© 2004 CORNELL UNIVERSITY
DOI: 10.1177/0010880404265231
ARTICLE
Are Your Satisfied
10.1177/0010880404265231
Customers Loyal?
by ISELIN SKOGLAND and JUDY A. SIGUAW
The firmly held doctrine that guest satisfaction means
repeat business is called into question by the results
of this study of 364 guests of two similar big-city
hotels. Analysis showed only a weak connection be-
tween satisfaction and loyalty (which is a precursor to
repeat purchases). Examining such factors as pur-
pose of travel and demographics, the study revealed
another finding that may give hoteliers pause—
especially considering the industry’s huge expendi-
tures on frequent-guest programs. Business travelers
were among the least loyal of the guests responding
to this survey. The chief factors that engaged guests’
loyalty were hotel design and amenities. Moreover,
the factor that caused guests to be most involved in
the purchase decision (and therefore more inter-
ested in the hotel) was its employees. The implication
is that hoteliers might consider redirecting some of
their frequent-guest expenditures toward strength-
ening human resources and toward improving the
guests’ experience through design and amenities.
Keywords: customer loyalty; customer satisfaction;
customer involvement
C
ustomer-defection rates are high for businesses
today. U.S. corporations routinely lose half
their customers over a span of five years result-
AUGUST 2004
Volume 45, Issue 3 221-234
ing in 25 to 50 percent reduction in corporate perfor-
mance. At the same time, researchers have noted the
1
importance of customer retention, citing evidence to
indicate that over time, a returning customer becomes
decreasingly costly to serve because of learning effects
and reduced service costs, while that customer simul-
taneously purchases more, pays higher prices, and
willingly offers word-of-mouth recommendations to
others.2 To capture the benefits of having loyal cus-
tomers, many companies—particularly hospitality
firms—have invested millions of dollars in customer-
retention programs. For instance, Marriott spent $54
million in 1996 on its Honored Guest program, while
Hyatt invested $25 million in its loyalty program that
same year.3 Nevertheless, customer-loyalty programs
are now being heavily scrutinized to determine
whether they are doing what they were intended to do:
namely, increase customer loyalty and build profits.
Research on customer loyalty has primarily focused
on customer satisfaction and involvement.4 However,
findings on the linkage between repeat-purchase be-
havior and satisfaction have been equivocal. A number
of studies have reported significant links, while others
have noted that satisfaction explains little in regards to
repeat purchases.5 Furthermore, the antecedent effects
of involvement on loyalty have received relatively lim-
Cornell Hotel and Restaurant Administration Quarterly 221
LOYALTY SATISFIED CUSTOMER LOYALTY
ited attention. Studies that have examined
the involvement–loyalty relationship have
offered the following, sometimes conflict-
ing, findings:
• involvement has an indirect effect on
loyalty as mediated by the investment of
time and investment in the relationship;6
• the relationship between satisfaction
and loyalty is moderated by high in-
volvement levels;7
• involvement is a determinant of loyalty;
8
and
• the involvement–loyalty linkage is not
that strong and depends solely on the
level of involvement.9
Consequently, our knowledge of custo-
mer loyalty and its determinants is replete
with ambiguities. In view of that situation,
the main objectives of this study are three-
fold: (1) to examine the degree to which
satisfaction influences loyalty, (2) to inves-
tigate how satisfaction may influence
involvement, and (3) to understand how
involvement may directly affect loyalty.
In this article, we first provide a brief
review of our constructs of interest. Next,
the research methodology used for this
study is presented, followed by a discus-
sion of our findings. Finally, the article
concludes with managerial implications.
Theoretical Foundations
and Research Focus
For decades, academics and profes-
sionals have preached that loyalty is a key
to a successful business. Loyal customers
have been found to purchase more and
facilitate additional business from new
customers by generating positive word of
mouth.10 Indeed, Ganesh, Arnold, and
Reynolds state, “Loyal customers are log-
ically at the heart of a company’s most
valuable customer group.”
11
Satisfaction with a product or service
offered has been identified as a key deter-
minant for loyalty and, perhaps more im-
222 Cornell Hotel and Restaurant Administration Quarterly
portant, a firm’s profitability. Prior re-
search has shown that satisfied customers
exhibit reduced price sensitivity and in-
crease the customer base through positive
word of mouth. Also, research intuitively
12
indicates that customer satisfaction in-
creases the likelihood of repeat business.13
The degree to which the customer is
involved in the purchase decision should
also have a strong effect on the propen-
sity to switch service providers. Two types
of involvement—purchase involvement
and ego involvement—have been found
to play an antecedent role in switching
behavior.14
Theoretical Foundations
for Customer Satisfaction
For the purposes of this study, satisfac-
tion is defined as “an overall evaluation of
performance based on all prior experi-
ences with a firm.”15 The following two
well-known theoretical bases serve as the
underpinnings for examining customer sat-
isfaction in this article: the confirmation-
disconfirmation paradigm and comparison-
level theory.16
Confirmation-disconfirmation theory.
Customer satisfaction is defined as a post-
purchase evaluative judgment concerning
a specific buying decision. According to
17
the confirmation-disconfirmation para-
digm, customers assess their levels of sat-
isfaction by comparing their actual experi-
ences with their previous experiences,
expectations, and perceptions of the prod-
uct’s performance.18 The theory postulates
that three outcomes of this evaluation are
possible: (1) confirmation occurs when
the actual performance matches the stan-
dard, leading to a neutral feeling; (2) posi-
tive disconfirmation occurs when the
performance is better than the standard,
which then leads to satisfaction; and (3)
negative disconfirmation occurs when the
AUGUST 2004

