Running head: MARKETING IN TOURISM 1

Does Customer Satisfaction Always Lead to Customer Loyalty in Travel and Hospitality

Markets?

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Institution
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Introduction

The travel and hospitality industries are among the most competitive industries

(Jasinskas, Streimikiene, Svagzdiene, & Simanavicius, 2016). Therefore, improving customer

satisfaction and customer loyalty are among the major facets of increasing competitiveness in the

industry and facilitating business continuity. Customer satisfaction is a cumulative procedure

constituting an overall assessment depending on the overall experience of consuming and

purchasing services and products over time (Maroco & Maroco, 2013). On the other hand,

customer loyalty refers to the relationship between a consumer and a service supplier or a

product based on commitment and confidence (Maroco & Maroco, 2013). It leads to relatedness,

sincerity, faithfulness, and devotion towards an organization's products. A loyal customer feels

that a certain supplier of services or products better satisfies his needs compared to other

competitors. Hence, customer loyalty can also be defined as an outcome of continually physical

satisfaction based on attribute, positive emotional experience, and perceived value of an

experience, that entails services or products (Rishipal, 2014). This paper investigates whether

customer satisfaction improves customer loyalty in the hospitality and travel industry.

Customer Relationships and Loyalty

Due to the increasing competition in the travel and hospitality industry, companies are

growingly concentrating on preserving existing customers (Westcott & Bird, 2016). It is cheaper

to retain existing customers than attracting new ones; thus customer experience management is

the most cost-effective strategy to improve customer retention, customer satisfaction, and

customer loyalty (Rishipal, 2014). This concept compels hospitality organizations to view the

relationship of a customer over a long duration or the lifetime value of a customer, instead of

single transactions only. For travel and hospitality businesses to improve customer relationships
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in order to satisfy their needs, they have to be customer-oriented. Customer orientation is the

development of beliefs, behaviors, and activities that instill high priority on the interests of the

customers and consistently establish superior customer value (Westcott & Bird, 2016).

Since customer satisfaction is the result of a customer's perception regarding the value

obtained in a relationship or transaction, there are various factors that influence customer

satisfaction resulting in customer loyalty (Kim, Vogt, & Knutson, 2015). For instance, in this

situation, the value is equivalent to perceived service quality, in relation to the value obtained

from relationships or transactions with rival companies. It is significant to anticipate and to

understand the needs of the customers and have the capability to satisfy them. Customers' needs

for quality services and products in the hospitality and travel industry have increasingly become

evident among professionals (Dominici & Guzzo, 2010).

Guest relationships are strategic strengths for organizations. Positive relationships

improve customer's commitment (Al-Msallam & Alhaddad, 2016). Reciprocally beneficial and

long-term relationships between a hotel and customers are progressively becoming significance

due to the highly positive relationship between the overall satisfaction levels of the guests and

the possibility of their return to the same hotel (Dominici & Guzzo, 2010). Businesses in the

hospitality and travel industry are escalating their ventures to enhance the perceived value for

guests and service quality for the purpose of attaining better customer satisfaction and customer

loyalty hence leading to improved relationships with every customer.

The relationship between Customer Satisfaction and Customer Loyalty

Customer satisfaction is regarded as among the most significant result of every marketing

activity in a market-oriented company. The reason for satisfying customers is to obtain referral

and repeat business, to attain a higher market share, and to expand the business Al-Msallam &
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Alhaddad (2016). Customer satisfaction has a considerable impact on future buying intentions.

Therefore, there is a positive correlation between consumer satisfaction and consumer loyalty.

Attitudes and feelings experienced by consumers through service offered by hospitality

businesses create the perception of service quality (Al-Rousan & Mohamed, 2010). Customers

essentially create their experiences based on the individual perceptions of the services. Once a

customer forms a positive perception, he may repeatedly purchase the service from the same

company and possibly recommend the service to other consumers with no absolute benefits,

which is considered as customer loyalty (Kuhn, Benetti, Anjos, & Limberger, 2018). Customer

loyalty will result in an increase in retention rates and profitability.

