SERVPERF Dimensions on Guests' Satisfaction and Loyalty to Low-cost Hotel

What is it about?

Most theories are tested in developed countries; moreover, there is still lack of research on SERVPERF, especially in low-cost hotel. Hence, due to high competition among low-cost hotels in Nigeria, many low-cost hotels are seeking for alternative ways of competing apart from pricing or operational costs. Thus, the aim of this study is to identify the effects of SERVPERF dimensions on guests' satisfaction and loyalty in low-cost hotels as well as the mediating role of guests' satisfaction on the relationships between SERVPERF dimensions and guests' loyalty. Data were collected from 300 guests at low-cost hotels and was analyzed using structural equation modelling (SEM). Also, composite reliability, cronbach alpha and average variance extracted were used to test the reliability and validity of the instrument. Result revealed that empathy, responsiveness and reliability influence guests' satisfaction. Furthermore, empathy, reliability and satisfaction influence guests' loyalty. Results on mediation revealed that guests' satisfaction partially mediates the relationships between empathy as well as reliability and guests' loyalty, while guests' satisfaction fully mediates the path between responsiveness and guests' loyalty. This study recommends that low-cost hotels management should emphasize on empathy and reliability to increase guest loyalty.

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Why is it important?

There is a dearth of literature regarding evaluating the effect of SERVPERF on guests' satisfaction and loyalty in low-cost hotels in developing countries, as well as the assumed mediating role of guests' satisfaction on the relationship between SERVPERF dimensions on guests' loyalty. Due to the high competition levels among low-cost hotels in Nigeria, many low-cost hotels are seeking for alternative ways of competing apart from pricing or operational costs. Moreover, low-cost hotels cannot continuously adjust their facilities to achieve business excellence because they have insufficient resources and lack a trustworthy instrument to investigate consumer perception of service quality rigorously.