions. An argument by (Yongchaitrakool, 2014) states scholars mention the

relationship between customer expectation and satisfaction in that customers will be

satisfied if a company or hotel provides services above their expectation as customers who

pay for service or product, normally expect that this service or product is worth their

payment.

Mason and Simmons (2012) also connect service quality with customer expectation as they

found that customer expectation occurs when customers predict the service quality by using

their own characteristics, attitudes and preference. Customers perceive the services

differently depending on their perception and expectation whilst customer satisfaction will

be judged by the provided service and customer expectation(Yongchaitrakool, 2014).

This study was conducted in a university environment while it does not ignore the level of

expectation developed by students in hotels, it depict a picture where the expectation of

students might be low ever than what high ends hotel provides. There is need for more

research on students’ expectation in hotel industry. However, the negative findings add

value on the body of knowledge with different results.

59

5.4. Conclusions

5.4.1. Effect of Service Quality on Consumer Satisfaction in the Hotel Industry in

Kenya.

On the inferential, the independent variable was not statistically correlated with the

dependent variables. ‘Customer satisfaction (CS)’ was not correlated with ‘service quality.

The coefficient for the relationship between service quality and customer satisfaction in the

hotel industry in Kenya was positive but insignificant. The service quality of customers can

influence customer satisfaction, but it was statistically insignificant hence service quality

does not affect customer satisfaction in the hotel industry in Kenya. The study concludes

service quality has no significant effect on consumer satisfaction in the hotel industry in

Kenya.

5.4.2. Effect of Perceived Value Quality on Consumer Satisfaction in the Hotel

Industry in Kenya.

On the inferential statistics, the independent variable was not statistically correlated with

the dependent variables. ‘Customer satisfaction (CS)’ was not correlated with. The

coefficient for the relationship shows the perceived value of customers and customer

satisfaction in the hotel industry in Kenya was positive but insignificant. The perceived

value of customers can influence customer satisfaction, but it was statistically insignificant

hence perceived quality does not affect customer satisfaction in the hotel industry. The

study concludes perceived value quality has no significant effect on consumer satisfaction

in the hotel industry in Kenya.

5.4.3. Effect of Customer Expectation on Consumer Satisfaction in the Hotel Industry

in Kenya.

On the inferential statistics, the independent variable was not statistically correlated with

the dependent variables. ‘Customer satisfaction (CS)’ was not correlated with ‘customer

expectation (CE). The coefficient for the relationship shows the customer expectations and

customer satisfaction in the hotel industry in Kenya was positive but insignificant. The

customer expectations can influence customer satisfaction (β = .032, t = .361, p>.05, but it

was statistically insignificant hence customer expectations does not affect customer

60

satisfaction in the hotel industry. The study concludes customer expectation has no

significant effect on consumer satisfaction in the hotel industry in Kenya.

5.5 Recommendations

5.5.1. Suggestions for Improvement

5.5.1.1 Effect of Service Quality on Consumer Satisfaction in the Hotel Industry in

Kenya.

The study found out service quality does not affect customer satisfaction. However, the

rating for service quality questions were highly ranked as agreed and strongly agreed. This

shows hotels strive to meet the expectations of the hotel customers through provision of

excellent services in pursuit of customer satisfaction. However, hotels should only focus

on quality services that will lead to increase in quality of the hotel and number of times a

client visits as this determines the customer satisfaction. Further, there is need for policy

on kind of quality that hotels should focus on to avoid wastage.

5.5.1.2 Effect of Perceived Value Quality on Consumer Satisfaction in the Hotel

Industry in Kenya.

The study findings shows perceived quality as significant factor but does not affect

customer satisfaction on hotel industry. Rather than focus on the perceived value, hotel

industry needs to focus on long term strategy on how current value to affect a client to visit

the hotel severally since the number of visits and quality determines customer satisfaction.

5.5.1.3 Effect of Customer Expectation on Consumer Satisfaction in the Hotel

Industry in Kenya.

On the last objective, the research recommends the hotel to focus on quality and not on the

customer expectations. While hotels base the improvement of the services based on

customer expectations, the focus should be on quality services that will lead to increase in

quality of the hotel and number of times a client visits as this determines the customer

satisfaction.

