Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
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Resort hotels are unique service organizations in terms of their long duration and high customer contact times. Currently, resort hotels are in a very competitive marketing environment in Thailand. A study that develops a much deeper insight into the marketing constructs such as service quality and its dimensions, customer perceived value, satisfaction, corporate image, and customer loyalty is of vital importance for the resort hotels to survive in the competitive market. Therefore, this study aims to adopt a comprehensive hierarchical modelling approach as a framework to identify the dimensions of service quality and to analyse the interrelationships between the aforementioned five marketing constructs. This study uses mix method research to analyse the data. The data was collected in Phuket Province between April and
August 2012 using a self-administered survey. Three focus group interviews and a pre-test preceded the data collection process. In addition, Exploratory Factor Analysis, Confirmatory Factor Analysis, and
Structural Equation Modelling were used to analyse the data. The results support a comprehensive hierarchical structure of service quality for resort hotel stays that consists of eleventh first order subdimensions: attitude, behaviour, professionalism, decor &ambience, room quality, design, location &convenience, facility &activity, valence, waiting time and sociability, three second order primary dimensions: interaction, physical environment and outcome quality and overall service quality. The sub-dimensions that drive the primary three dimensions vary in number and importance; however outcome quality is the most important primary dimension for overall service quality performance. Furthermore, service quality is the most important determinant of customer satisfaction which is the most significant antecedent of customer loyalty. Lastly, customer satisfaction is found as a complete mediator variable on the relationship between service quality and customer loyalty, customer perceived value and customer loyalty.
Field of Research: Service Marketing
Resort hotels are unique service organizations in terms of their long duration and
high customer contact times(Clemes et al., 2001, Lovelock and Wirtz,
2011).Currently, resort hotels in Thailand are in a very competitive marketing environment(Tourism Authority of Thailand et al., 2011). In response, resort hotel
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Rachata Channoi, Faculty of Commerce, Lincoln University Christchurch, New Zealand,
Email: Rachata.Channoi@lincolnuni.ac.nz
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Corresponding Author, Michael D. Clemes, Faculty of Commerce, Lincoln University Christchurch,
New Zealand, Email: Mike.Clemes@lincoln.ac.nz
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Dr. David Dean, Faculty of Commerce, Lincoln University Christchurch, New Zealand,
Email: David.Dean@lincoln.ac.nz
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8 entrepreneurs need to investigate, establish and implement successful marketing
strategies to remain competitive(Chand, 2010).Service quality is recognized as a key
success factor of hospitality business as service quality is a vital antecedent of other higher order constructs (customer perceived value, corporate image, customer satisfaction and customer loyalty) that drive the financial performance of service
firms (Chand, 2010, Kandampully and Hu, 2007). Therefore, a study that develops a
much deeper insight into service quality and its dimensions, as well as the interrelationships between these marketing constructs is vital for resort hotels to survive in the competitive marketing environment. Recently, a comprehensive hierarchical modelling has been introduced as an advanced model for investigating service quality dimensions and their relationshipswith the other higher marketing constructs. In comprehensive hierarchical modellingthe service quality measurement model and the interrelationships between the higher constructs in a service setting
are simultaneously analysed using the perceptions from a single sample (Clemes et al., 2011). However,there are only a few studies that have developed and tested comprehensive hierarchical models in the hotel industry (Clemes et al., 2011,
Clemes et al., 2009) and to date, none have studied resort hotels. Therefore, this
study aims to apply a comprehensive hierarchical model as a framework to identify the dimensions of service quality specifically for resort hotel stays in Thailand as well as testing the interrelationships between the five higher-order marketing constructs.This paper consists of five sections: Introduction, Literature Review and
Hypotheses, Research Design and Method, Data Analysis Result and Summary and
Conclusions.
2.1 Service Quality
Service quality is a judgement of customers about the overall superiority of a
service(Zeithaml, 1988). Most service marketing academics agree that service
quality is a multidimensional, higher order construct(Brady and Cronin 2001, Clemes et al., 2013).Therefore, a multidimensional and hierarchical modelling approach is used to conceptualize and measure service quality (Brady and Cronin 2001,
Dabholkar et al., 1996, Dagger et al., 2007, Clemes et al., 2007). The
multidimensional and hierarchical modelling approach demonstrates that customers expect to evaluate service quality through multiple sub-dimensions (at a subdimensional level), and aggregate their perceptions of each sub-dimension to form their perceptions of three primary dimensions, lastly the perception of all three primary dimensions are combined together to reflect customer’s overall service
quality perceptions (Brady and Cronin 2001, Dagger et al., 2007, Clemes et al.,
2009). Several scholars have consistently identified that perceived service quality
consists of at least three primary dimensions: interaction quality, physical
environment quality, and outcome quality(Brady and Cronin 2001, Clemes et al.,
2009, Clemes et al., 2011, Kyle et al., 2010). Therefore these three primary
dimensions are modelled in this study.
