Table of Contents

1 Customer Behaviour in Hospitality..........................................................................................2

2 Critical Factors of Service........................................................................................................3

3 Channels of Distributing Service.............................................................................................4

4 Importance of Building Customer Relationship.......................................................................5

5 The Positioning of Hospitality Outlet Offering Hospitality Services in Local Area...............6

6 Suggestions on Ways of Improvement.....................................................................................7

7 Strategic Plan of Providing Distinctive Service to Support the Company’s Strategy..............8

1 Customer Behaviour in Hospitality

As has already been noted, satisfaction has been concern for a number of years and is generally

recognised as a post purchase construct that is related to how much a person likes or dislikes a

product or a service after experiencing it.

It can be defined as an evaluation that an experience was at least as good as it was supposed to

be. Satisfaction is a response to a perceived discrepancy between prior expectations and

perceived performance after consumption. Consequently, managers need to understand how

expectations are created and how these expectations are influenced by people‘s consumption

experiences.

Customers are assumed to have developed expectations prior to use, and perceived performance

is compared to these expectations on a “better than or worse than” model. Satisfaction is a

summary psychological state resulting when the emotion surrounding disconfirmed expectations

is coupled with the consumers’ prior feelings about the consumption experience. Satisfaction

encompasses more than mere fulfilment. It describes a consumer‘s experiences, which is the end

state of a psychological process. Satisfaction has become a central concept in modern marketing

thought and practice.

Many studies have made significant contributions to better understanding this complex

phenomenon. Achieving visitor satisfaction is one of important goals for most tourism service

businesses and organizations today. Increasing customer satisfaction and customer retention

generates more profits, positive word-of-mouth, and lower marketing expenditures. Satisfaction

is a visitor‘s affective and evaluative response to the overall product or service experience. What

visitors received from the investment money, time and other resources on a trip or a visit are

psychological benefits. Thus, it is an experience that tourists receive from a visit with tangible

goods. It is also more likely that satisfied visitors will return and say positive things about a

service.

2 Critical Factors of Service

The SERVQUAL instrument has proved popular, being used in many studies of service quality.

This is because it has a generic service application and is a practical approach to the area. A

number of researchers have applied the SERVQUAL model to measure service quality in the

hospitality industry, with modified constructs to suit specific hospitality situations. Consumers’

perceptions are based on the actual service they receive, while consumers’ expectations are based

on past experiences and information received. The statements represent the determinants or

dimensions of service quality. Refinement of his work reduced the original service dimensions

used by consumers to judge the quality of a service from ten to five. The five key dimensions

that were identified are as follows:

1. Assurance – the knowledge and courtesy of employees and their ability to convey trust

and confidence.

2. Empathy – the provision of caring, individualized attention to consumers.

3. Reliability – the ability to perform the promised service dependably and accurately.

4. Responsiveness – the willingness to help consumers and to provide prompt service.

5. Tangibles – the appearance of physical facilities, equipment, personnel and

communications materials.

Improving the quality of service attributes as well as improving the emotional and psychological

reactions that visitors obtain from service experiences is considered important to commercial and

public tourism businesses and organizations. The intimate, hands-on nature of the service

encounter itself affords many opportunities for affective response. It has long been

acknowledged that human interaction itself is an emotionally-charged process.

Service quality is now of major concern to industries such as the tourism/hospitality industry,

which are basically people oriented‘. In the service industry, definitions of service quality tend to

focus on meeting customers’ needs and requirements and how well the service delivered meets

their expectations. In order to deliver and maintain service quality, an organization must first

identify what it is that constitutes quality to those whom it serves, whereby service quality into

two categories: technical quality, primarily focused on what consumers actually received from

the service; and functional quality, focused on the process of service delivery.

3 Channels of Distributing Service

The variety and complexity of electronic distribution channels available to hotels has increased

dramatically in recent years. Identifying and differentiate between such channels has become

difficult, and the literature suggests that the complexity of the system is likely to further increase

in the future.