performance is worse than the standard,
which then leads to dissatisfaction.
Comparison-level theory. This theory
proposes that consumers use comparison
levels for the relationship under consider-
ation and also use comparison levels for
alternative relationships to determine sat-
isfaction with and propensity to remain in
a relationship.19 The comparison level is
“the standard against which a member
evaluates the ‘attractiveness’ of the rela-
tionship.”20 These consumer standards
reflect what the brand should achieve not
just what it will achieve.21 Previous re-
search has found a positive relationship
between prior experiences and current
levels of expectations.
22
Dimensions of customer satisfaction.
Although an investigation of overall satis-
faction with services provides relevant
insight regarding loyalty, even greater
knowledge can be obtained by distilling
satisfaction into its various dimensions,
especially in an industry where switching
behavior and customer loyalty are para-
mount.23 Indeed, some dimensions of sat-
isfaction may be more important ante-
cedents of repeat-purchase behavior and
loyalty than others are.
Common dimensions of satisfaction
with a service include service quality,
product quality, price, and location. The-
ory suggests that the “people factor” (i.e.,
service quality), in terms of tangibility,
reliability, responsiveness, assurance, and
empathy,24 may be the most salient in de-
termining overall satisfaction and re-
peated purchasing in service industries.25
The argument for the importance of the
people factor is further supported by the
services-marketing literature, which, not-
ing the intangibility of services, advances
service encounters as predominantly
interpersonal interactions. 2 6 Conse-
AUGUST 2004
SATISFIED CUSTOMER LOYALTY LOYALTY
quently, as with other social relationships,
the bond between the hotel representative
and the guest will be more heavily
weighed if the guest makes a satisfaction
judgment than if the guest makes no such
judgment. Thus, in this study, we examine
not only the effects of overall satisfaction
but also the effects on involvement and
loyalty of both satisfaction with the peo-
ple factor and satisfaction with hotel
ambience.
Theoretical Foundations
for Involvement
Involvement, as related to this research,
comprises both purchase and ego involve-
ment. Purchase involvement is defined as
“the level of concern for or interest in the
purchase process that is triggered by the
need to consider a particular purchase.”27
Thus, purchase involvement consists of
the time, effort, and costs invested in mak-
ing a purchase, including any internal and
external research that may precede the
transaction.28 Specifically, in this study,
we look at purchase involvement as it
relates to price comparison and risk re-
duction. Service failures are exceedingly
memorable and readily recalled29 because
they are “highly salient . . . distinctive,
atypical, and emotionally charged.”30 As a
result, these negative experiences modify
future expectations and both broaden and
deepen the criteria used in the search for
better alternatives31 as a mechanism for
reducing the risk of making a poor pur-
chase decision in the future. In turn, these
32
additional cognitions heighten the level of
purchase involvement.33 Consequently,
low levels of satisfaction may result in
high levels of purchase involvement (so
that one may ensure that a purchasing
error does not reoccur), and high levels of
purchase involvement may result in low
levels of loyalty, as the consumer focuses
on better alternatives. This conjecture is
Cornell Hotel and Restaurant Administration Quarterly 223
LOYALTY SATISFIED CUSTOMER LOYALTY
consistent with prior studies, which noted
that high involvement resulted in brand
commitment when the consumer was sat-
isfied with product performance.34
Customer satisfaction—usually considered the brass
ring of hospitality management—does not guarantee
that customers will return.
Ego involvement occurs when rela-
tively enduring importance is placed on
a product or product class as it relates to
the consumer’s self-image, values, and
status.35 In this study, ego involvement is
examined in terms of self-image and the
need for recognition. Satisfactory experi-
ences may heighten the customer’s ego
involvement, but on the other hand, levels
of ego involvement for the product or
product class should decline when the cus-
tomer experiences an unsatisfactory ser-
vice relationship.36 That is, the customer
will mentally reduce the degree to which
the unsatisfactory service influences his or
her self-image, values, or status.37 Follow-
ing this line of thought, satisfaction should
increase ego involvement. Furthermore,
since ego involvement incorporates the
need for recognition, when ego involve-
ment is high, loyalty should also be high
because repeat visits would typically have
to occur for the guest to be recognized and
treated in a special fashion.
Theoretical Foundations
for Customer Loyalty
Loyalty has been defined as “a deeply
held commitment to re-buy or re-
patronize a preferred product or service
consistently in the future, thereby causing
repetitive same-brand-set purchasing,
despite situational influences’and market-
ing efforts’ having the potential to cause
224 Cornell Hotel and Restaurant Administration Quarterly
switching behaviour.” Customer loyalty
38
consists of both an attitudinal commit-
ment to the relationship, such as price in-
sensitivity, and other, more-overt loyalty
behavior, such as positive word of mouth
and repeat patronage.39 Comparison-level
theory and the patronage literature pro-
vide the theoretical underpinnings for the
loyalty construct.
As discussed previously, the standard
by which someone determines his or her
satisfaction with a service and, hence,
whether that person should switch or
remain in that relationship is founded on
comparison-level theory. The manner in
which a service experience is assessed is
based largely on the next-best alternative
relationship. As soon as the current level
of outcomes drops below the perceived
comparison level for alternatives, the cus-
tomer is motivated to leave the rela-
tionship.40 Thus, guests who are satisfied
with a service when compared with avail-
able alternatives should report greater loy-
alty to that service than dissatisfied guests.
The reverse is also true when guests are
dissatisfied.
Research Method
For this examination of satisfaction,
involvement, and loyalty, we contacted
two hotels located in a major midwestern
city in the United States. Both hotels are
three-star properties located in the city’s
core business district and are similar in
terms of their target markets and business
mix. Both hotels are affiliated with major
but different hotel chains. However, one
hotel is not openly flagged with the chain
name and is likely perceived by the aver-
age consumer as being an independent
hotel. Both properties are housed in rela-
tively old buildings that have been con-
verted into hotels, and one of the hotels is
listed as a historic hotel. The historic hotel
(hotel A) is positioned as a boutique hotel,
AUGUST 2004