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
2.1.1 Interaction Quality
Interaction quality is described as the quality of personal interactions between
customers and service providers (Clemes et al., 2009). There is consensus that
Interaction quality is a vital factor affecting customers’ assessment of service quality
in the hotel industry (Clemes et al., 2009, Clemes et al., 2011, Wu and Ko, 2013).
Based on the existing literature, several sub- dimensions are proposed to have a
positive impact on the interaction quality primary dimension: attitude(Clemes et al.,
2009, Brady and Cronin 2001),behaviour(Wu and Ko, 2013, Clemes et al., 2009)and
professionalism(Clemes et al., 2009, Wu and Ko, 2013).
Therefore,thefollowinghypothesesare formulated:
H1: There is a significant positive relationship between the sub-dimensions of interaction quality (H1a, H1b, H1c) and the interaction quality primary dimension.
H2: There is a significant positive relationship between the interaction qualityprimary dimension and customers’ overall perceptions of service quality.
2.1.2 Physical Environment Quality
Surrounding physical environment has a significant impact on the overall service quality perceptions of service encounters as customers also evaluate services through tangible physical surrounding such as décor, ambience and location in the
hospitality industry(Hilliard and Baloglu, 2008). Several research findings ensure that
the physical environment is an essential aspect of service quality
assessment(Dagger et al., 2007, Clemes et al., 2009). Based on the literature;
several sub- dimensions are proposed to have a positive impact on the physical
environment quality: a.décor and ambience (Wu and Weber, 2005, Kim and Moon,
2009), b. room quality(Choi and Chu, 2001, Chu and Choi, 2000), c. design(Clemes
et al., 2009, Wu and Ko, 2013), d. location(Urtasun and Gutiérrez, 2006, Chu and
Choi, 2000), e. facility and activity(Xiang-xiang, 2005, Clemes et al., 2009, Wu et al.,
2011). Therefore, the following hypotheses are formulated:
H3: There is a significant positive relationship between the sub-dimensions of physical environment quality (H3a, H3b, H3c) and the physical environment quality primary dimension.
H4:There is a significant positive relationship between the physical environment qualityprimary dimension and customers’ overall perceptions of service quality.
2.1.3 Outcome Quality
Outcome quality, or technical quality, is what customers receive after the service
delivery or the buyer-seller interactions(Brady and Cronin 2001). There is consensus
in the literature that outcome quality has a positive influence on cus tomers’ overall perceptions of service quality. Several sub-dimensions are proposed to have a
positive impact on the outcome quality primary dimension: a. valence(Brady et al.,
2006, Caro and Garcia, 2008), b. waiting time(Clemes et al., 2009, Dagger et al.,
2007), c. sociability (Brady and Cronin 2001, Clemes et al., 2009, Wu and Ko, 2013).
Therefore, the following hypotheses are formulated:
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
H5: There is a significant positive relationship between the sub-dimensions of outcome quality(H5a, H5b, H5c)and the outcome quality primary dimension.
H6:There is a significant positive relationship between the outcome qualityprimary dimension and customers’ overall perceptions of service quality.
The extent researchindicates the positive impact of service quality on customer
loyalty(Pollack, 2009, Kyle et al., 2010); customer perceived value(Suhartanto et al.,
2013, Kandampully and Hu, 2007); customer satisfaction (Kandampully and Hu,
2007, Suhartanto et al., 2013, Clemes et al., 2009) and corporate image(Clemes et al., 2009, Kandampully and Hu, 2007). Therefore, the following hypotheses are
formulated:
H7:Higher perceptions of service quality positively affect customer loyalty.
H8:Higher perceptions of service quality positively affect customer perceived value.
H9:Higher perceptions of service quality positively affectcustomer satisfaction.
H10:Higher perceptions of service quality positively affect corporate image.