In this situation customer loyalty refers to the likelihood of a customer to continue using

the same product or other products from the same firm, unintentionally and intentionally offering

strong word-of-mouth publicity and references, and make business referrals. Loyal customers are

not easily enticed by price incentives from rivals (Al-Rousan & Mohamed, 2010). Nonetheless,

hospitality business managers should not be complacent since preserved consumers are not

usually satisfied and also not every satisfied customer can be preserved (Al-Rousan & Mohamed,

2010). There are numerous variables for such type of loyal customers. Some customers may be

loyal due to the satisfaction they obtain from the services offered while others may be due to lack

of real substitutes or high switching barriers.

A study undertaken by Maroco & Maroco (2013) found out that there is a considerable

correlation between consumer satisfaction and consumer loyalty. The relationship is positive

whereby customer satisfaction considerably improves customer loyalty and vice-versa. They also

revealed that customer satisfaction acts as a link between quality of service and consumer

loyalty. Thus, quality of service cannot directly influence consumer loyalty rather, an indirect
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impact through customer satisfaction. Managers running companies in the travel and hospitality

industry have to acknowledge what the customers want and how they evaluate the service quality

of a business. Therefore, they have to understand how to modify the service quality dimensions

for the purpose of positively influencing the satisfaction of customers and subsequently their

loyalty. Customers have to be satisfied to be loyal (Rishipal, 2014). It is commendable for

business executives in the hospitality and travel industry to establish initiatives for the

assessment of customer satisfaction and service quality in an efficient manner so that everyone in

the company assumes an active role in facilitating marketing strategies most appropriate for

customer retention.

However, there are other studies such as Li & Krit (2012) that contradict the results

attained by Maroco & Maroco (2013) which indicate that customer satisfaction has a low effect

on customer loyalty. However, Maroco & Maroco (2013) investigated four-star and five-star

hotels while Li & Krit (2012) investigated two to three-star hotels. Therefore, there could be a

high likelihood that the type of hotel affects the variables that influence consumer satisfaction

and consumer loyalty. Four-star and five-star hotels' customers may emphasize more on the

satisfaction aspect in the willingness to revisit the premises and repurchase the services of the

hotel, than customers of two-star and three-star hotels where the quality of service is associated

with the price influences the decision to return without being emotionally satisfied.

In another research carried out by Al-Rousan & Mohamed (2010), it revealed that there is

a direct connection between consumer satisfaction and consumer loyalty. The investigators

emphasized that service quality is essential in improving customer satisfaction leading to

customer loyalty enhancement. They identified five dimensions of tourism service quality which

were arranged starting from the most significant to the least significant factor. Assurance was the
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most important followed by tangibility, empathy, reliability, and responsiveness. Hence, business

managers in the travel and hospitality industry should account for these dimensions focusing on

the most significant to the least significant factors in order to optimize customer satisfaction

resulting in improved customer loyalty. This study was supported by research undertaken by

Jasinskas et al. (2016) which also indicated that perceived higher satisfaction of hospitality

services leads to increased customer loyalty and customers were more likely to recommend the

company to acquaintances and friends. Both studies posit that service quality is fundamental in

improving customer satisfaction.

Moreover, Al-Msallam & Alhaddad (2016) revealed that the correlation between

customer satisfaction and customer loyalty is effectively expounded when brand trust and

commitment are considered. The investigators found out that customer satisfaction directly and

through commitment and trust indirectly accounted for 42 percent of the difference in customer

loyalty. On the other hand, Kim et al. (2015) indicated that cumulative overall satisfaction (both

emotional and cognitive reactions from the total experiences) significantly affects customer

loyalty.

Indian Destination

In 2014, the size of the Indian hospitality and tourism market was U.S.D 117.7 billion

(Rishipal, 2014). It is projected to grow to U.S.D. 418.9 billion by 2022 (Rishipal, 2014).

