BSHM 2B Service Quality Management Research Elly Jen Sesbreño

Republic of the Philippines
SORSOGON STATE UNIVERSITY

College of Business Management
Sorsogon City Campus
Magsaysay Street, Salog (Pob.) Sorsogon City, Sorsogon
Tel. No.; 056 211-0103 loc. 1371; Email address: cbm.bshm@sorsu.edu.ph
Research about
The Impact of Service Quality on Customer
Satisfaction in Hotel Business Development
“Correlation Between Customer Satisfaction
and Service Quality”
PREPARED BY: ELLY JEN M. SESBREÑO

BSHM-2B
Introduction:
The hospitality industry's success hinges on its ability to provide high-quality services
that lead to customer satisfaction and subsequent business development. This research
aims to delve into the intricate relationship between service quality, customer
satisfaction, and hotel business development, with a specific focus on identifying
strategies using PORTER'S generic strategies.
Service Quality:
Service quality is a crucial factor in the hospitality industry, encompassing a range of
elements such as responsiveness, reliability, assurance, empathy, and tangibles. These
dimensions collectively contribute to the overall customer experience. For a hotel to
thrive, it must consistently meet or exceed customer expectations regarding these
service quality dimensions. This research seeks to analyze how variations in service
quality directly impact customer satisfaction and, consequently, the hotel's success.
Customer Satisfaction:
Customer satisfaction is a key metric in evaluating the effectiveness of a hotel's service
delivery. Satisfied customers are more likely to become repeat customers and
advocates for the hotel, driving positive word-of-mouth and influencing others' decisions.
Understanding the factors that lead to customer satisfaction in the context of the
hospitality industry is vital for establishing long-term relationships with guests. The
research will explore the correlation between different dimensions of service quality and
customer satisfaction, highlighting areas where improvements can be made to enhance
overall guest experience.
Hotel Business Development:

The success and growth of a hotel are closely tied to its business development
strategies. These encompass marketing efforts, brand positioning, partnerships, and
overall market competitiveness. The research aims to identify the specific ways in which
service quality and customer satisfaction contribute to a hotel's business development.
This includes exploring how positive customer experiences lead to increased patronage,
improved online reviews, and, consequently, a positive impact on the hotel's market
position and revenue generation.
Application of PORTER'S Generic Strategies:

PORTER'S generic strategies provide a framework for achieving a competitive
advantage within an industry. These strategies include cost leadership, differentiation,
and focus. In the context of the hospitality industry, the research will investigate how
hotels can apply
satisfaction. For instance, cost leadership may involve operational efficiencies to

provide affordable yet high-quality services, while differentiation may focus on unique
offerings or experiences that set a hotel apart from competitors.
In conclusion, this research seeks to provide a comprehensive understanding of the

