Hospitality management



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Muhammad Raza Ali


Hotel industry in Pakistan is developing rapidly but still there are various problems faced by the industry. For developing employees to deliver the quality service, there is lack of suitable human resource management strategies, one of the biggest issues faced by the hotel industry. In this research two big chain hotels (Serena hotel and Pearl Continental hotel) from Pakistan situated in Faisalabad city, were evaluated to know that how they are using the human resource practices to deliver the quality service and development of their employees’. This paper compared the two hotels (Serena and Pearl Continental) according to the service delivery for customers, how employees’ are contributing in delivering the quality service, how training impacts the employees’ to improve their abilities and what are the major HRM strategies of hotel. Data was collected and analyzed from customers and employees’ of both hotels through questionnaires and telephonic interview with the managers to get the required information.

By researching the standards of delivery service to customers some gaps are visible in overall quality of service and how important human resource strategies are important to bring improvement in employees to deliver the quality service. The analysis of data indicated that all the respondents recognized the significance of the use of HRM practices in recruitment, training, retaining, development and service delivery of hotel employees. There was a general agreement that the skilled employees perform better for the satisfaction of customers which enhances the possibility for improvement in business. This research will highlight the services standards, strong points and weak points and how HRM important for overall delivering the

quality service; it will help other hotels as well to enhance the service standards.




Chapter 1
This section of the thesis pertains to the background of two Pakistani hotels i. e. Serena Hotel and Pearl Continent (PC) Hotel both located in Faisalabad. In this chapter problem will be discussed and the research questions relevant to the project will be raised. The objective of the study alongwith limitations of the research will also be discussed in this chapter.

1.1 Background
One of the top three constituents of the world economy is hotel industry after autos and oil and is developing on a brisk pace than the arms and petroleum. It is bigger than agriculture in the U.S.A, automobile manufacturing in Japan & banking sector of Switzerland. South Asian emerging economies are covering passage speedily towards transforming themselves in service economies and that’s why hospitality industry competitiveness is developing as a major feature persuading on the effectiveness & attraction of a country overall, and Pakistan is not far behind in this, where the share of service is increasing. Regardless the worldwide promptly changing market situations the hotel business is gradually progressing but facing severe competition. In order to properly compete with its competitors it needs strong commitment of the management and its willingness as well potential to contest. The improved spirit of competition may also yield to unrelenting development of profits and production and it can to show excellent performance of the organization. Hofer and Schendel (1978) defined performance means a time test for a

strategy while betterness in performance is regard a vital output of the strategy used by an organization as reported by Chakravarthy (1986).

Human resource management (HRM) has been embraced world over in the hospitality industry (Hoque, 1999; Chand and Katou, 2007, Khan, 2010) but there is no clear picture whether Pakistani hotels have fully embraced this concept or not (Khan, et al., 2011). Despite many efforts to develop with international fashion, the Pakistani hotel industry still seems a little behind in generating revenue as compared to some other countries in the region. The main reason for its slow progress in Pakistan is that most of the hotels, restaurants and motels are either located in well populated major cities or running their business in hilly areas and stations, for attracting domestic tourists alongside some international tourists.

Some historic sites mostly located in big cities like Lahore, Karachi, Faisalabad and Islamabad also enchant local plus international tourists and in addition to a very large number of business tourists. The major hotel chains in Pakistan are Marriott, Holiday Inn, Hilton, Serena, PC, and Sheraton (Malik, 2012). The expansion opportunities of hotel sector in country has attracted many foreign, as well local investors and generated many job opportunities. On the other hand following the incidents of Gulf War-1991 and 9/11, because of frequent terrorist activities happening worldwide in general and in Pakistan in Particular, a highly threatened environment exists in some parts of the country especially in the hilly resorts which have badly influenced the Hospitality and tourism industry. The hospitality industry need to nullify the adverse effects of prevailing environment by providing true image of the situation that such adverse environment does not prevail throughout the country and to a large extent it has been exaggerated by the international media.