while the other hotel (hotel B) is a stan-
dard, franchised property. The historic
hotel has a restaurant and bar within the
hotel; the other property does not have
its own restaurant but is adjoined by a
national coffeehouse and a well-known,
full-service restaurant. Room rates range
from $149 to $259 for the historic hotel
and $109 to $275 for the other property.
The two hotels are also managed by the
same company, making them relatively
comparable in terms of management. Our
data also indicated that guests perceived
the two hotels to be competitive, and one is
the likely target for the other in terms of
switching hotels.
A two-page survey was designed to col-
lect information concerning (1) the use of
the hotel (e.g., frequency of stays, length
of relationship, factors considered in
making a reservation, type of traveler, and
competitors used and why), (2) overall
satisfaction with the hotel, (3) satisfaction
with the individual service and tangible
characteristics of the hotel, (4) purchase
and ego involvement associated with the
decision to stay at the hotel, (5) level of
loyalty toward the hotel, and (6) demo-
graphic factors. Copies of the question-
naire were mailed to 1,000 former guests
of hotel A and 700 former guests of hotel
B. Participants in the study were guests
who had stayed at one of the properties
some time during the previous twelve
months; these guests’ names were ran-
domly selected from the hotels’ data-
bases by the hotels’ managers. The self-
administered surveys were accompanied
by cover letters on university letterhead
explaining the study, disclosing liability,
and offering an incentive to encourage
response. The incentive consisted of a
prize offered by each hotel with the win-
ners to be determined by a drawing.
Usable responses were received from
364 guests. Fourteen other surveys were
AUGUST 2004
SATISFIED CUSTOMER LOYALTY LOYALTY
returned incomplete, and 134 question-
naires were returned to the authors
because of unknown addresses or names,
resulting in an effective response rate of
24.1 percent. To assess nonresponse bias,
an analysis of early and late responses was
undertaken.41 This analysis revealed no
significant difference between early and
late respondents on any of the constructs
of interest in this study.
Measures of Constructs
Thirteen items were used to measure
respondents’ satisfaction with the various
aspects of the services and facilities of the
hotel at which they stayed. The items used
in this scale were primarily extracted from
those developed by Rust and Zahorik and
by Ganesh, Arnold, and Reynolds.42 In
addition, we sought a global measure of
satisfaction by asking the respondents to
rate the following question: “Overall, how
satisfied are you with the hotel?” Re-
sponses were based on a 5-point Likert-
type scale ranging from very dissatisfied
to very satisfied. See the sidebar on pages
226-227 for the complete listing of all
scale items.
To measure involvement, we added
questions on ambience, convenience, and
timeliness and adapted the items pre-
viously used by Ganesh, Arnold, and
Reynolds (as denoted in the sidebar). The
involvement items were intended to cap-
ture the effort, self-image, desire for
familiarity, and perceived risk dimensions
noted in the literature.
To capture the multidimensionality of
brand loyalty, the questionnaire contained
multiple items, including price insensitiv-
ity (attitudinal loyalty), repeat-patronage
intentions, and the propensity to spread
positive word of mouth. Adapting these
items to the lodging business, we used
seven related items to understand the
customer-loyalty construct; these items
Cornell Hotel and Restaurant Administration Quarterly 225
LOYALTY SATISFIED CUSTOMER LOYALTY