intricate relationship between service quality, customer satisfaction, and hotel business
development in the hospitality industry. By exploring and applying PORTER'S generic
strategies, the goal is to offer actionable insights for hotels to optimize their service
delivery, enhance customer satisfaction, and strategically position themselves for
sustained growth and success.
Background of the study
Information Most companies and researchers alike have had significant interests in the
aspects of customer satisfaction and service quality. As is common to all organizations,
the fundamental objective in business is to minimize costs and increase profits—the
surest way to achieve profit increases through increased sales (Zameer et al., 2015). As
has been noted by most researchers, customer satisfaction is the main driving force
behind increased sales (Elvira & Shpetim, 2016). Customer satisfaction results in
customer loyalty which contributes to repeat purchases and recommend the product or
service to family and friends. In the ancient business days, the main focus was
marketing products to customers. However, according to current trends, businesses
have shifted towards enhancing customer satisfaction as the pivotal point to drive sales
(Farooq & Salam, 2018). Currently, more focus has been drawn towards consumers
compared to product marketing and consumption. Customer satisfaction is built on the
quality of services offered by an enterprise (Sharma & Srivatsa, 2018). With a better
service quality in place, the organization is assured of increased sales because their
consumer base shall be reliable and stable. This factor results in constant profits for the
organization, which in the long run boosts overall performance.
Objectives:
- To examine the impact of service quality on customer satisfaction in the hotel
industry.
- To analyze the correlation between customer satisfaction and key business
development metrics.
- To identify and evaluate strategies employed by hotels through the lens of
PORTER'S generic strategies.
This research aims to determine the impact of service quality on customer satisfaction
in the hotel industry. It seeks to determine the direct correlation between service
provided and customer perception regarding the service. The study's objective is to
establish how an increase or decline in service quality affects customer feedback. This
study aims to use the five-dimensional models as a basis for showing how customer
satisfaction relates to the services rendered. Using the SERVQUAL model, this
research seeks to determine how the five dimensions of service quality determine the
nature of customer satisfaction. The research also seeks to determine whether
customer satisfaction relies exclusively on service quality or other factors that control it.
Additionally, the study defines how dimensions such as empathy, reliability, tangibles,
responsiveness, and assurance impact customer satisfaction in the hotel industry. The
objective is to describe the nature of the impact of each dimension on customer
satisfaction. The impacts will be rated as either low, moderate, or high. Apart from
customer satisfaction, the study also aims to determine how the five dimensions directly
affect the quality of hotel services.
Methodology:
In this section, we outline the key components of our study, covering research design,
target group, sampling methodology, data collection instruments, and analysis
procedures
*Research Design:
Our research adopts a qualitative descriptive approach to assess service quality and
customer satisfaction at the Best Western Princess Hotel in Norrköping, Sweden. This
design systematically analyzes events or phenomena without manipulating variables,
making it ideal for understanding specific details of the research context. By focusing on
the interconnection between service quality and client satisfaction, this approach aligns
with the study's objectives.
Sample Size:
The study involves 100 visitors from the Best Western Princess Hotel, encompassing
local and international guests of all ages and genders, including both current and past
visitors. Due to challenges in obtaining daily visitor numbers, a sample of 100 was
chosen to answer study questions, considering the classified nature of daily visitor
information.
Research Instrument:
For data collection, a questionnaire, based on the SERVQUAL model, was developed
and translated into English for wider application. The questionnaire, featuring twenty-
two questions on customer satisfaction and service quality, was administered to
respondents with both open and closed-ended sections. The use of a paper-based,
close-ended questionnaire proved convenient for gathering data from a diverse group of
respondents, ensuring accessibility to those who could read and write independently.
Data Collection:
For this study, we gathered primary data using a standardized questionnaire with
twenty-two statements adapted from Markovic & Loncaric (2014), tweaking the
SERVQUAL model. The questionnaire had three parts – the first focusing on
demographic info, the second on rating factors impacting customer satisfaction, and the
last on participants' perception of services at Best Western Princess Hotel, rated on a
Likert scale. We employed a 'drop and pick later' approach for questionnaire
administration.
Study Quality
To gauge the quality of this research, we consider factors like credibility, confirmability,
dependability, and transferability, as highlighted by Zameer et al. (2015) and Sharma &
Srivatsa (2018).
Credibility: The study is deemed credible because the findings are precise and align
with the actual service quality at Best Western Princess Hotel. Analysis of filled
questionnaires indicates respondents provided accurate information about service
provision and satisfaction levels.
Transferability: This study meets transferability criteria as the data obtained can be
used for regression analysis by other hotels in Norrköping interested in exploring
service quality and customer satisfaction. The results can be applied to various
analyses, ensuring accurate outcomes.
Dependability: The study fulfills dependability criteria as the data can consistently yield
similar results over time. For instance, customer satisfaction depends on service quality
dimensions like responsiveness, tangibility, assurance, reliability, and empathy, making
the research reliable for accurate deductions in different scenarios.
Confirmability: This research achieves confirmability since the recorded data is
primary and drawn from the analysis of various customers who visited Best Western
Princess Hotel. The data is unbiased, aligning with the research's objectives.
Service Quality Assessment: The Impact of Service Quality on Customer Satisfaction

in Hotel Business Development
This study focuses on the correlation between customer satisfaction and service quality
within the context of hotel business development.
Key Findings:
1.Positive Correlation: The research establishes a positive correlation between
customer satisfaction and service quality. High service quality directly contributes to
increased customer satisfaction, fostering a positive relationship crucial for hotel
business development.
2. Customer Perception: The study delves into customer perception of service quality,
emphasizing dimensions such as responsiveness, tangibility, assurance, reliability, and
empathy. Results indicate that improvements in these areas positively influence overall
customer satisfaction.
3.Business Development Impact: The research underlines the pivotal role of service
quality in hotel business development. Satisfied customers become advocates,
influencing positive word-of-mouth, repeat business, and enhanced online reviews, all
contributing to the hotel's market position and revenue growth.
4. Strategies for Improvement: To optimize service quality, the study suggests

implementing strategies aligned with PORTER'S generic strategies. These include cost
leadership, differentiation, and focus, allowing hotels to tailor their approaches based on
specific business goals.
This service quality assessment emphasizes the significant impact of service quality on
customer satisfaction, ultimately driving hotel business development. Implementing
strategies to enhance service quality proves instrumental in fostering positive customer
relationships and positioning hotels for sustained success.
Business Development Metrics:

In evaluating the connection between service quality and business development in the
hotel industry, the following key metrics provide valuable insights:
1. Revenue Growth:
- Assess the impact of service quality on revenue growth, examining how positive
customer experiences contribute to increased spending and overall financial success.
2. Occupancy Rates:
- Analyze service quality's influence on occupancy rates, as satisfied customers are
more likely to return and recommend the hotel, leading to sustained high occupancy
levels.
3. Repeat Bookings:
- Measure the correlation between positive service quality indicators and the likelihood
of customers making repeat bookings. A strong link suggests that exceptional service
fosters customer loyalty.
Metric Exploration
- Investigate revenue growth trends, occupancy rates, and repeat bookings over a
specified period to identify patterns and potential correlations.
- Correlation Analysis:
- Examine the relationship between positive service quality indicators, such as
customer satisfaction scores, and improvements in business development metrics.
Utilize statistical methods to quantify this correlation.
Understanding the impact of service quality on business development metrics is crucial
for hotel success. By exploring revenue growth, occupancy rates, and repeat bookings
alongside service quality indicators, hotels can tailor strategies to enhance customer
satisfaction, thereby positively influencing their overall business development.
PORTER'S Generic Strategies Analysis: Case Study - Impact of Service Quality on

Hotel Business Development
In the case study examining the correlation between service quality, customer
satisfaction, and hotel business development, the application of PORTER'S Generic
Strategies offers practical insights:
1.Cost Leadership:
- Case Application: The hotel can focus on streamlining operational costs while
maintaining service quality, potentially leading to competitive pricing and increased
customer satisfaction. This approach may attract budget-conscious travelers and
contribute to revenue growth.
2. Differentiation:
Case Application: By offering unique and exceptional services tailored to guest
preferences, the hotel can stand out in a crowded market. This differentiation enhances
the overall guest experience, potentially leading to heightened satisfaction, positive
reviews, and increased revenue through premium offerings.
3. Focus:
Case Application: Targeting a specific market segment, such as business travelers
or luxury seekers, allows the hotel to tailor services to meet the unique needs of that
group. This focused approach can result in higher satisfaction within the targeted
market, contributing to the hotel's market share and business growth.
Analysis Approach:
- Case-Specific Evaluation: Assess the hotel's cost structures and operational
efficiencies to implement cost leadership strategies.
-Unique Offerings: Examine the hotel's existing services and identify opportunities for
differentiation that align with guest expectations.
Target Market Alignment: Evaluate the current guest demographic and preferences
to ensure the hotel's services align with the specific needs of its target market for a
focused strategy.
By strategically applying PORTER'S Generic Strategies to the case study, the hotel can
enhance service quality, foster customer satisfaction, and drive business development.
Whether through cost leadership, differentiation, or focus, aligning strategies with
specific market dynamics positions the hotel for sustained success in a competitive
hospitality landscape.
Data Analysis:
To ensure data completeness and accuracy, all administered questionnaires underwent
editing. We analyzed quantitative data using the Statistical Package for Social Sciences
(SPSS) software, using responses from the second section to address the first research
question. Mean and standard deviation were applied for further analysis. The second
research question, our second objective, was tackled using a linear regression model.
The formula for this model was.

in the above expression, Y refers to the dependent variable representing customer

satisfaction, whereas X1 to X5 symbolizes the independent variables that include being
responsive, tangibility, assurance, reliability, and empathy. Additionally, α represents a
constant that symbolizes the intercept of the model; β1 to β5 represent the regression
coefficients; ε represents the marginal error.
Analysis and Interpretation: Perception of Customer Satisfaction Influencers