The hospitality industry in Pakistan needs to improve its internal strengths and has to reduce its weaknesses if any in different attributes. It also needs to fully recognize the significance of HR management to improve service quality, customer relations and team work (Haynes and Fryer, 2000). An efficient and effective linkage of HR management with the objectives and strategies of the industry is also needed for improved performance and to get sustainable competitive advantage. Following HRM practices favorable results may emerge for the industry if employees are properly recruited (Wu and Chen, 2002), trained (Yang, 2010), and empowered to involve in decision making (Meyer and Allen, 1991). Pakistani hospitality industry should be well aware of the fact that its biggest strength may be its skilled and empowered employees and well planned use of HR management practices.

New techniques and policies arising as a result of HRM may not only bring enthusiastic employees but can also play a vital role in uplifting the field (Batt and Moynihan, 2002). To enhance the performance of hospitality industry its managers should emphasize more on employee training and development, their participation and improvement in quality service through HRM (Buick and Muthu, 1997). Now a day, hotel operators emphasize more on the standards of quality in order to fulfill the expectations and needs of the customers which can be fulfilled by the hotel employees to a great extent by application of HRM practices. Once the requirements of customers are understood and identified by hotel operators they try their best to meet the needs of their customers (Grizinic, 2007). Meeting the customer’s expectations and satisfying them means prolonging their stay in hotel or expecting that they will return back again (Jeong and Oh, 1998).

The quality of service is an indomitable assessment that customers seek between their hopes about getting any service and the actual way of presentation of service. Parasuraman et al. (1985) described service quality as a role which differentiates anticipation and presentation based on ten key proportions. Later on Parasuraman et al. (1988) reduced service quality parameters from ten to five i.e. reliability (ability to perform the promised service dependably and accurately), tangibility (dressing of hotel staff, how well presented they are), assurance (knowledge and courtesy of employees and their ability to convey trust and confidence), empathy (caring, individualized attention provided to customers) and responsiveness (willingness to help customers and to provide prompt service).

Other attributes worth consideration for improving the service quality offered by different hotel chains include decoration of front office of hotel; responsiveness (expediency of making the reservation, swiftness in the process of check-in/check-out, information about hotel or provision of tour guide); reliability (capability to resolve any issues faced by customers); empathy (politeness and individual attention); assurance (safety and security of guests) as described by Min and Min (1997).


satisfaction has specific importance for successfully running the business of hospitality industry and to earn more profit. Hernon and Whitwan (2009) described service quality as a scale to measure the customer satisfaction; the more is the quality of service, more it is likely that the customers will be satisfied. So service quality has become the main priority which empowers an organization to persist in the hospitality industry. Hence providing exceptional service quality for high customer satisfaction has become a challenge being faced by this service industry worldwide (Hung, et al., 2003). For an organization seeking competitive advantage as well, an improved service quality can play very critical role (Fitzsimmons and Fitzsimmons, 1994). Kandampully, et al. (2001) recommended that to achieve superior customer satisfaction the best way is to have efficient service quality management. Pariseau and McDaniel (1997) also emphasized that to fascinate more customers, an organization needs to meet their expectations.

Otherwise failing to deliver the quality service means lack of returning customers, loss of customer loyalty and increase in complaints. Furthermore poor quality service may become a challenge for the hotel industry and result into low attractiveness of customers. Hence the survival of any firm in market place usually depends upon its ability to outpace the competition by providing quality service (Hamel and Prahalad, 1994). In this study I have selected Serena Hotel and PC Hotel located in Faisalabad, Pakistan for my thesis research. These two organizations are considered to be the leading hotels of Faisalabad. This study was expected to provide important data for exploring the status of HRM practices being followed and their possible role in improving the service quality and customer satisfaction. The information collected from these hotels would be applicable to other hotels in Pakistan.