had been previously compiled by

Scale Items Ganesh, Arnold, and Reynolds.43 Both
the involvement and the loyalty items
Overall Satisfaction were assessed on a 5-point Likert-type
scale, ranging from strongly disagree to
X1. Overall, how satisfied are you with the hotel?
strongly agree. In addition, one item, ask-
ing whether participants routinely stay at
Satisfaction
the same hotel, was included as a measure
This section pertains to how satisfied/dissatisfied you are with the of actual repeat-purchase behavior.
various aspects of the hotel.
Data Analysis
X2. The friendliness of the hotel employees An analysis of the data revealed that the
X3. How well the staff/managers know me majority of respondents were male (58.2
X4. How well the hotel listens to my needs
X5. The convenience and service of the reservation system
a percent), married (66.9 percent), and well
X6. The timeliness of the hotel staff in dealing with me as a educated (52.8 percent had completed an
guest in busy times
a
undergraduate degree). Business travelers
X7. The room rate constituted 34.1 percent of the respon-
X8. The price of other services (e.g., room service, dry cleaning) dents, leisure travelers totaled 46 percent,
X9. The location of the hotel to other businesses or attractions
and travelers identifying the purpose of
X10. How easily accessible the hotel is from airports and major
highways their trips as both business and leisure
X11. The ambience in the hotel (interior design/decor)
a
made up 19.9 percent. For the most part,
X12. The amenities offered in the guest room the respondents had high incomes, with
X13. The amenities offered in other parts of the hotel 57.9 percent reporting earnings in excess
X14. The quality of service offered by the hotel of $100,000 per year. The ages of study
participants ranged from twenty-one to
Repeat Purchase
eighty-six, with 25.5 percent indicating
X15. When staying in [name of city], do you routinely stay at the they were fifty-five or older. Occupations
[name of hotel]? were diverse, with the most populated job
titles consisting of executive (14.3
Loyalty percent) and marketing (11.4 percent).
A regression using contrast effects
Please indicate how strongly you agree or disagree with each of tested the relationships between satisfac-
the statements presented below. tion, involvement, and loyalty. Given prior
X16. I consider myself to be a loyal guest of the hotel.
b research that demographic factors, such as
X17. If the hotel were to raise the price of my stay, I would still education and age, influence customer
continue to be a guest of the hotel. loyalty and satisfaction, we included five
X18. If a competing hotel were to offer a better rate or discount on demographic variables—namely, gender,
their services I would switch. (R) age, education, purpose of travel (business
X19. In the near future, I intend to use this hotel more often.
b

or leisure), and income—as covariates in

X20. As long as I travel to this area, I do not foresee myself
switching to a different hotel. the regression analysis.44
X21. I would highly recommend the hotel to my friends and
family. The Contrary Customer
X22. I am likely to make negative comments about the hotel to In examining our results, it is well to
my friends and family. (R) remember that hotel companies are invest-
(continued) ing millions of dollars each year on their
loyalty programs—despite questions

226 Cornell Hotel and Restaurant Administration Quarterly AUGUST 2004


about the effectiveness of these costly pro-
grams. These programs have been
designed with the goal of fulfilling guests’
needs and desires on the premise that cus-
tomer satisfaction will ensure guest loy-
alty. Thus, in this study, satisfied guests
were posited to be loyal to the hotel
because the guests’ comparison levels
should have been positively disposed
toward the hotel.45 Surprisingly, however,
neither overall satisfaction nor satisfac-
tion with the people factor was a determi-
nant of repeat-purchase behavior, attitudi-
nal loyalty, or word-of-mouth loyalty. As
a simple means of illustration, Exhibit 1
provides a cross-tabulation presenting the
relationship between overall satisfaction
and repeat-purchase behavior. As shown,
fewer than half of even the most satisfied
guests routinely chose to stay again at the
hotel they had just patronized. Thus,
although marketers have long advanced
the presence of guest satisfaction as
instrumental in ensuring repeat business,
guest satisfaction does not appear to have
the substantive and sweeping effect on
guest loyalty that has previously been
assumed. Nor did this study support the
people factor (i.e., service quality), in
terms of tangibility, reliability, respon-
siveness, assurance, and empathy, as be-
ing the most salient in determining repeat
purchases.46 (See Exhibit 2 for the results
of the regression analysis.)
Several theories may explain the weak
linkage between overall satisfaction and
loyalty, as well as among satisfaction, the
people factor, and loyalty. First, switching
costs, such as time, money, and effort, play
a role in customer loyalty.47 Higher per-
ceived switching costs have been found to
result in greater customer loyalty and
repeat-purchase intentions.48 However,
hotel guests incur few switching costs.
That is, lodging customers do not gener-
ally encounter procedural, financial, or
AUGUST 2004
SATISFIED CUSTOMER LOYALTY LOYALTY
Involvement
Please indicate how strongly you agree or disagree with each of
the statements presented below.
X23. The relationship that I share with the [hotel name] is
something that is very important to me.
b
X24. The relationship that I share with the [hotel name] is
something that deserves my maximum effort to maintain.
b
X25. I am very cautious in trying new/different products.
b
X26. I would rather stick with a brand that I know than try
something that I am not very sure of.
b
X27. I enjoy taking chances in buying unfamiliar brands just to get
some variety in my purchases. (R)
b
X28. I constantly compare the prices and rates offered by various
hotels in the area.
X29. The brand image of the hotel played a major role in my
decision to become a guest at the hotel.
X30. I called various other hotels in the area before I decided to
stay at this hotel.
X31. I compared the prices and rates of several hotels in this area
before I selected this hotel.
X32. The frequent-guest program influences my choice in hotels.
a
X33. Choosing a hotel is an important decision for me.
b
X34. All hotels are alike in the type and quality of services they
offer. (R)
b
X35. The hotel I stay at says a lot about who I am.
X36. It is important for me to choose a hotel that “feels” right.
X37. After deciding on the [hotel name], I have compared this
hotel with other hotels in the area.
X38. After deciding on the [hotel name], I have weighed the pros
and cons of my choice.
X39. A bad choice in selecting a hotel could bring you grief.
b
Note: (R) = item reverse scored.
a. Item added to scale.
b. Item originally appeared on Ganesh, Arnold, and Reynolds questionnaire but was not used
in their study.
relational switching costs that serve as
incentives to remain loyal to a particular
hotel. Second, several studies have indi-
cated that even when enhanced levels of
customer satisfaction exist, some consum-
ers may still have a strong predisposition
to switch service suppliers or brands.49 In
this study, for example, 38 percent of
respondents who reported high levels of
satisfaction noted that they routinely
switched to competing properties. Third,
Cornell Hotel and Restaurant Administration Quarterly 227
LOYALTY SATISFIED CUSTOMER LOYALTY