Respondents rated twenty-two statements on a 1-5 scale to assess factors impacting
customer satisfaction: 1=strongly disagrees, 2=disagree, 3=neutral, 4=agree, and
5=strongly agree (see Appendix 3). A Likert scale guided interpretation, with '1'
indicating minimal consideration, '5' high impact, '4' fair influence, '3' neutral, and '2'
some influence. Mean and standard deviation were applied for individual response
analysis, detailed in the following table.
The study indicated that factors with a mean range of 0.5 to 1.5 never influenced customer satisfaction.
Those factors with a mean range of 1.6 to 2.5 were somewhat influential.
The 34-respondent analysis shows that no element was rated between 0.5 and 1.5; hence a clear
indication that all significantly influenced customer satisfaction. Neutral factors were rated between 2.6
and 3.5. These neutral factors included employee (staff) competence, consistent services, employee
behavior, and service efficiency (see Appendix 3). Factors that fairly influenced customer satisfaction
were rated between 3.6 and 4.5. These factors included equipment availability, hotel physical facilities,
i.e. swimming pool, staff appearance, communication channels, timeliness, the interest in solving
customer problems, record accuracy, promptness, problem resolution, staff flexibility, security, courtesy,
customer attention from staff, constant operation, and providing personalized attention to guests. In
this study, any factor that could portray a mean value of more than 4.6 would be deemed the most
influential regarding customer satisfaction. Since no factor among those defined in this study reached
that level, it becomes prudent to state that none of these factors had an extremely high impact on client
contentment. Here, the standard deviation feature was also used to analyze each response. It was
projected that the higher the standard deviation, the higher the disparity among the answers from the
respondents. Since this deviation was less than one in most instances of this study, it was estimated that
there existed a consensus in the information provided. A standard deviation above one would mean that
some conflicting results existed in the study. However, this factor was not the case.
Establishing the Interconnection between Standard of Service and Satisfaction for Customers The other
objective of this analysis entailed determining how service quality relates to customer satisfaction. The
following regression model was applied to achieve this objective;
0.867 positive shift in customer satisfaction. Moreover, increasing service assurance by a unit leads to a
0.813 positive change in customer satisfaction. On the other hand, increasing reliability by a unit leads to
a 0.916 positive shift in customer satisfaction. Lastly, this factor also implies that increasing empathy by
one unit leads to a 0.879 positive change in customer satisfaction.
Apart from that, the findings also revealed to us that service reliability had the highest impact on
customer satisfaction. This factor was closely followed by service empathy, service tangibles, and service
responsiveness. Service assurance displayed minimal implications for customer satisfaction. Despite
that, all the five service dimensions received good ratings from all the respondents; hence, the hotel
management ignored none.
II. Coefficient of Determination
This term refers to a numerical representation of the effectiveness of a particular set of data within a
statistical model. It defines the suitability of the model in measuring real-world outcomes. The
coefficient of determination (R2 ) seeks to analyze how differences in a given variable can get explained
by the disparities in another variable. In our example, the nature of the service provided directly
correlates with how customers will be satisfied. Ideally, R2 is used to derive the percentage variation in a
given variable Y based on some known variable X. A correlation coefficient formula gets applied to
explain the benefits of a particular linear relationship amongst two existing variables. R2 gets obtained
by squaring the correlation coefficient (R). Based on the research findings, the five dimensions have a
74.2% contribution to satisfaction. This percentage gets based on the R2 representation. Additionally,
this is a clear indication that the remaining factors only make a 25.8% significance towards customer
satisfaction
Moreover, this study's results were of statistical significance since most dimensional aspects had their P-
values below 0.05. These included empathy, tangibles, and assurance. Service reliability and service
responsiveness were termed statistically insignificant because their P-values were more than 0.05. It is
noted with much emphasis that the findings of this study echoed the works of Elvira & Shpetim (2016),
Danish (2018), and Fida et al. (2020) in determining that the reliability dimension had the most
significant impact on customer satisfaction
Recommendation
Based on this study, it is recommended that all hotels within Norrköping, Sweden, should improve on all
the seventeen factors influencing customer satisfaction. This factor is to help these hotels enhance
satisfaction among their customers. Apart from that, these hotels should also implement the latter's
five-dimensional aspects because they positively impact customers' satisfaction. Moreover, during
resource allocation, it is recommended that more emphasis should be put on the reliability dimension
because it portrays a higher impact on customer satisfaction. Lastly, it is recommended that hotel
communication channels should be improved since most customers are dissatisfied with this factor.
5 Recommendations Based on this study, it is recommended that all hotels within Norrköping, Sweden,
should improve on all the seventeen factors influencing customer satisfaction. This factor is to help
these hotels enhance satisfaction among their customers. Apart from that, these hotels should also
implement the latter's five-dimensional aspects because they positively impact customers' satisfaction.
Moreover, during resource allocation, it is recommended that more emphasis should be put on the
reliability dimension because it portrays a higher impact on customer satisfaction. Lastly, it is
recommended that hotel communication channels should be improved since most customers are
dissatisfied with this factor.
Elaborated Recommendations:
1.Enhance Factors Influencing Customer Satisfaction:
- It is strongly advised that all hotels in Norrköping, Sweden, focus on improving all seventeen factors
identified in the study as influencers of customer satisfaction. This comprehensive approach aims to
elevate overall guest satisfaction levels across the hospitality sector in the region.
2. Implement Five-Dimensional Aspects:
- Hotels are encouraged to adopt the five-dimensional aspects identified in the study, recognizing their
positive impact on customer satisfaction. By incorporating elements such as responsiveness, tangibility,
assurance, reliability, and empathy, hotels can create a holistic and satisfying experience for their
guests.
3. Prioritize Resource Allocation to Reliability Dimension:
- In the allocation of resources, special attention should be given to enhancing the reliability
dimension. As this factor demonstrates a higher impact on customer satisfaction, investing in reliable
services and consistent delivery can significantly contribute to overall guest contentment and loyalty.
4. Improve Hotel Communication Channels:
- Recognizing the dissatisfaction expressed by customers regarding hotel communication channels, it is