1.2 Problem Statement
The hotel business prevails in Pakistan since it got independence in 1947 and currently it is contributing a large share to the national economy. Through time a number of national and international hotel chains have been established in some major cities as well as in the hilly areas of the country. The greatest growth in the hotel industry happened during the late 80s and in early 90s. However, the industry began declining afterwards due to a number of constraints including 1) unstable political conditions, 2

Lack of proper infrastructure, 3) terroristic activities, 4). Incapability to cope with natural disaster without international aid and 5) High inflation rate. Pakistan is a developing country where the hotel industry is striving hard to come at par with those in developed countries but still it has not been fully established. Another reason that Pakistani hotel industry is facing major economic crisis is that yet it has failed in fully adopting new ventures like HRM practices for updating their employees and in offering quality service to their customers. In order to attain international standard the Pakistani hotel industry needs to fully adopt HRM practices.

1.3 Research Objectives
a. To analyze the impact of HRM activities to provide quality service in hotel industry of Pakistan.

b. To evaluate the level that Pakistan hotel industry has responded to the applications of HRM in boosting the standard of service.

c. To assess the role of HRM strategies which are required to increase the standard of quality service in Hotel Industry of Pakistan.

d.To know that what more is required in hotel industry of Pakistan by taking the case of Pearl Continental and Serena hotel to boost the standard of services in hotel industry by implementing the HRM strategies.

1.4 Research questions:
a. What is the importance of service quality in hotels?

b. How does HRM operate in hotels? What are the strategic objectives of branded chain hotels related to service quality? c. To what level, Pakistan hotel industry has applied the HRM role in boosting the standard of service? d. How Serena and Pearl Continental hotel have used HRM policies to meet the quality service standard? Comparison of two hotels.

1.5 Contribution of research
This study indicates the significance of HRM practices and their possible role in improving the service quality in two Pakistani hotels i. e. Serena and PC. The results achieved will also provide directions to other hotel

chains running their business in Pakistan to improve the skills of their employees for better service delivery in accordance with customers needs.

1.6 Methodology
This study was conducted by using both quantitative and qualitative methods. The customers and employees of both Pakistani hotels under study were served with well conceived written questionnaire while the HR managers were interviewed telephonically to get their views. The questionnaires were framed keeping in view the objectives of our study regarding the use of HRM practices and their role in improving the service quality of the hotel.

1.7 Limitations
1. It was restricted to only two hotels located in Faisalabad. Therefore a very small sample of respondents especially for hotel management could be included in the study. It is therefore difficult to generalize these results for the entire hotel industry of Pakistan.

2. The hotel employees may not provide true picture of the situation prevailing in the hotel. This is because the employees understand that the hotel management would never like to make all the information public. It creates a possibility of biased opinion by employees deliberately converting their replies in favor of the organization.

3. It was not possible for the author to visit Pakistan due to time factor. If face to face interviews of managerial staff and other respondents had been conducted some more authenticated results might have been achieved

1.8 Structure of thesis

Chapter one includes the general introduction, background of research, motivation behind the study, research objectives and questions. Second chapter is literature review. Research methodology is explained in chapter three including quantitative and qualitative research, data collection paths, validity and reliability. Chapter four is the empirical part; results and analysis are presented in it, in the form of charts and tables. The fifth chapter is the conclusion of the research. Recommendations and suggestions are presented in chapter 6.

1.9 Conclusion
With the improvement in communication and transportation mean the world has become a global village and boosted the tourism as well as hospitality industry. Accordingly the progress in hotel sector has become vital to keep pace with international standards. Hence in order to satisfy the customers belonging to different cultures an understanding of their needs, customs and believes is felt very necessary for the hospitality industry. To fulfill the customers’ expectations, it seems necessary that the hotel managers and employees should be well aware of dealing with international customers in an efficient and effective way. The hotel management and employees can not develop these attributes or skills without undergoing HRM training. As such worldwide Hotel industry has realized this aspect but in Pakistan it is not equally being practiced by different hotel chains. Hence the objective of this study wars to examine the status of HRM practices being adopted in two Pakistani hotels.