Additionally, there are several studies indicate an insignificant causal path between
service quality and customer loyalty (Cronin et al., 2000, Hu et al., 2009,
Kandampully and Hu, 2007, Kim et al., 2008). However, the literature suggests that
customer satisfaction may function as a meditating variable between the relationship
between service quality and customer loyalty (Chitty et al., 2007, Kuo et al., 2012,
Ekinci et al., 2008, Yu and Ramanathan, 2012). Therefore, the following hypothesis
is formulated:
H11: customer satisfaction mediates the relationship between service quality and customer loyalty.
2.2 Customer Perceived Value
Customer perceived value is determined by the beneficial perceptions and sacrificial
perceptions of customers(Zeithaml et al., 2006, Bhattacharya and Singh, 2008).
Customers who perceive that they receive value for money are more satisfied than
those who perceive that they do not receive value for money (Zeithaml, 1988).
Empirical studies in broader contexts have found a direct impact of customer
perceive value on: customer satisfaction(Chen, 2008, Chitty et al., 2007), customer
loyalty (Brodie et al., 2009, Hutchinson et al., 2009), and corporate
image(Kandampully and Hu, 2007, Suhartanto et al., 2013). Therefore the following
hypotheses are formulated:
H12: Higher customer perceived value positively affects customer satisfaction.
H13: Higher customer perceived value positively affects customer loyalty.
H14: Higher customer perceived value positively affects corporate image.
However, some researchers report an insignificant causal path between customer perceived value and customer loyalty and indicate customer satisfaction functions as a mediating variable between the customer perceived value and customer loyalty
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
relationship (Bowen and Shoemaker, 2003, Chitty et al., 2007, Wang et al., 2004).
Therefore, the following hypothesis is proposed.
H15: Customer satisfaction mediates the relationship between customer perceived value and customer loyalty.
2.3 Corporate Image
Corporate image is the impressions, beliefs and attitudes held in a customer ’s
memory regarding a company (Barich and Kotler, 1991). Corporate image positively
influences customer satisfaction(Lai et al., 2009, Clemes et al., 2009, Suhartanto et al., 2013) and customer loyalty(Helgesen and Nesset, 2007, Suhartanto et al., 2013,
Faullant et al., 2008). Hence, the following hypotheses are formulated:
H16: A higher corporate image positively affects customer satisfaction.
H17: A higher corporate image positively affects customer loyalty.
2.4 Customer Satisfaction
Customer satisfaction is defined as “an outcome of purchase and use resulting from the buyer's comparison of the reward and the cost of purchase in relation to the
anticipated consequences”(Churchill Jr and Surprenant, 1982). Customer
satisfaction is proposed to positively influence customer loyalty(Ekinci et al., 2008,
Han et al., 2008, Suhartanto et al., 2013). Therefore, the following hypothesis is
formulated:
H18: Higher customer satisfaction positively affects customer loyalty.
2.5 Customer Loyalty
A behavioural approach and an attitude approach are two perspectives of customer loyalty. The behavioural approach defines customer loyalty as the behaviour of repurchasing a product or service from the same provider and engaging in positive
word-of-mouth advertising (Suhartanto et al., 2013). Customer loyalty is a feeling of
attachment to, or affection for, a company’s people, products or service such as the willingness to recommend a service provider to other consumers or the commitment
to re-patronize a preferred service (Back, 2005, Suhartanto et al., 2013). Customer
loyalty is closely related to the continued survival and future growth of all service
organizations(Kim and Kim, 2005). Severalresearches assert that customer loyalty is
influenced by the four constructs (service quality, image, perceived value, satisfaction). Nevertheless, these influences havenot been empirically investigated in a resort hotel stay context. Therefore, customer loyalty is included in the conceptual research model.
A survey- based method that combines a qualitative and quantitative technique (mixmethod technique) is used for data collection in this study. A self-administered
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8 questionnaire is used as the research instrument. The questionnaire was designed following an extensive review of literature and the information obtained from three focus group interviews. The questionnaire items are a standard seven-point Likert
Scale ranging from Strongly Disagree (1) to Strongly Agree (7). A pretest process also conducted prior the survey to improve the face validity and content validity. The preliminary questionnaire instrument was reviewed by 3 service marketing experts and 3 experienced resort hotel managers. The instrument was then pre-tested with a sample of 30 resort hotel customers who had stayed at a Thai resort hotel for at least 5 days. Primary data was collected from resort hotel guests who stayed over at oneof any 4-star resort hotel located in Phuket. The nationality, length-of-stay and interaction with the resort were criteria for classifying and selecting a participant. The target population focused on customers from the United Kingdom, Australia and The
United States as they are the main tourist markets of Thailand in terms of budget
spending and numbers lodging in resort hotels(Ministry of Tourism and Sport
Thailand., 2012). A convenient sampling approach was used in this study.