recommended that hotels prioritize and improve these channels. Enhancements in communication can
lead to clearer information, better guest experiences, and ultimately contribute to increased satisfaction
levels.
5. ontinuous Monitoring and Adaptation:
- Establish a system for continuous monitoring and adaptation based on evolving customer needs and
industry trends. Regularly reassessing the effectiveness of implemented improvements will ensure that
hotels remain responsive to changing guest expectations, fostering long-term satisfaction and loyalty.
Conclusion
This research aimed to determine the features influencing customer satisfaction and establish a direct
relationship between service quality and customer satisfaction. Based on the stipulated findings, a total
of seventeen factors that fairly impacted customer satisfaction got identified. Of the seventeen factors,
the most influential ones included sticking to timelines, improved communication channels, staff
willingness to help guests, the state of hotel equipment, and guest tailored needs (Appendix 3). These
factors indicate that hotels can enhance their customers' satisfaction by emphasizing the significant
elements that satisfy customers in their service.
Moreover, this study's results indicate that service quality's five-dimensional aspects have varying
impacts on customer satisfaction. The reliability dimension was the most impactful. The factors that
portrayed moderate effects included empathy and tangibles. The least impactful dimensions on
customer satisfaction had responsiveness and assurance. Despite that, all of the five dimensions
received substantial ratings. This factor leads to our conclusion that the hotels within Norrköping,
Sweden, offer higher quality services based on these dimensional aspect
So, what did we find out in this research? Well, our main goal was to figure out what makes
customers happy and how that's connected to the quality of service. Here's the scoop:
1.Seventeen Things That Make a Difference:

- We discovered a total of seventeen things that rally make a difference in how satisfied
customers are. Some of the big ones include sticking to promised timelines, having better ways
to communicate with guests, having a helpful staff, making sure the hotel equipment is in good
shape, and meeting personalized guest needs (check out Appendix 3 for the full list).
2. What Really Matters:

- Turns out, if hotels really focus on these important things that customers care about, they
can make them a lot happier. It's like finding the secret sauce to making guests leave with a big
smile.
In a nutshell, this research gives hotels a roadmap to boost customer satisfaction by paying
attention to what truly matters to their guests. It's all about making their experience top-notch!
REFERENCE:
http://www.diva-portal.org/smash/get/diva2:1582843/FULLTEXT01.pdf

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Republic of the Philippines

SORSOGON STATE UNIVERSITY

PREPARED BY: ELLY JEN M. SESBREÑO

Hotel Business Development:

Application of PORTER'S Generic Strategies:

satisfaction. For instance, cost leadership may involve operational efficiencies to

In conclusion, this research seeks to provide a comprehensive understanding of the

Background of the study

Service Quality Assessment: The Impact of Service Quality on Customer Satisfaction

4. Strategies for Improvement: To optimize service quality, the study suggests

Business Development Metrics:

PORTER'S Generic Strategies Analysis: Case Study - Impact of Service Quality on

The formula for this model was.

in the above expression, Y refers to the dependent variable representing customer

Analysis and Interpretation: Perception of Customer Satisfaction Influencers

II. Coefficient of Determination

1.Enhance Factors Influencing Customer Satisfaction:

2. Implement Five-Dimensional Aspects:

3. Prioritize Resource Allocation to Reliability Dimension:

4. Improve Hotel Communication Channels:

- Recognizing the dissatisfaction expressed by customers regarding hotel communication channels, it is

5. ontinuous Monitoring and Adaptation:

1.Seventeen Things That Make a Difference:

2. What Really Matters:

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