CHAPTER 1: RESEARCH OVERVIEW
In Chapter 1, contents included will be the summary of research project. Chapter 1 consist of six parts which included research background, problem statement, research objectives, research questions, hypotheses of study and significance of the research study.
1.1 Research Background
Malaysia is a federation consisting of Sabah and Sarawak, also known as East Malaysia and the southern part of the Malay Peninsula, formerly Malaya which is also known as West Malaysia (Cheah, 2002). Diversity is one of the key attractions of Malaysia with the extreme contrasts in the country (The Tourist Development Corporation of Malaysia, 2013). According to Malaysia Tourism Satellite Account (2013) reported that there is increasing 15.5 million number of domestic tourist from 115.5.million in 2010 to 131.0 million in 2011. Based on Saaid, Executive Director of Malaysian highlighted that the hotel industry is growing potentially due to contribution of tourism (Jaafar, Toh & Sukarno, 2011). According to Business Dictionary (n.d.), hotel is defined as a commercial establishment which provides the guest services, meals and lodging while the least requirement of a hotel is the institution is required to have at least 6 bedrooms and at least 3 rooms with bathroom facilities. Based on the level of service provided by hotel, hotel can be classified into economy or luxury hotel while economy hotel also known as budget hotel which meet the basis need of customer by offering clean and tidy rooms (Abhijeet, 2013).
Budget hotel provides rooms and meals at a lower cost and is considered as lowest category in hotel industry (hotelarcopalace, 2012). It is an alternative for the customer who just wants to have a simple room with a bed and shower (Colbu & Scutariu, 2008). The service provided by the budget hotel in Malaysia might be better than one star hotel (Ukessay, 2015). The price range of budget hotel can be as low as RM80 to RM150 per night and budget hotel allows hourly renting for the rooms (Tourism Malaysia, 2012). There are many constructions of budget hotels happen in Sabah especially in Kota Kinabalu and lead to increase competition among budget hotels (Fong, 2007).
1.2 Problem Statement
President of Malaysia Budget Hotel Association (MBHA) revealed that the amount of budget hotels in Malaysia is increasing and domestic tourists are the majority number to patron the budget hotels (Mybajet, 2013). Therefore, this was a trend in the tourism sector, revealing that budget hotels played an important role within the hotel industry (Abdullah, Ishak, & Farah, 2012). Xie & Chaipoopirutana (2014) pointed out that the key of hotel’s success is tourists’ satisfaction. Therefore, budget hoteliers need put efforts to differentiate their products and services and improve the local tourists’ satisfaction. Besides that, there are many tourists are concern about their budget and save their money. They look for cheaper and budget hotel to stay (Mybajet, 2013). They also become rational and preferred “use less to enjoy more” (Tan, 2014). The number of consumers that turn into internet sites and other related sites to make reviews and complaints about hotel services has increased (Tyrrell ; Woods, 2004). Using internet communication is considered as a source of mass and interpersonal communication (Ohiagu, 2011). A customer complaint that the hotel room is dirty, moreover no towel was provided in the bathroom. The problem unresolved due to housekeeping service is not available at night (TripAdvisor, 2013). According to J.D Power (2012) stated, an unresolved problem will lower customer satisfaction score to 573 out of 1,000 (as cited in Bender, 2012). Based on data of market matrix, the report showed that the global hotel customer satisfaction include budget hotels had declined (Village, 2012). Verm (as cited in Ariffin ; Aziz, 2012) mentioned that evaluation of customer satisfaction is depends on their every single experiences. There are limited researches are conducted about factor that affecting customer satisfactions towards hotels, but it is not focus on budget hotels in Malaysia. For example, the study of Forizia, Zadeh, ; Gilani (2013) which investigated the customer satisfaction in 3 stars hotels in Malaysia. In addition, there are limited researches which investigate SERVQUAL model and price all together. Furthermore, there are limited researches to investigate customer satisfaction towards budget hotels in Malaysia in term of these six variables. Besides that, there are yet new aspects and defects to be enhanced in consumer satisfaction (Forozia, Zadeh, ; Gilani, 2013). There are numerous viewpoints and measurements were considered to enhance the level of satisfaction, they used significant variables however the important of SERVQUAL model and price still requires further thought.