Approximately 600 resort hotel guests were personally approached to participate in the survey. 500 resort hotel guests agreed to respond to the questionnaire and 500 questionnaires were distributed and returned. However, 44 of these were subsequently excluded as they were incomplete or not suitable for use, resulting in a total 456 useable responses. The data analysis was conducted through the
Statistical Package for the Social Sciences 20 version (SPSS) and the Analysis of
Moment Structures 21 version (AMOS) software. Prior to data analysis, the total sample was randomly split into two sub-samples of equal size; then a two stage data analysis is performed. The first stage is EFA (Exploratory Factor Analysis) with the aim of identifying the underlying factors that represented the sub-dimensions of service quality, and then a CFA (Confirmatory Factor Analysis) was performed to validate the measurement models developed and reassess the result of the EFA.
Lastly, SEM (Structural Equation Modeling) was performed to test the first-order analysis, second-order analysis, and causal path analysis respectively.
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
Figure1: The Conceptual Research Model
Perceived Value
Customer Loyalty
H13
H8
H7
H15
H12
H14
H18
H15
H11
H11
H9
H10
Perceived Service Quality
H17
Customer
Satisfaction
H16
Corporate Image
H4
H2 H6
Primary
Dimensions
Interaction
Physical
Environment
Outcome
H1a H1b H1c H3a H3b H3c H3d
H3e
H5a H5b H5c
Sub-dimensions
AT BH PF DA
RQ DS LC FC VL WTT SA
AT = Attitude, BH = Behaviour, PF = Professionalism, DA = Décor and Ambience,
RQ = Room Quality, DS = Design, LC = Location and Convenient, FC = Facility and
Activity, VL = Valence, WT = Waiting time, SA = Sociability
4.1 The Exploratory Factor Analysis Result
The EFA was undertaken using a principal component factor analysis approach with the VARIMAX orthogonal rotation. The factor loading value ± 0.4 was the cut-off value to retain items in the analysis and items loading on more than one factor were eliminated (Hair et al., 2010). The results reveal that there are elevensubdimensions: three sub-dimensions for interaction quality (attitude, behaviour and professionalism), five sub-dimensions for physical environment quality (décor
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
&ambience, room quality, design, location &convenience and facilities &activity), and three sub-dimensions for outcome quality (valence, waiting time and sociability). All the factor loadings ranged from 0.56 to 0.91. The Cronbrach’s Coefficient alphas ranged from 0.86 to 0.95 and the total variance was 80.58%, 73.38% and 81.72% respectively.
4.2 First- Order Confirmatory Factor Analysis Result
The model fit indices of all five first-order confirmatory factor analysis model
( sufficiently meet the recommended fit criteria which are: theNormed Chi-square
2
/df
)<3.00, Goodness-of-
Fit Indices (GFI ≥ 0.90), Standardized Root Mean
Residual (SRMR ≤ 0.10), Comparative Fit Index (CFI≥ 0.90),Normed Fit Index (NFI≥
0.90) and Root Mean Square Error of Approximation (RMSEA≤ 0.08)(Hair et al.,
2010), indicating a good model fit.The construct reliabilities of all five model range from 0.89 to 0.95, above the recommended threshold of 0.70 (Hair et al., 2010),
confirming that the measures for the first-order factors have adequate reliability. All standardized factor loadings are statistically significant (P < 0.01), and range from
0.697 to 0.95, above the recommended threshold of 0.60 (Tabachnick and Fidell,
2007). The average variances extracted (AVEs) of the first-order factor range from
0.65 to 0.86, above the recommended threshold of 0.5 (Hair et al., 2010), confirming
that the all five measurement model have adequate convergent validity. The correlation coefficients of the first-order factors range from 0.36 to 0.84, below the recommended threshold of 0.85, confirming that all five measurement models have
adequate discriminant validity (Kline, 2005).