Chapter 2

The subject of Hospitality and Tourism industry is currently not being offered at degree level by any teaching institute in Pakistan (FITHM, 2013). However a few colleges offer one year certification/diploma courses after secondary school level education which is of very preliminary nature. Consequently very little research work has been conducted and reported relating to role of HRM in hotel industry of Pakistan. So keeping in view the scarcity of investigation pertaining to this field as well as shortage of available literature, the present study seems very strong inducement in this direction. The aim of this study was to discover how HRM practices are being followed by the hotel industry of Pakistan to tackle different issues for better management for the satisfaction of both customers and employees.

However, the role of different aspects of HRM in the success of any organization particularly hotel industry has been widely studied worldwide as briefly reviewed in the following literature. The success of hotel industry depends on the quality of service offered which directly relates with the satisfaction of customers. Nonetheless intention of the customers

to revisit the same hotel depends upon his satisfaction already achieved (Min & Min, 1996). Adopting HRM practices by a hotel industry can improve the potential of its employee. Hessamaldin (2008) reported that the benefits of HRM include improvement in management leadership, reduced costs and economic profits, competitive advantages, employees’ and customers’ satisfaction and loyalty, staff empowerment and involvement, integration among different parts of management, communication skills, team work, and ultimately sustainability of organization. A competitive advantage can be created by a hotel if it exposes good image to the customers as already reported by Edvardson (1997; 2008). Some important features of the services provided by a hotel include: (1) Standard of service offered at reception, in restaurant hall and in the guest rooms, (2) Atmosphere & decoration of reception, restaurants & guestrooms, (3) Skills and procedures of employees, (4) politeness of attendants, (5) Safety and security of guest rooms, (6) Variation and taste of food (Han et al., 2009; Shi and Su, 2007).

2.1 HRM in Hotel Industry
For any organization HR management is considered vital for delivering the best quality service that directly affects the growth in business. Provision of the best service quality means the satisfaction of customers which is an essential footstep for gaining competitive advantage over other such organizations (Lin, 2007). Boxall and Purcell (2000) described two schools of thought about the ways in which HRM can be beneficial for any industry in two ways like ‘Best-practice’ and ‘Best-fit’ models. Pfeiffer (1998) favored “Best-practice’ model and identified its seven finest practices viz. extensive training, employment security, selection and hiring, self-organized teams, information sharing, reduction in number of employee positions, and incentive based rewards for employees offered by firm. However, this model was considered to prove useful for some firms but possibly not fit for others. The idea of strategic fit is an integration of HR systems with the overall strategy of the organization (MacDuffie 1995). Schuler and Jackson (1987) emphasized that for the innovation or quality management of an organization, its HRM has to be more effective. In their opinion there should be no ambiguity that the impact of HRM depends upon the approaches adopted by an industry (Huselid, 1995; Becker and Gerhart, 1996;

Fey et al., 2000). On the basis of these findings Hoque (1999) and Khatri (2000) highly supported this theory. Alleyne et al. (2005) investigated the role of human resource management (HRM) in Barbados hospitality industry. They interviewed HR Mangers, General Managers and Line Managers to get their views. In accordance with Hoque (1999), they tested the impact of external and internal fit and the universal relevance of HRM. They obtained mixed support for external fit, internal fit and universal relevance in the hotel industry of Barbados. All the hotels perceived themselves as performing very well. They noted strong relationship among elements of industrial and personnel management (IR/PM) and HRM. Based on their findings they concluded that in Barbados “best practice” works better as compared to “best fit”.