Exhibit 1:
Relationship between Overall Satisfaction and Repeat-purchase Behavior
ROUTSTAY

Overall No Yes Total

Very dissatisfied 3 2 5
Dissatisfied 12 1 13
Neutral 16 5 21
Satisfied 128 78 206
Very satisfied 65 52 117
Total 224 138 362

Exhibit 2:
Regression Results
Mean F
Source Variable Dependent Variable Square value Significance

Overall satisfaction Repeat purchase 0.193 0.743 0.528

Attitudinal loyalty 0.143 0.309 0.819
Word-of-mouth loyalty 0.708 2.121 0.099
Risk-reduction involvement 0.151 0.149 0.930
Price-comparison involvement 0.202 0.316 0.814
Self-image involvement 0.229 0.461 0.710
Need-for-recognition involvement 0.718 1.180 0.319
Satisfaction with people Repeat purchase 0.132 0.508 0.896
Attitudinal loyalty 0.282 0.608 0.820
Word-of-mouth loyalty 0.303 0.903 0.534
Risk-reduction involvement 1.170 1.152 0.324
Price-comparison involvement 1.384 2.163 0.018
Self-image involvement 0.939 1.889 0.044
Need-for-recognition involvement 1.115 1.832 0.052
Satisfaction with ambience Repeat purchase 0.322 1.239 0.265
Attitudinal loyalty 0.591 1.274 0.243
Word-of-mouth loyalty 0.986 2.956 0.001
Risk-reduction involvement 0.648 0.638 0.794
Price-comparison involvement 0.744 1.162 0.317
Self-image involvement 0.649 1.305 0.225
Need-for-recognition involvement 0.704 1.157 0.321
Risk-reduction involvement Repeat purchase 0.166 0.708 0.884
Attitudinal loyalty 1.154 2.051 0.041
Word-of-mouth loyalty 0.607 0.927 0.494
Price-comparison Repeat purchase 0.221 0.902 0.585
involvement Attitudinal loyalty 1.781 3.620 0.000
Word-of-mouth loyalty 0.658 1.009 0.452

(continued)

228 Cornell Hotel and Restaurant Administration Quarterly AUGUST 2004

 SATISFIED CUSTOMER LOYALTY LOYALTY

Exhibit 2 (Continued)

Mean F
Source Variable Dependent Variable Square value Significance

Self-image involvement Repeat purchase 0.333 1.463 0.138

Attitudinal loyalty 1.110 2.005 0.024
Word-of-mouth loyalty 0.408 0.624 0.822
Need-for-recognition Repeat purchase 0.754 3.466 0.001
involvement Attitudinal loyalty 3.074 6.220 0.000
Word-of-mouth loyalty 1.617 2.593 0.010
Purpose of travel Repeat purchase 0.188 0.722 0.396
Attitudinal loyalty 1.751 3.778 0.054
Word-of-mouth loyalty 0.564 1.690 0.195
Risk-reduction involvement 0.462 0.456 0.501
Price involvement 6.119 9.563 0.002
Self-image involvement 0.992 1.997 0.159
Need-for-recognition involvement 0.541 0.889 0.347
Gender Repeat purchase 0.009 0.036 0.850
Attitudinal loyalty 0.238 0.513 0.475
Word-of-mouth loyalty 0.380 1.139 0.287
Risk-reduction involvement 5.755 5.669 0.018
Price involvement 0.150 0.234 0.629
Self-image involvement 0.006 0.011 0.916
Need-for-recognition involvement 0.750 1.232 0.269
Age Repeat purchase 0.262 1.008 0.317
Attitudinal loyalty 4.643 10.016 0.002
Word-of-mouth loyalty 0.621 1.863 0.174
Risk-reduction involvement 0.006 0.006 0.937
Price-comparison involvement 0.756 1.180 0.279
Self-image involvement 2.485 5.001 0.027
Need-for-recognition involvement 10.005 16.440 0.000
Income Repeat purchase 0.001 0.003 0.956
Attitudinal loyalty 0.087 0.l87 0.666
Word-of-mouth loyalty 0.565 1.692 0.195
Risk-reduction involvement 1.507 1.484 0.225
Price-comparison involvement 3.476 5.433 0.021
Self-image involvement 0.018 0.036 0.850
Need-for-recognition involvement 0.806 1.324 0.252
Education Repeat purchase 0.008 0.030 0.863
Attitudinal loyalty 0.934 2.015 0.158
Word-of-mouth loyalty 2.120 6.356 0.013
Risk-reduction involvement 0.002 0.002 0.964
Price-comparison involvement 0.032 0.050 0.823
Self-image involvement 2.236 4.500 0.035
Need-for-recognition involvement 0.051 0.084 0.772
Note: Significant relationships are shown in boldface.