5.5.2. Further Research

The research focused on the effect of customer satisfaction in hotel industry in Kenya. The

sample size was derived from USIU-Africa hence there is need for such study and the

61

population to be the consumers specific hotel customers. The research also focused on

population which had stayed in the hotel for the last six months before the study – there is

need to conduct research on clients in the hotel at the time of study but not on their past

experiences. Lastly, further research should look at different factors that affects customer

satisfaction besides service quality, perceived value quality and customer expectations.

62

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APPENDICES

APPENDIX I: INTRODUCTION LETTER

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APPENDIX II: NACOSTI PERMIT

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APPENDIX III: RESEARCH QUESTIONNAIRE

This questionnaire is meant to collect information on the factors influencing customer

satisfaction in the hotel 4star or 5star hotel industry in Kenya. This information is being

sought solely for academic purposes and will be treated with strict confidence. Kindly

answer the questions as requested based on the hotel you last visited.

SECTION 1. Background Information

1. What is your gender? [ ] Male [ ] Female

2. Please select your age from the following age brackets.

[ ] 18 years -35 years [ ] 36 years -55 years [ ] 56 years -75 years

[ ] above 75 years

3. What is your residency? [ ] Kenyan [ ] East Africa [ ]

International

4. What was your specific reason of travel?

[ ] Work [ ] Pleasure [ ] Holiday [ ] Business [ ] Adventure [ ] Visiting People

[ ] Other

5. How would you rate the quality of the services offered by the hotel you last visited

in a rating scale of 1 to 5 (1 being the smallest).

Hotel Service quality 1 2 3 4 5

6. Did you get all your preferred kinds of foods and drinks in that specific hotel you

last visited? [ ] Yes [ ] No

7. Have you ever raised suggestions, complains or complements to the management

of the hotel you last visited regarding the quality of their services?

[ ] Yes [ ] No

8. Did the management take any action on your suggestions, complains or

complements (Raised in 7 above)

[ ] Yes [ ] No

9. What is the approximate number of times you have visited the last visited hotel for

the last 6 months?

[ ] First visit [ ] Second visit [ ] Third Visit [ ] 5-10 visits [ ] 10-15 visits

[ ] Daily [ ] Weekly [ ] Every time I have toured this country [ ] Once in a

month

10. What is the average number of days you spend in the hotel?

[ ] Less than 3 days [ ] 3 days to 5 days

[ ] 1 week 2 weeks [ ] 1 month [ ] Over 1 month

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11. Which services do you value other than meals and accommodation?

[ ] Transport [ ] Casino [ ] Swimming Pools

[ ] Kids Club and other kids friendly activities [ ] Spa [ ] Conference

[ ] Business Centre [ ] Fitness Center (gym) [ ] Club [ ] Others

-If others, please specify

SECTION 2. Effect of Service Quality on Customer Satisfaction

A. Tangibility

Kindly indicate your responses to the following statements regarding the relationship

between tangibility and customer satisfaction based on the 4star or 5star hotel that you last

visited. Tick your choice in the appropriate answer box.1 = Strongly Agree, 2 = Agree, 3

= Neutral, 4 = Disagree, 5 = Strongly Disagree.

Does the hotel have modern equipment e.g. furniture,

telephones, flat screen, cutlery, safe box 1 2 3 4 5

The physical facilities at the hotel are visually appealing 1 2 3 4 5

The menu offers a wide variety of foodstuff to choose from 1 2 3 4 5

Value added activities such as live bands, music etc are of

great quality 1 2 3 4 5

The hotel has a serene environment with great ambience 1 2 3 4 5

B. Reliability

Kindly indicate your responses to the following statements regarding the relationship

between Reliability and customer satisfaction based on the 4star or 5star hotel that you last

visited. Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree,

3 = Neutral, 4 = Disagree, 5 = Strongly Disagree.

Orders are served in a timely manner 1 2 3 4 5

Hotel management shows interest in solving customer

issues once raised 1 2 3 4 5

Personnel responds to customers promptly 1 2 3 4 5

Hotels services and menus are available at the right place 1 2 3 4 5

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C. Responsiveness

Kindly indicate your responses to the following statements regarding the relationship

between responsiveness and customer satisfaction based on the 4star or 5star hotel that you

last visited. Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree,

3 = Neutral, 4 = Disagree, 5 = Strongly Disagree.