1.3 Research objective
1.3.1 General Research Objective
The main objective of this research is to examine the factors that affecting customer satisfaction among local tourists toward budget hotels in Malaysia.
1.3.2 Specific Research Objective
1. To examine the relationship between reliability and customer satisfaction among local tourists toward budget hotels in Malaysia.
2. To examine the relationship between assurance and customer satisfaction among local tourists toward budget hotels in Malaysia.
3. To examine the relationship between tangibles and customer satisfaction among local tourists toward budget hotels in Malaysia.
4. To examine the relationship between empathy and customer satisfaction among local tourists toward budget hotels in Malaysia.
5. To examine the relationship between responsiveness and customer satisfaction among local tourists toward budget hotels in Malaysia.
6. To examine the relationship between price and customer satisfaction among local tourists toward budget hotels in Malaysia.
1.4 Research Question
Based on our research objectives, questions constructed as below that have to be
answered after completion of research study:
1. Does reliability affect customer satisfaction among local tourists toward budget hotels in Malaysia?
2. Does assurance affect customer satisfaction among local tourists toward budget hotels in Malaysia?
3. Do tangibles affect customer satisfaction among local tourists toward budget hotels in Malaysia?
4. Does empathy affect customer satisfaction among local tourists toward budget hotels in Malaysia?
5. Does responsiveness affect customer satisfaction among local tourists toward budget hotels in Malaysia?
6. Does price affect customer satisfaction among local tourists toward budget hotels in Malaysia?
1.5 Hypotheses of study
H1: Reliability has positive relationship with the customer satisfaction among local tourists toward budget hotels in Malaysia.
H2: Assurance has positive relationship with customer satisfaction among local tourists toward budget hotels in Malaysia.
H3: Tangibles has positive relationship with the customer satisfaction among local tourists toward budget hotels in Malaysia.
H4: Empathy has positive relationship with the customer satisfaction among local tourists toward budget hotels in Malaysia.
H5: Responsiveness has positive relationship with the customer satisfaction among local tourists toward budget hotels in Malaysia.
H6: Price has positive relationship with the customer satisfaction among local tourists toward budget hotels in Malaysia.
1.6 Significance of the Study
This research is able to devote to the budget hoteliers that they may have a better understanding of what the influencing factors are local tourists emphasize. Besides, they have an in-depth insight of hotel customers priority concern in budget hotels businesses. Hence, they can develop a suitable and outstanding marketing strategy or selling preposition that can maximize local tourist’s value and provide good services to them. In addition, they may become an outstanding hotelier and gain the competitive advantages that differentiate from competitors in order to increase the business profitability, reputation and popularity. Besides, it may provide a springboard to success in hotel business and operate the business in a right and success path. Through this study, budget hoteliers will get the useful information about these influencing factors that can strive in the high competitive field in order to satisfy local tourist needs. Besides that, it had benefited academics and educators; they may have in-depth information and knowledge about the factors that can affect the local tourist satisfaction in related field. It is also contributes to future researcher, especially research on customer satisfaction among local tourist toward budget hotels. They can use the hypothetical contribution as evidence and support. Other than that, this study had researched SERVQUAL model and extra one factor which is price. Uniquely, it is distinct from previous researches which only make a research on SERVQUAL model. Exclusively make a research on price factor due to poor Malaysia’s economy and changing consumer spending behaviours. Consumers concern about their budget and expenses. Furthermore, hotel agencies will have a superior comprehension on budget hotel customer even students in term of their satisfaction. In this study, it gives an adequate information and data to hotel agencies to determine most influencing factors. In addition, it gives a chance for hotel agencies to enhance their competitive advantages.