AUGUST 2004 Cornell Hotel and Restaurant Administration Quarterly 229

LOYALTY SATISFIED CUSTOMER LOYALTY
the literature indicates that customers who
switch because of extrinsic motivators
(e.g., coupons or discounts) are more
likely to demonstrate lower levels of loy-
alty and repeat-purchase intentions than
customers who are intrinsically motivated
(e.g., dissatisfied, wanting to try a new
brand).50
Satisfaction with hotel ambience did
positively affect word-of-mouth loyalty.
This finding supports a prior study that
underscored the importance of hotel
design and amenities as drivers of guest
satisfaction.51
Uninvolved. Overall satisfaction and
satisfaction with hotel ambience were
unrelated to any dimensions of involve-
ment. This finding is contradictory to the
literature, from which we inferred that low
levels of satisfaction will result in high
levels of purchase involvement. 52 We
believe that this unexpected result may be
explained by the low-risk and minimal
switching costs attached to the hotel stay,
factors that would facilitate low involve-
ment. Involvement is typically heightened
by emotional and financial risk, neither of
which is strongly present in such a
transient purchase as a hotel room.
Satisfaction with the people factor was
positively related to price-comparison
involvement, self-image involvement, and
need for recognition involvement. This
finding emphasizes the value of human
resources in the lodging industry and sub-
stantiates prior studies that have argued
for the importance of the people factor in
services.53 Furthermore, this result under-
scores the role that human resources plays
in increasing the guest’s ego involvement;
that is, the hotel representative’s words
and actions can play a role in enhancing the
guest’s self-image and status involvement.
Unexpectedly, however, employees’ positive
actions also appear to encourage price com-
230 Cornell Hotel and Restaurant Administration Quarterly
parisons, indicating that price is still a primary
determinant of hotel selection.
Only self-image involvement was re-
lated to repeat purchase, while only two of
four involvement dimensions—need for
recognition and self-image—influenced
word-of-mouth loyalty. These results
could be said to provide support for the
research from which we inferred that
higher levels of purchase involvement
will result in lower levels of loyalty.54
However, all four of the involvement
dimensions—price comparison, self-
image, need for recognition, and risk
reduction—were positively related to atti-
tudinal loyalty. These findings did support
our proposition, which suggests that when
ego involvement is high, loyalty will also
be high. At the same time, this result con-
tradicts the posited inverse relationship
between purchase involvement and loy-
alty. That is, this study indicates that ego
and purchase involvement may diminish
guests’ propensities to switch service pro-
viders, especially when the current level
of outcomes exceeds the perceived com-
parison level for alternatives. Guests who
are involved in the purchase decision may
more readily identify the benefits their
current service providers have to offer
over the alternatives and, consequently,
may develop a more positive confirmation
regarding the hotel.
As previously suggested, some demo-
graphic factors affected involvement and
loyalty. Purpose of travel influenced
price-comparison involvement and mar-
ginally influenced attitudinal loyalty,
while gender affected risk-reduction
involvement. Age influenced self-image,
need-for-recognition involvement, and
attitudinal loyalty. Income positively
affected price-comparison involvement.
Education positively influenced self-
image involvement and word-of-mouth
loyalty.
AUGUST 2004