Personnel in the hotel communicate to customers exactly

when services will be performed 1 2 3 4 5

Hotel staff give prompt service to customers 1 2 3 4 5

Personnel are always willing to help customers 1 2 3 4 5

Hotel staff are never too busy to respond to customers’

requests 1 2 3 4 5

D. Assurance.

Kindly indicate your responses to the following statements regarding the relationship

between assurance and customer satisfaction based on the 4star or 5star hotel that you last

visited. Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree,

3 = Neutral, 4 = Disagree, 5 = Strongly Disagree.

I find the hotel facilities to be secure. 1 2 3 4 5

Food’s well cooked with wide varieties for selection 1 2 3 4 5

Personnel are consistently courteous with customers 1 2 3 4 5

The staff are very helpful to customers and competent in

their work 1 2 3 4 5

Food is handled and served in clean environment as well as

the rooms are consistently kept clean with the rest of the

hotel premises. 1 2 3 4 5

E. Empathy

Kindly indicate your responses to the following statements regarding the relationship

between empathy and customer satisfaction based on the 4star or 5star hotel that you last

visited. Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree,

3 = Neutral, 4 = Disagree, 5 = Strongly Disagree.

The hotel staff gives customers individual attention 1 2 3 4 5

Hotel staff are always available to serve customers anytime 1 2 3 4 5

The hotel treats each customer with respect 1 2 3 4 5

The hotel has the customers best interests at heart 1 2 3 4 5

The hotel staff understand the specific needs and

preferences of their customers 1 2 3 4 5

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SECTION 3. Effect off Perceived Quality on Customer Satisfaction

A. Functional Value

Kindly indicate your responses to the following statements regarding the relationship

between functional values on customer satisfaction based on the 4star or 5star hotel that

you last visited

Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree,

3 = Neutral, 4 = Disagree, 5 = Strongly Disagree

Hotel services are worth the money 1 2 3 4 5

Hotel services are fairly priced 1 2 3 4 5

Hotel service are reasonably priced 1 2 3 4 5

Hotel is economical 1 2 3 4 5

B. Symbolic Value

Kindly indicate your responses to the following statements regarding the

relationship between symbolic values on customer satisfaction based on the 4star

or 5star hotel that you last visited.

Tick your choice in the appropriate answer box.

1 = Strongly Agree, 2 = Agree, 3 = Neutral, 4 = Disagree, 5 = Strongly Disagree

Hotel has good reputation 1 2 3 4 5

Quality of this hotel is Outstanding 1 2 3 4 5

Hotel is well thought of 1 2 3 4 5

SECTION 4. Effects of Customer Expectations on Customer Satisfaction

Kindly indicate your responses to the following statements regarding the relationship

between customer expectations and customer satisfaction based on the 4star or 5star hotel

that you last visited

Tick your choice in the appropriate answer box. 1 = Strongly Agree, 2 = Agree, 3 = Neutral,

4 = Disagree, 5 = Strongly Disagree.

The Hotel is of good value for money 1 2 3 4 5

Hotel premises are safe and secure 1 2 3 4 5

Employees are never too busy to respond 1 2 3 4 5

The hotel staff is friendly 1 2 3 4 5

Efficiency at the check-in and check-out of the accommodation 1 2 3 4 5

The hotel has a variety of restaurants, bars, entertainment and other

activities. 1 2 3 4 5

The hotel meals are of high quality 1 2 3 4 5

The hotel is easily accessible 1 2 3 4 5

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SECTION 5. Customer Satisfaction

On a scale of 1 - 5 where l = Very dissatisfied, 2=Dissatisfied, 3=Neutral, 4=Satisfied and

5 =Very satisfied, indicate your level of satisfaction with the following aspects of the hotel

offerings based on the 4star or 5star hotel that you last visited.

Physical facilities 1 2 3 4 5

Equipment 1 2 3 4 5

Personnel 1 2 3 4 5

Menu 1 2 3 4 5

Environment 1 2 3 4 5

Service 1 2 3 4 5

Value added services 1 2 3 4 5

Overall rating 1 2 3 4 5

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