A channel of distribution is defined as one that provides sufficient information to the right people

at the right time and in the right place to allow a purchase decision to be made, and provides a

mechanism where the consumer can purchase the required product". Effective distribution is

especially important in the hotel sector, as the accommodation product is extremely perishable.

Revenue from an unsold hotel room is lost forever, and thus selling each room each night at an

optimum price is critical to profitability. As a result, the efficiency of a hotel’s set of channels of

distribution is critical. Hotels have thus traditionally used a variety of simultaneous channels to

help maximise their sales. These include distributing through other properties within their brand,

joining consortia or other types of affiliation organisation, joining representative companies,

using intermediaries such as travel agents, tour operators or incentive houses, and making use of

an increasingly important portfolio of electronic channels, as will be discussed below. In each

case, the objectives are to make information about the product conveniently available to the

customer and to make it easier for them to reserve that particular property.

4 Importance of Building Customer Relationship

Customer focus and attention to customer service is not a new concept. It is certainly a business

dynamic that has been recognized for a long time by more people than the management gurus.

Building customer relationships is more evolution than revolution. Thus, achieving the full

potential of each customer relationship should be the major goal of every business. Particularly,

customer relationships play a major role in the competence development of hospitality.

Hotels are embracing customer relationships as a major element of business strategy, because

technological applications permit a precise segmentation, profiling and targeting of customers

and competitive pressures require a customer-centric culture. To survive in the global markets,

focusing on the customer is becoming a key factor for hotels. It is known that it takes up to live

times more money to acquire a new customer than to get an existing customer to make a new

purchase. Hence, customer retention is in particular important to hotels because of their limited

resources.

Moreover, a dissatisfied customer causes market damage because they are more likely to defect

to competition and more likely to persuade others to defect. It is therefore no surprise that

building customer relationships is an important topic of conversation in business world. Building

customer relationships is the strategic application of people, processes and technology to

improve and sustain profitable relationships with customers and partners. Building customer

relationships provides transform organizations into customer-centric enterprises that maximize

the value of every customer.

Building customer relationships can help businesses enhance their customer relationships by

attracting more profitable customers and establishing stronger and more durable customer

relationships, which gives sales force more time to sell, improves customer response times and

quality of customer service, and allows marketing to better understand customer issues and

trends. At businesses, building customer relationships leverages best practices that value

customer information as a corporate asset. It is committed to helping businesses implement

strategies and solutions improving the way they sell, communicate service and analyze

customers.

5 The Positioning of Hospitality Outlet Offering Hospitality Services in Local Area

The hospitality industry in Singapore consists of thousands of businesses. Many are small local

businesses, but some are national operations. There are many hospitality businesses that are

unique to a particular town or area. These are independent businesses. They are owned by

individuals or partners, and are not part of a national chain. Although the experience for the

customer is less predictable than with a national chain, local hospitality outlets can offer

specialised and interesting menus, and a range of accommodation at various prices.

The location of hospitality businesses is very important. Unlike a business selling goods that can

be sold in a shop or on the internet, customers need to visit the hospitality business to experience

its goods and services. The location of a hospitality business influences the types of products and

services on offer and the prices that are charged. A hotel located in the highlands of Scotland is

unlikely to able to attract business customers for half-day meetings as it would be too far for

most people to travel there and back in a day. However, the hotel could attract tourists for

walking and sightseeing holidays. Catering businesses also need to take location into account. A

fast-food restaurant needs to be situated where people are likely to need a quick food stop. This

could be in town centres, beside tourist attractions or on busy roads.

Another way of looking at the hospitality industry is by the size of businesses. Many hospitality

businesses are very small. For example, a small independent cafe may only employ two or three

people. It may have a relatively small turnover, and only generate enough profit to provide its

owner with a modest income. In contrast, the hospitality businesses that run the well-known

national chains are multi-million pound operations and employ thousands of people.