Managerial Implications
The chief implication of this study is
that hoteliers should not assume that satis-
fying their guests will ensure repeat pur-
chases. Instead, this study shows that the
connection between satisfaction and loy-
alty is tenuous, at best. Therefore, we sug-
gest a reconsideration of loyalty pro-
grams. If a large core of guests is routinely
going to switch to competitive properties,
regardless of the best efforts put forth by
the hotel, might not the funds that are
being expended on loyalty programs for
this group be better applied in other ways?
For example, hotel design and amenities
have been shown to be primary drivers of
loyalty. Hoteliers might better serve their
own financial interests by diverting many
of the millions currently spent on loyalty
programs to developing more innovative
and comfortable hotel rooms and public
spaces that in turn, will create more mem-
orable guest experiences.
Human resources focus. Lodging man-
agers should continue to focus on their
employees. Well-trained staff members
who exude the appropriate attitude toward
service are invaluable in keeping guests
involved in the purchase decision so that
they are actively pursuing information
that will showcase the hotel’s benefits over
those of alternative properties. Viewed
sequentially, members of the hotel staff
heighten guest involvement, which then
produces greater attitudinal loyalty, in-
cluding less price sensitivity and an inten-
tion to be loyal.
Finally, although little work has been
conducted on the effects of demographics
on involvement and satisfaction, the initial
findings of the study suggest that hoteliers
should not overlook demographic factors.
Instead, managers should analyze their
own guests to gain an understanding of
how these guests differ by gender, age,
AUGUST 2004
SATISFIED CUSTOMER LOYALTY LOYALTY
education, income, and type of travel on
the dimensions of involvement and loy-
alty. For example, in this study, additional
post hoc analyses revealed that men were
more interested than were women in
reducing risk by purchasing a known
hotel. This finding may mean that men
should be targeted with loyalty programs
more strongly than women. Furthermore,
the widespread assumption that business
travelers are the best guests to attract is
challenged by this study’s finding that
business travelers were the least satisfied,
least loyal, and least involved of the guest
segments. Thus, it might behoove those in
the lodging industry to reconsider their
extensive efforts to attract those guests
who, on average, are going to be ex-
tremely difficult to please and the least
likely to return.
Endnotes
1. Jaishankar Ganesh, Mark J. Arnold, and Kristy
E. Reynolds, “Understanding the Customer
Base of Service Providers: An Examination of
the Differences Between Switchers and Stay-
ers,” Journal of Marketing, vol. 64 (July 2000),
pp. 65–87; and Frederick Reichheld and
Thomas Teal, The Loyalty Effect (Boston: Har-
vard Business School Press, 1996).
2. Ganesh, Arnold, and Reynolds, “Understand-
ing the Customer Base”; Susan Keaveney,
“Customer Switching Behavior in Service In-
dustries: An Exploratory Study” Journal of
Marketing, vol. 59 (April 1995), pp. 71–82;
Louise O’Brien and Charles Jones, “Do Re-
wards Really Create Loyalty?” Harvard Busi-
ness Review, vol. 73 (May–June 1995), pp. 75–
83; and Frederick Reichheld and David W.
Kenny, “The Hidden Advantages of Customer
Retention,” Journal of Retail Banking, vol. 4,
no. 1 (Winter 1990), pp. 19–23.
3. Stephanie Seacord, “Who’s Been Sleeping in
Our Beds?” American Demographics, vol. 58
(March–April 1996), pp. 58–65.
4. As put forth in: Ganesh, Arnold, and Reynolds,
“Understanding the Customer Base.”
Cornell Hotel and Restaurant Administration Quarterly 231
LOYALTY SATISFIED CUSTOMER LOYALTY
5. See, for example: Ruth N. Bolton, “A Dynamic
Model of the Duration of the Customer’s Rela-
tionship with a Continuous Service Provider:
The Role of Satisfaction,” Marketing Science,
vol. 17, no. 1 (1998), pp. 45–65; Joseph J.
Cronin Jr. and Steven A. Taylor, “Measuring
Service Quality: A Reexamination and Ex-
tension,” Journal of Marketing, vol. 56 (July
1992), pp. 55–68; Priscilla A. LaBarbera and
David Mazursky, “A Longitudinal Assessment
of Consumer Satisfaction/Dissatisfaction: The
Dynamic Aspect of the Cognitive Process,”
Journal of Marketing Research, vol. 20 (No-
vember 1983), pp. 393–404; and Rajan
Sambandam and Kenneth R. Lord, “Switching
Behavior in Automobile Markets: A Consid-
eration Sets Model,” Journal of the Academy
of Marketing Science, vol. 23 (Winter 1995),
pp. 57–65.
6. Kristof De Wulf, Gaby Odekerken-Schröder,
and Dawn Iacobucci, “Investments in Con-
sumer Relationships: A Cross-country and
Cross-industry Exploration,” Journal of Mar-
keting, vol. 65 (October 2001), pp. 33–50.
7. Josee Bloemer and Ko de Ruyter, “Customer
Loyalty in High and Low Involvement Service
Settings: The Moderating Impact of Positive
Emotions,” Journal of Marketing Manage-
ment, vol. 15 (May 1999), pp. 315–30.
8. Sharon E. Beatty, Pamela Homer, and Lynn R.
Kahle, “The Involvement-Commitment
Model: Theory and Implications,” Journal
of Business Research, vol. 16 (March 1988),
pp. 149–67; and Palto Ranjan Datta, “The De-
terminants of Brand Loyalty,” Journal of Amer-
ican Academy of Business, vol. 3 (September
2003), pp. 138–44.
9. Patti Warrington and Soyeon Shim, “An Empir-
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Product Involvement and Brand Commit-
ment,” Psychology & Marketing, vol. 17 (Sep-
tember 2000), pp. 761–82.
10. O’Brien and Jones, “Do Rewards Really Create
Loyalty?”; Richard L. Oliver, Satisfaction: A
Behavioral Perspective on the Consumer,
(Boston: Richard D. Irwin/McGraw-Hill,
1997); and Reichheld and Teal, The Loyalty
Effect.
11. Ganesh, Arnold, and Reynolds, “Understand-
ing the Customer Base.”
12. Eugene W. Anderson, Claes Fornell, and Don-
ald Lehman, “Customer Satisfaction, Market
Share, and Profitability: Findings from Swe-
232 Cornell Hotel and Restaurant Administration Quarterly
den,” Journal of Marketing, vol. 58 (July
1994), pp. 53–66; and Claes Fornell, “A Na-
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Swedish Experience,” Journal of Marketing,
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13. Bolton, “A Dynamic Model”; LaBarbera and
Mazursky, “A Longitudinal Assessment”; and
Steven A. Taylor and Thomas L. Baker, “An
Assessment of the Relationship Between Ser-
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(1994), pp. 163–78.
14. Terrence Oliva, Richard L. Oliver, and Ian
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vol. 17 (November 1980), pp. 460–69; and
John W. Thibaut and Harold H. Kelley, The
Social Psychology of Groups (New York: John
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17. Christian Homburg and Annette Giering, “Per-
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and Marketing Journal, vol. 18, no. 1 (2001),
pp. 43–66.
18. Oliver, “A Cognitive Model.”
19. Thibaut and Kelley, The Social Psychology.
20. Ibid.
21. Ernest R. Cadotte, Robert B. Woodruff, and
Roger Jenkins, “Expectations and Norms in
Models of Consumer Satisfaction,” Journal of
Marketing Research, vol. 24 (August 1987),
pp. 305–14; and Robert B. Woodruff, Ernest R.
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Consumer Satisfaction Processes Using Expe-
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Research, vol. 20 (August 1983), pp. 296–304.
22. Valarie A. Zeithaml, Leonard L. Berry, and
A. Parasuraman, “The Nature and Determi-
AUGUST 2004