Table1: The Result of the First-Order Confirmatory Factor Analysis
Model
Model Fit Indices
χ
2
/df GFI SRMR CFI NFI RMSEA interaction
Physical Environment
2.22 0.91
1.63 0.89
0.04
0.04
0.97
0.97
0.94
0.93
0.07
0.05
Outcome 1.76 0.94 0.03 0.98 0.96 0.05
Service Quality 2.50 0.97 0.01 0.99 0.98 0.04
Five higher-Order
Constructs 1.76 0.93 0.08 0.98 0.96 0.05
4.3 Second- Order Confirmatory Factor Analysis
The results indicate that all of four second-order models sufficiently meet the recommended fit criteria, indicating a reasonable model fit. The standardized estimate results of the interaction quality show that behaviour is the most reliable and strongest indicator of interaction quality ( β = 0.936, t-value = 13.888, P < 0.001,
R
2
= 0.83), followed by p rofessionalism (β = 0.856, t-value = 13.529, P < 0.001, R 2
0.80)and attitude. (
β = 0.856, t-value = 12.999, P < 0.001, R 2
=
= 0.79). These results support Hypotheses 1.The standardized estimate results of the physical environment quality show thatroom quality is the most reliable and strongest indicator of physical environment quality ( β = 0.724, t-value = 10.007, P < 0.001, R 2 location & c onvenience (β = 0.710, t-value = 9.493, P < 0.001, R
= 0.52), followed by
2
= 0.50), facilities &
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8 activity (
β = 0.694, t-value = 8.954, P < 0.001, R
0.668, t-value = 8.832, P < 0.001, R
P < 0.001, R
2
2
2
= 0.48),décor &ambience (
β =
= 0.44) and design (
β = 0.625, t-value = 8.744,
= 0.39). These results support Hypotheses 3. The standardized estimate results of the outcome quality show that Valence is the most reliable and strongest indicator of outcome quality (
β = 0.804, t-value = 11.939, P < 0.001, R 2
=
0.64), followed by s ociability (β = 0.792, t-value = 11.044, P < 0.001, R 2 waiting time ( β = 0.773, t-value = 10.884, P < 0.001, R 2
= 0.627) and
= 0.59). These results support Hypotheses 5. Lastly, the standardized estimate results of the service quality model confirm the three primary dimension of service quality (interaction, physical environment and outcome quality) and outcome quality is found as the most important primary dimension of the overallservice quality perception ( β = 0.874, tvalue = 14.392, P < 0.001, R
0.864, t-value =
2
= 0.76), followed by physical environment q uality (β =
14.027, P < 0.001, R
2 and interaction quality ( β = 0.853, t-value = 12.874, P < 0.001, R 2
= 0.74)
= 0.72). These results support Hypotheses 2, 4, 6.
Table2: The Result of the Second-Order Confirmatory Factor Analysis
Model
Model Fit Indices
χ
2
/df GFI SRMR CFI NFI RMSEA
Interaction
Physical Environment
2.15 0.91
1.53 0.90
0.04
0.05
0.97
0.97
0.95
0.93
0.07
0.04
Outcome 1.91 0.94 0.04 0.98 0.96 0.06
Service Quality 1.95 0.98 0.01 0.99 0.99 0.06
4.4 The Causal Path Model
The SEM was designed to determine the relationships between the five higher order constructs (service quality, customer satisfaction, and customerperceived value, corporate image and customer loyalty). The model-fit results illustrate a good model fit to the sample data. All model-fit indices sufficiently satisfy with relative recommended thresholds. Firstly, the exogenous variables, service quality, customer perceived value and corporate image explain 81% of the variance of the endogenous variable (customer satisfaction); service quality is the most important determinant of customer satisfaction which has a significant total causal effect of 0.441, followed by corporate image with a total causal effect of 0.341, and perceived value with a total causal effect of 0.250(H9, H12, H16). Secondly, the exogenous variables, customer satisfaction, corporate image, service quality and customer perceived value explain
64% of the variance of the endogenous variable (customer loyalty); customer satisfaction is the most important determinant of customer loyalty which has a significant total causal effect of 0.377 followed by corporate image with a total causal effect of 0.251, while the total causal effect of perceived value and service quality on customer loyalty is not statistically significant (H7, H13, H17 and H18). Thirdly, the exogenous variables, service quality and customer perceived value explain 53% of the variance of corporate image;customer perceived value is the most important determinant of corporate image which has a significant total causal effect of 0.451, while service quality has a total causal effect of 0.329 on corporate image(H10 and
H14). Lastly, the exogenous variable, service quality explains 54% of the variance of
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8 the endogenous variable (customer perceived value) with a total causal effect of
0.737 (H8).