1.7 Definition of key variable
Phenomenon: The factors that affecting customer satisfaction among local tourists toward budget hotels in Malaysia
Examples of variables related to the factors that affecting customer satisfaction among local tourists toward budget hotels in Malaysia
2.the amount of carbon emission
3.the amount of rainfall
Chapter 1 provides a basic understanding of the study of the factors that affecting customer satisfaction among local tourists toward budget hotels in Malaysia. This chapter also provide a fundamental guideline for further development of the study. Further discussion of this research will be carried out in Chapter 2.
CHAPTER 2: LITERATURE REVIEW
The conceptual framework and the six core determinants related to the factors that affect customer satisfaction among local tourists toward budget hotels in Malaysia, reliability, assurance, tangibles, empathy, responsiveness and price used in proposed conceptual framework will be discussed in details in this chapter. Finally, Chapter 2 also will include with all hypotheses formed to test the relationship between these factors and customer satisfaction among local tourists toward budget hotels.
2.1 Review of Literature
2.1.1 Customer Satisfaction
Satisfaction was defined as whole performance evaluation based on all prior experiences with the firm (Jones et al., 2000). Satisfaction can be influenced by objective factors such as product and service features, and also determined by subjective factors such as emotions and customer needs (Markovic et al., 2010). In fact, satisfaction holds an essential role in creating value for customers (Tanackovic, 2013). In order to success in any business, customer satisfaction definitely is the critical factor (Gronoos, 1990). Satisfaction level is the outcome of the discrepancy between expected and actual performance. For example, positive disconfirmation as known as satisfaction will happen when product or service performs better than expected (Oliver, 1980). Furthermore, customer satisfaction is also outcome of customer’s perception of the value gained in a relationship or transaction, comparing to competitors (Blanchard & Galloway, 1994).
Other than that, customer satisfaction considered as a starting point to create and strengthen customer loyalty, hence long-term relationship with customers can be developed (Gandolfo, 2010). In order to improve customer loyalty, management approach focused on customer satisfaction was effective, at the same time enhanced the good image of touristic place (Gandolfo, 2010). A satisfied customer spreads positive Word Of Mouth, the effect was better than conventional advertising (Villanueva et al., 2008). The level of deep analysis and understanding about motivators and knowledge of customer satisfaction are the key points for the business success of hospitality services (Gutiererez-Sanchez et al. 2011, p. 18). Besides, a small increment in customer satisfaction will enhance customer loyalty dramatically in hotel industry (Carev, 2008). Room qualities, value and employee quality are the main reasons that affect hotel customer satisfaction (Choi & Chu, 2001).
Reliability in SERVQUAL model is the capability to carry out the service accurately and dependably as promise (Van Iwaarden & Van der Wiele, 2002). Dependably is defined as the service provider is able to provided what is needed and to be trusted while accurately is defined as service provider is able to achieve the outputs that are correct. High service reliability refers to the error-free performance provided by the service provider. For example, charity fund is distributed rightfully, car is well-tuned after maintenance and train is arriving on schedule (Meriam Webster, n.d.). Reliability is assumed to affect the costs and demand of customers and defined as the probability that service provider is able to meet the predetermined (Boronico & Moliver, 1997). Reliability of service includes complaint handling, pricing and promises delivery (Rahman, Jamil, and Iranmanesh, 2014). In handling customer complaint, satisfaction of the customer can be increased if the employee is capable to solve the problem and is competent (Bitner et al., 1990). Satisfaction of complain means the satisfaction of the customer to the service provider’s response to the customer’s complaint (Stauss, 2002). Besides, customers compare the expectation and the perception of the company’s delivery performance in order to evaluate their acceptability (Demoulin ; Djelassi, 2013).
According to Merriam Webster (n.d.), assurance is defined as the confidence of manner. Credibility, competence, security, courtesy and attributes of communication are the elements in service assurance (Parasuramen ; Zeithaml, 1985). The ability of company employees use their courtesy and knowledge to inspire confidence and trust of the customers is the meaning of
service assurance as well (Schneider ; White, 2004). The components in assurance can be elaborate as the courtesy embraces admiration, consideration and politeness. Communication that keeps customers always informed. Competence refers to the required knowledge and skills to