The hotel sector of the hospitality industry is large. There are over 2000 hotels in Singapore.

What all hotels have in common is that they offer rooms to their guests in exchange for

payment. All hotels have guest bedrooms and bathrooms (although sometimes bathrooms have to

be shared). Larger hotels also have public spaces such as large foyers, private meeting rooms and

conference facilities for business meetings, and function rooms. Hotels are given ratings (from

one-star to five-star) according to the range and quality of their facilities. Budget hotels and bed

and

6 Suggestions on Ways of Improvement

Developing customer loyalty depends, not only on the hotel's ability to increase customer

satisfaction in terms of service performance, but also on its ability to establish a favourable

image. Moreover, various aspects of the hotel operation, including the seven services marketing

variables (product, place, price, promotion, people, process, and physical evidence) may directly

affect the hotel image. Hence, it is crucial that the seven services marketing variables are

managed and marketed in accordance with the hotel's image. For example, reduction in price

may attract a particular category of clientele. To a customer, the hotel's clientele is an element

that significantly and indirectly reflects the hotel's image. Hence, attracting customers who do

not represent the image of the customer base may negatively affect the loyalty of existing

customers.

All aspects of a hotel operation are not equally important to the customer. It was found that the

hotel room and the ability and willingness of housekeeping staff to offer superior service were

the most important factors determining customer loyalty. It is suggested that any efforts towards

quality improvement in a hotel should focus primarily on ensuring customer satisfaction with

housekeeping. While acknowledging the importance of all aspects of the hotel operation,

managers should recognise the significance of housekeeping to overall customer satisfaction.

Thus it is imperative that management channel their resources into updating guest services in the

room in accordance with the requirements of their clientele.

For example, hotels that target business customers may find it necessary to adopt and/or keep

pace with the latest advances in communication technology. Moreover, housekeeping is not

traditionally considered by hotel managers as a front-line service department. Hence, service

training offered to housekeeping staff is minimal in comparison with that provided for reception

and/or restaurant staff. Therefore I recommend that hotels incorporate special service training for

housekeeping staff.

7 Strategic Plan of Providing Distinctive Service to Support the Company’s Strategy

There are two strategies most commonly used by hotel managers in order to gain a competitive

advantage; they are:

1. Low-cost leadership through price discounting

2. Developing customer loyalty by providing unique benefits to customers.

Hotels that attempt to improve their market share by discounting price, however, run the serious

risk of having a negative impact on the hotel's medium- and long-term profitability. As a result,

it is quality of service rather than price that has become the key to a hotel's ability to differentiate

itself from its competitors and to gain customer loyalty. While customer satisfaction is a widely

accepted and proven prerequisite to gain customer loyalty, there have been relatively few studies

on image as the prerequisite for customer loyalty. The inclusion of image and customer

satisfaction in one model not only highlights the importance of image, but also provides a more

comprehensive understanding of how it influences both customer satisfaction and loyalty. This

also suggests that both image and customer satisfaction should be included when measuring

customer loyalty.

Numerous examples illustrate that it is important that the hotel industry develop customer

loyalty, as opposed to relying solely on pricing strategies. Researchers have shown that as

percent increase in customer loyalty can produce a profit increase of 25 per cent to 85 per cent.

Hence a dedicated focus on customer loyalty is likely to become a necessary prerequisite for the

future survival of hotel organizations. Hospitality managers believe that firms cam improve their

profits by satisfying customers. Studies show, however, that satisfying customers alone is not

enough, since there is no guarantee that satisfied customers will return to purchase. It is now

becoming apparent that customer loyalty is significantly more important than customer

satisfaction in a business organization's success. The increasing sophistication of customers’

demands coupled with the increasing market competition has posed a new challenge to hotel

managers Hotel managers, therefore, are seeking ways to understand the most influential factors

in customer loyalty. This knowledge may assist hotel managers to implement strategies which

will ensure that the hotel will receive loyalty from both existing and prospective customers.