nants of Customer Expectations of Service,”
Journal of the Academy of Marketing Science,
vol. 21 (Winter 1993), pp. 1–12.
23. Ronald T. Rust and Anthony J. Zahorik, “Cus-
tomer Satisfaction, Customer Retention, and
Market Share,” Journal of Retailing, vol. 69
(Summer 1993), pp. 193–215.
24. According to: A. Parasuraman, Valarie A.
Zeithaml, and Leonard L. Berry, “A Con-
ceptual Model of Service Quality and Its Impli-
cations for Future Research,” Journal of Mar-
keting, vol. 49 (Fall 1985), pp. 41–50;
A. Parasuraman, Valarie A. Zeithaml, and
Leonard L. Berry, “SERVQUAL: A Multiple-
Item Scale for Measuring Consumer Percep-
tions of Service Quality,” Journal of Retailing,
vol. 64 (Spring 1988), pp. 12–37; and
A. Parasuraman, Valarie A. Zeithaml, and
Leonard L. Berry, “Reassessment of Expecta-
tions as a Comparison Standard in Measuring
Service Quality: Implications for Further Re-
search,” Journal of Marketing, vol. 58 (January
1994), pp. 111–24.
25. Ganesh, Arnold, and Reynolds, “Understand-
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Based Approach,” Journal of Vacation Market-
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26. Leonard L. Berry, “Relationship Marketing,” in
Emerging Perspectives on Services Marketing,
ed. Leonard L. Berry, Lynn Shostack, and
Gregory Upah (Chicago: American Marketing
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27. Ganesh, Arnold, and Reynolds, “Understand-
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28. According to: Banwari Mittal and Myung-soo
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29. Valerie S. Folkes, “The Availability Heuristic
and Perceived Risk,” Journal of Consumer Re-
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30. Ganesh, Arnold, and Reynolds, “Understand-
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31. Richard L. Oliver and Russell S. Winer, “A
Framework for the Formation and Structure of
AUGUST 2004
SATISFIED CUSTOMER LOYALTY LOYALTY
Consumer Expectations: Review and Proposi-
tions,” Journal of Economic Psychology, vol. 8
(December 1987), pp. 469–99.
32. Mittal and Lee, “A Causal Model.”
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34. Bloemer and de Ruyter, “Customer Loyalty”;
and Warrington and Shim, “An Empirical
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35. Bloemer and de Ruyter, “Customer Loyalty”;
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36. Musafer Sherif and H. Cantril, The Psychology
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37. Bloch and Richins, “A Theoretical Model.”
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39. Richard L. Oliver, “Whence Consumer Loy-
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Issue 1999), pp. 33–44.
40. Thibaut and Kelley, The Social Psychology.
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42. Rust and Zahorik, “Customer Satisfaction”;
Ganesh, Arnold, and Reynolds, “Understand-
ing the Customer Base.”
43. Ganesh, Arnold, and Reynolds, “Understand-
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44. Homburg and Giering, “Personal Characteris-
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45. Ganesh, Arnold, and Reynolds, “Understand-
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46. According to: Parasuraman, Zeithaml, and
Berry, “A Conceptual Model of Service Qual-
ity”; Parasuraman, Zeithaml, and Berry,
“SERVQUAL”; and Parasuraman, Zeithaml,
and Berry, “Reassessment of Expectations.”
47. Alan S. Dick and Kunal Basu, “Customer Loy-
alty: Toward an Integrated Conceptual Frame-
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Cornell Hotel and Restaurant Administration Quarterly 233
LOYALTY SATISFIED CUSTOMER LOYALTY
Ganesh, Arnold, and Reynolds, “Understand-
ing the Customer Base.”
48. Jones, Mothersbaugh, and Beatty, “Switching
Barriers.”
49. Abod Ali Khatibi, Ismail Hishamuddin, and
Venu Thyagarajan, “What Drives Customer
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12, no. 3 (1998), pp. 177–94.
50. LaBarbera and Mazursky, “A Longitudinal
Assessment”; David Mazursky, Priscilla
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Switch Brands,” Psychology and Marketing,
vol. 4 (Spring 1987), pp. 17–30.
51. Judy A. Siguaw and Cathy A. Enz, “Best Prac-
tices in Hotel Architecture,” Cornell Hotel and
234 Cornell Hotel and Restaurant Administration Quarterly
Restaurant Administration Quarterly, vol. 40,
no. 4 (October 1999), pp. 44–49. See also:
Laurette Dubé, Cathy A. Enz, Leo M.
Renaghan, and Judy A. Siguaw, American
Lodging Excellence: The Key To Best Practices
in the U.S. Lodging Industry (New York: Amer-
ican Express and American Hotel Foundation,
1999).
52. Bloch and Richins, “A Theoretical Model”;
Mittal and Lee, “A Causal Model”; and Oliver
and Winer, “A Framework for the Formation.”
53. Parasuraman, Zeithaml, and Berry, “A Concep-
tual Model of Service Quality”; Parasuraman,
Zeithaml, and Berry, “SERVQUAL”; and
Parasuraman, Zeithaml, and Berry, “Reassess-
ment of Expectations.”
54. Bloch and Richins, “A Theoretical Model”;
Mittal and Lee, “A Causal Model”; and Oliver
and Winer, “A Framework for the Formation.”
Iselin Skogland is a graduate of the Cornell Uni-
versity School of Hotel Administration, where
Judy A. Siguaw, DBA, is J. Thomas Clark Pro-
fessor of Entrepreneurship and Personal Enter-
prise (jas92@cornell.edu).
AUGUST 2004