There is a high scope for the tourism industry in Pakistan due to high valued tourism spots in its various parts. Hotel industry is very closely linked with the tourism industry and plays very important role in the economy of the country. Thus managing human resource seems very imperative for hotel industry of Pakistan because an effectively managed human capital can play a significant role to operate this organization on better footings. Due to scarcity of literature relevant to this project in hotel industry of Pakistan, the relevant studies conducted in various other countries will also be briefly reviewed here. Pio (2007) investigated the role of Human Resource practices in the success of any organization in India.

He remarked that many Indian companies are becoming successful organizations partly due to their Human Resource (HR) practices that are increasingly maneuvered towards strategic perspective. Further he advised the hotel owners for including the chief of the HR function among top management teams. According to him multi-national organizations need expert Human Resource Managers, so that they can work with according to global and local visions. He remarked regarding McDonald’s view as “multi-local” operator including local partners, the suppliers and using menu variations reflecting local tastes. McDonald utilizes global system, corporate values and vision to produce the end product. Many workers like Bhatnagar and Sharma (2005) and Som (2006) have indicated that there is an apparent link between HRM activities and productivity due to which HRM has assumed great importance in India. Human Resource Management is a management system that forms close inter- and intra-firm relationship to various dimensions of business. In fact, this is specifically recognized that to develop a competitive advantage, Human Resource Management strongly emphasizes coordination of inter-departmental activities such as customer satisfaction and enhanced service quality to improve the hotel performance as these activities are important determinants in the success of the hotel industry. It is thought that in the hotel industry, HRM practices may have a positive effect on relationship development which may be helpful for improvement in effectiveness for the achievement of customer satisfaction, quality service and consequently hotel performance. In addition to this effective HRM practices directly affect the ability of hotel employees to perform the service in an active way.

Schneider, (1994) concluded that emphasis should be paid towards customer-focused management to improve the competitiveness of the firm in the market place. Arrowsmith and McGoldrick (1996) conducted a study regarding HRM service practices like quality, flexibility and employee strategy. They noted that due to continuously increasing competitive environment, service industries demand to develop a strategic human resource for maintaining the service, quality and flexible goals. It also puts emphasis on the recruitment as well as retention of older experienced employees and to develop models for providing a link between social characteristics of workers and service for employment implications. It revealed that older employees prove more suitable for various types of work. It was also observed that as compared to young employees the older employees put more value for service provision.

The younger employees mostly seemed dissatisfied with the jobs and are more inclined for financial considerations. Othman (1999) examined important factors of human resource management (HRM) theory. He concluded that to improve the organization’s business these firms should develop HRM practices as an essential component. The HRM practice in an organization considerably improves the behavior of its employees. The service organizations like hotel industry should have distinct and unique plans from manufacturing organizations. Service organizations should also develop proper role behavior. Many reports show that in United States, HRM practices developed by service industries are very different from manufacturing organizations which may be considered as one of the factors for their success. Huselid (1995) argued that for competitive advantage in the hotel industry a very important factor is to

improve the knowledge, skills, motivation and retention of staff.

2.2 HRM and service quality
A number of HR workers have indicated that for quality improvement there should be given more emphasis on training, pay package, recruitment and development (Chand and Katou 2007). A positive correlation was calculated by HRM experts like Harrington and Harrington and Akehurst (1996) and Gilbert and Guerrier (1997) between business performance and service quality in the hospitality industry of United Kingdom. Above view was also supported by Hoque (2000) who remarked that chain type hotels in UK must adopt HRM practices to reduce cost and should emphasize on service quality for improving their performance. He also pointed out that relationship between performance of organization and HRM rests upon the business strategy employed by the hotel. According to him the hotels which follow HRM practices focusing on quality usually perform in the best way.