Between 2000 and 2013, the inflows in the sector were U.S.D. 6.8 billion (Rishipal, 2014). The

Indian government has marketed the country as “Incredible India.” Hospitality is the relationship

between the host and the guest. The Indian hospitality sector is founded on the concept

AtithiDevoBhava, referring to “The Guest is God” (Rishipal, 2014). Therefore, the guest should

be treated and rewarded accordingly while being perceived as God. This concept influences the
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hospitality and travel businesses to treat the guests or clients with satisfaction thus promoting

their loyalty towards the destination. Treating clients from such a perspective ensures that they

are satisfied and improves their loyalty thus the tourists will tend to go back to India to acquire

the same level of satisfaction. This is reflected in the high level of tourist inflows into the country

and the high growth rate in the future contributing immensely to the country’s gross domestic

product.

Conclusion

Customer satisfaction and customer loyalty are significant in the travel and hospitality

markets in order to improve the competitive edge of the companies. The studies have shown that

there is a significant positive correlation between customer satisfaction and customer loyalty.

However, there are other variables such as brand image and service quality that affect customer

satisfaction. In such a scenario, customer satisfaction acts as a mediator between the variables

and customer loyalty. When service quality is improved, the customers get satisfied thus

increasing their loyalty towards the products and services offered by the business in the travel

and hospitality industry.

Recommendation

The Indian travel and hospitality has to focus on customer satisfaction and loyalty in

order to attain the projected market size by 2022 since they already have adequate infrastructure,

technology, and resources. Therefore, the marketing aspect should be based on improving the

satisfaction of the guests. The restaurant sector is a significant segment in the Indian travel and

hospitality market. If the projections are to be achieved, the restaurant sector has to assume a

significant role in achieving the goal. India has exclusive local foods that are attractive to

tourists. However, regardless of the product being offered, the services are essential in improving
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customer satisfaction in the sector. Service quality in the Indian restaurant sector can be

undertaken by meeting and exceeding the expectations of the guest, approach the service quality

by thinking about the decision-making procedure tourists make prior to arrive at the location,

inviting the tourists to join the restaurant’s loyalty program, simplifying the payment procedure

through adopting restaurant POS system to reduce the wait time, and they have to gather

customer feedback. This should be enough reason to convince them to return to India and

specifically the restaurant to experience the sufficient satisfaction. If the retention of the guests

into the restaurants is increased, the sector will easily attain the target combining the arrival of

new guests and existing ones. The satisfaction should be attained by quality customer service and

brand image. The restaurants should concentrate on methods to increase guest retention into the

country. Thus, the sector will account for a significant share in the country’s gross domestic

product.
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References

Al-Msallam, S., & Alhaddad, A. (2016). Customer satisfaction and loyalty in the hotel industry:

The mediating role of relationship marketing (PLS approach). Journal of Research in

Business and Management, 4(5), pp. 32-42.

Al-Rousan, M. R., & Mohamed, B. (2010). Customer loyalty and the impacts of service quality:

The case of five star hotels in Jordan. International Journal of Human and Social

sciences, 5(13), 886-892.

Dominici, G., & Guzzo, R. (2010). Customer satisfaction in the hotel industry: a case study from

Sicily. International Journal of Marketing Studies, 2(2), pp. 3-12.

Jasinskas, E., Streimikiene, D., Svagzdiene, B., & Simanavicius, A. (2016). Impact of hotel

service quality on the loyalty of customers. Economic Research-Ekonomska

Istraživanja, 29(1), pp. 559-572.

Kim, M., Vogt, C. A., & Knutson, B. J. (2015). Relationships among customer satisfaction,

delight, and loyalty in the hospitality industry. Journal of Hospitality & Tourism

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Kuhn, V. R., Benetti, A. C., Anjos, S., & Limberger, P. F. (2018). Food services and customer

loyalty in the hospitality industry. Tourism & Management Studies, 14(2), pp. 26-35.

Li, X., & Krit, J. (2012). Service is power: Exploring service quality in hotel’s business.

International Business Research, 5(5), pp. 35-48.

Maroco, A.L. & Maroco, J. (2013). Service Quality, customer Satisfaction and

Loyalty. European Journal of Tourism, Hospitality, and Recreation, 4(3), pp. 119-145.

Rishipal, D. (2014). Customer loyalty towards hotel industry in India. International Journal of

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