Czepiel (1990) reported that service quality may be regarded as perception of “in what a way service exceeds or meets the expectations of customers”. And this service quality is a prime factor for improving the customer satisfaction. Cronin and Taylor (1992) also recognized customer satisfaction as a key factor. Grizinic, (2007) reported a very important role of service quality in customer satisfaction and also regarded it as a point to attract consumers and a mode to place the product in an energetic and lively environment. Shahin (2002) indicated that understanding the requirement of customers regarding service quality and fulfilling this need proves very helpful in numerous ways.

2.3 HRM and employees’ efficiency
Dhammika (2010) remarked that in business organization customer satisfaction has very important role in their marketing management strategies. This factor has affected the other functional areas of the firms as well and their activities are to be redirected towards customer satisfaction. In service organizations such as hotels, Human Resource Management has vital role to achieve more customer satisfaction. There is a need to introduce a particular package of strategies provided by HRM to create customer satisfaction in such service organizations. He conducted a study to investigate the HRM strategies used in some of the hotels in relation to the level of customers’ satisfaction achieved in those hotels. He used interview method including the managers and employees also. His results indicated that HRM has significant contribution for bringing customer satisfaction in the hotel industry. He also pointed out that strategies like value system oriented for customer, empowerment, and behavior based evaluation of employees and rewards on the basis of performance seem very effective to increase customer satisfaction in hotel industry. Batt and Moynihan (2002) studied the relationship of HRM resource practices with operational outcomes, economic achievements and service quality. They noted that Human Resource practices give emphasis on employee training judgment and rewards leading to better service quality. It was also concluded that service quality forms a link between economic outcomes and Human Resource practices. Vencatachellum and Mathuvirin (2010) investigated the role of HRM practices regarding excellence of customer service in the hotel industry of Mauritania.

They pointed out that hotels play a very important role in Mauritian economy and for a competitive advantage they should give more emphasis to providing excellence customer service. They also need to understand the fact that there is a very close link between service quality and employee satisfaction which may be achieved only through proper implication of Human Resource Management practices. They investigated to what extent HRM practices require are orientation towards customer service excellence for the hotel industry of Mauritania. They studied HRM practices in relation to four basic HR strategies namely, “electing the appropriate persons”, “training them for delivering service quality”, “provision of required support systems” and “to retain the best employees”. They concluded that customer service excellence is closely related with proper selection and recruitment, development and training, performance management, and system of rewards.

They further advised the hotel management to follow basic HR strategies during the engagement of HRM practices Nankervis and Debrah (1995) compared hotels of Australia and Singapore regarding Human Resource Management. They observed that Singapore hotels were suffering from labour shortage and needed to adopt a number of Human Resource Management strategies to retain well trained staff. In contrast hotels in Australia faced no such difficulty due to availability of surplus labour. They need to conduct training and carrier forming programs to ensure better service quality as examined by Talib at al (2010) as well. According to them such managers due to high employee turnover may carry out Human Resource Management practices that may be more integrated. In Singapore, on the other hand, the hotels should benefit from enhanced pays. They concluded that such management practices employed in two countries would be applicable to hoteliers in other countries as well. Huang et al. (2001) conducted a survey regarding Human Resource roles and functions in Taiwan. He noted that American owned firms devoted more time on “industrial relations handling” as compared to other industries. In contrast, more time was spent on “environment of working”, and “health and safety of employees” by Japanese owned firms to achieve better service quality for successful business. Wu and Chen (2002) undertook a research in Taiwan regarding manpower requirements in hospitality industry. They observed that for recruitment of employees criteria of selection can differ according to the situation.

According to them educational institutions give high value to inter-personnel communication as well as language proficiency but standard used in hotels is quite different. The hotel industry favors the recruitment of employees keeping in view their working attitude due to its link with better service quality and performance of the hotel. Budhwar and Boyne (2004) examined Human Resource policies of the public sector firms like hotels. Keeping in view the importance of service quality in them, they supported social contacts accommodating friend, family members or relatives in their policies for Human Resource Management. They emphasized on recruitment agencies, external advertisement and suggested to recruit trained managerial staff to provide better service quality to get improved performance of their firms as examined by Cho et al., (2006). Budhwar and Khatri (2001) studied the importance of training setup causing a great influence on service quality among the practices of Human Resource Management. They observed that multinational corporations impart comparatively higher degree of emphasis to training for good service quality resulting in better customer satisfaction. Chand (2010) observed the effect of HRM practices on the customer satisfaction, service quality and performance of the hotels in India. He examined four research hypotheses for the development of a conceptual model. For this, he collected data through a et al. 2009. Som (2008) also reached a similar conclusion that HRM practices have a sound effect on quality service delivery, customer satisfaction and performance of hotel organization. Pugh et. al. (2002) pointed out the importance of service quality. They remarked that motivated employees would satisfy customers by their quality service more effectively; consequently such satisfied customers would be a source of better revenue to the hotel in future. Many research experts in Human Resources emphasize that there is a great need to promote commitment of employees for quality service. They suggest that employees should be encouraged to feel their responsibility for quality service and they should be told to keep customer satisfaction in focus; they should create an atmosphere for innovative product, develop the service and improve performance of the hotel (Chand and Katou, 2007). Heskett et al. (1997) conducted a research to identify some factors for the working environment which may link or correlate with important and critical organizational outcomes including service quality, customer satisfaction, HRM practices and business performance.

According to them, numerous research workers acknowledge that understanding the relationship among customers, employees and performance of the firm is very important. Katou and Budhwar (2006) examined the relationship between organizational performance and reward relations for service quality mediated through skills and attributes resulting from HRM practices. They remarked HRM systems have a positive influence on performance of organization and also enlighten the mechanisms by which HRM practices can improve the performance of firms. In another study (Katou and Budhwar, 2007) they concluded that HRM related policies of recruitment, health and safety, training, incentive, promotion, benefits and involvement have a positive relationship with performance of organization. Shi and Su (2007) reported that commonly service industry is used as a measure for modernization of market. Many studies on service industry give much attention to examine service quality for hospitality industry; which is regarded as one of the general services industry. A systematic and theoretical research relating to service quality management seems very meaningful. This project introduced a method to examine the hotel service quality in China. As a first step, a questionnaire was designed and an analysis was used to weight every variable given in the questionnaire. Then a series of practical measures were used to analyze the data and service quality was measured depending on customer satisfaction (CS). Through computation of this Customer Satisfaction Degree service quality of hotel was measured. Afterwards, some insightful conclusions were drawn based on statistical analysis. The most powerful influences identified during this study were: 1) Quality of service provided in the reception hall was ranked as the most important for customer satisfaction. 2) Techniques applied by attendants, attendants’ service initiative, decoration and environment of reception hall also proved important variables for satisfaction of customers. 3) For guest room safety of room, its decoration and politeness of attendants had strong influence. 4) The key variables for restaurant were variety and taste of food, flexibility in the service of waiters/waitresses and restaurant environment. Pandey et al. (2008) remarked that hotel industries compete in the market to attract more customers by their good services and products. According to them, a customer availing this service feels satisfied only after the service or product meets his need or expectation.

Thus customer satisfaction is to be considered as an important component in the retention of the products or services given by the hotel. Customer satisfaction includes not only one activity or one step event but a continued satisfaction of customers’ needs. If a customer gets satisfied, he motivates the other people as well to use the same hotel or the product and he becomes a brand ambassador of the firm through advocacy. It is also important to be aware of the factors which can possibly contribute towards advocacy. On the other hand, customer’s dissatisfaction would incline him for negative word of mouth. A correlation between customer satisfaction and customer advocacy was examined and the effect of negative word of mouth was also observed for the hotel industry in case of customer’s dissatisfaction.

Many research workers including Hackl et al. (2000) conducted studies regarding factors responsible for customer satisfaction. They named many factors such as friendliness of staff and their willingness to help the customers, freshness and quality of food served the perceived nature of food in relation to the prices, appearance of store and extent of customer service. There was regarded a drawback in such conclusions as all these factors are qualitative. The managers of hotels think it necessary to measure these factors precisely so that they may set priorities regarding their strategies for managing these factors. Anderson and Mittal (2000)

tried to investigate regarding a correlation between customer’s satisfaction and attribute perceptions. They reported that it should be identified that in what way the customers respond and interpret to the services provided to them. They remarked that it is necessary to differentiate between particular characteristics of the service and satisfaction factor represented by them; e.g. : in food retailing the customers may give top importance to customer service provided by the hotel. Oliver (1999) argued about a relationship between satisfaction and loyalty of the customer. According to him, in the absence of other competing choices customer may be loyal even if he is not satisfied. On the other hand, he may not be loyal even if he is highly satisfied even if other alternatives are available to him. He concluded that the hotels should try to get better understanding regarding the relationship between loyalty and satisfaction according to the situation of competition in the market.

Customer satisfaction and service quality are regarded key factors for achieving competitive advantage and retention of customers. Customer satisfaction is basically outcome of customer’s perception for service quality compared to his expectations. According to Heskett et. al. (1990), it is essential to anticipate and recognize the needs of the customers and the firms should make them able to satisfy such needs. The hotels which become acquainted with needs of customers in short time and satisfy them earn greater revenues than those firms which fail in the effort of understanding and satisfying them. It is generally agreed that starting point for defining objectives of any business is customer satisfaction.

Through good relationships the consumers may become more committed which may become a point for their increased return rate. It is becoming very important that hotels by providing better service quality should satisfy customers, as a positive correlation exists between overall level of satisfaction of customer and the probability that they return to that particular hotel (Choi and Chu, 2001). Jones et. al. (2007) have observed that hotel managements have become very conscious for service quality and are investing more to improve quality of service for attaining better satisfaction and loyalty of customers. Hessamaldin (2008) found that in the last decade of the second millennium throughout the world tourist industries

have become the most profitable income generating sources. This phenomenon proved more important after the incident of 9/11 especially for those countries which had to suffer from terrorism the ever increasing oil prices including Pakistan (Kazmi, 2008). Hence, hotel industry appeared as a vital infrastructure of tourism and played a vital role in boosting the economies of many countries The present investigation aimed at customer satisfaction. Applying SERVQUAL model to two hotels in Isfahan named: A) Aseman, and B) Aliqapoo. To achieve the target this study established a field-descriptive survey design while the researcher-developed questionnaire contained fifty questions. The questionnaire was distributed among 195 guests in different hotels of Isfahan but only 170 guests returned the questionnaire.

To analyze the data, SPSS software was utilized at both descriptive as well as at inferential statistical levels. The results revealed that hotel guests’ perceptions of the offered services remained below the expected average level. It indicated that none of these hotels in Isfahan has an optimal service quality. The results also proved helpful in differentiating between hotel A and B. Moreover, the quality of services provided by Aseman hotel (A) was slightly better than pertaining to Aliqapoo hotel (B). Overall the quality of services provided by both these hotels could not achieve the normal standards according to expectations of guests.

2.4 Service and customer satisfaction
Choi and Chu (2001) examined the relative importance of different factors of hotel industry related to customer satisfaction during their stay in hotels at Singapore and the possibility of their returning to the same hotels during their subsequent visits. They used a factor analysis technique and identified seven important hotel factors that may be responsible for the customer intentions These included Qualities of room, Staff Service Quality, General Amenities, Business services, Value and Security. To determine clients overall satisfaction levels and likelihood of returning to the same hotels they analyzed data using multiple regression which helped in examining the relative importance of different hotel factors. With respect to importance, Room Qualities, Staff Service Quality and Value proved the three most effective factors in judging customers regarding the overall satisfaction levels as well as the possibility that they would return to the


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