Table3: The Results of the Structural Equation Model
Goodness-of-Fit Indices
ChiSquare (χ2 )
Degree of Freedom (df)
Normed Chisquare (χ2/df)
Goodness-of-Fit Indices (GFI)
Standardized Root Mean Residual (SRMR)
Comparative Fit Index (CFI)
Normed Fit Index (NFI)
Root Mean Square Error of Approximation (RMSEA)
Figure2: The Structural Equations Modelling
Values
183.760
125
1.470
.923
.022
.990
.970
.046
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
Table4: Standardized Causal Effect of the Structural Equation Model and
Hypotheses Assessment
Outcome
Customer
(
Satisfaction
R
2
= .810 )
Determinant
Service Quality
Perceived Value
Corporate Image
Causal Effects
Direct
Causal
Critical
Ratio
Path
.441
.250
8.168***
4.501***
.341 6.168***
Hypotheses Assessment
H:9
H:12
H:16
Supported
Supported
Supported
Customer
( R
Loyalty
2
= .641 )
Customer
Satisfaction
Corporate Image
Perceived Value
Service Quality
Service Quality
.377
.251
.142
.104
.329
3.479***
3.138***
.063
.216
4.368***
H:18
H:17
H:13
H:7
H:10
Supported
Supported
Not
Supported
Not
Supported
Supported Corporate Image
2
( R = .533 )
Perceived
( R
Valued
2
= .543 )
Perceived Value
Service Quality
.451
.737
5.897***
14.759***
H:14
H:8
Supported
Supported
4.5 Mediating Variable Analysis Result
The Mediating Variable Analysis was designed to test the effect of the mediating variable (customer satisfaction) on the relationship between the service quality and customer loyalty and between customer perceived value and customer loyalty. The analysis starts by testing the direct (and statistically significant) effect of the exogenous variables (service quality and customer perceived value) on the endogenous variable (customer loyalty). Then, with the mediating variable is included in the model. If the direct effect of the exogenous variable on the endogenous variable is reduced and no longer significant, complete mediation is present. Alternatively, if the effect is reduced but still significant, partial mediation has occurred. The analysis indicates that service quality has a significant direct effect on customer loyalty as the regression weight value is 0.615 which was statistically significant at the 0.001% level. The regression weight is significantly reduced to 0.13 and no longer statistically significant when customer satisfaction is included.
Likewise, the regression weight value of customer perceived value on customer loyalty issignificantly reduced from 0.529 to 0.13 and is no longer statistically significant when customer satisfaction is included the model.Thereforecustomersatisfaction is a complete meditator variable on the relationship between service quality and customer loyalty, as well as between customer perceived value and customer loyalty (H11 and H15).
The results of this research support the use of a comprehensive hierarchical model for conceptualising and measuring service quality,and investigating the interrelationship between the five higher order marketing constructs in a long duration and high customer involvement service organization such as resort hotel
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8 stays. The results reveal that the measurement model for resort hotelsconsistsof 11 first-order sub-dimensions: three sub-dimensions of interaction quality (attitude, behaviour, professionalism),five sub-dimensions of physical environment quality(décor and ambient, room quality, design, location and convenient, facility and activity) and three sub-dimensions of outcome quality (valence, waiting time and sociability), three second-order primary dimensions (interaction, physical environment and outcome quality) and one higher order construct (service quality).
The empirical findingsalso illustrate thatoutcome quality is the most important primary dimensionofservice quality perception, followed by physical environment quality and interaction quality.
In addition, this study provides an understanding of the influence of the four higher marketing constructs on customer loyalty which is a key factor for resort hotels to survive in an intensely competitive environment. The analysis demonstrates that customer satisfaction and corporate image are two constructs that directly influence customer loyalty, whereas, customer satisfaction has a stronger influence on customer loyalty than corporate image.Among theantecedent factors of customer satisfaction: service qualityhas astrongest impact on customer satisfaction followed by corporate image, and customer perceived value. These findingimplies that resort hotel entrepreneurs who intend to increase the level of customer satisfaction need to focus on how to deliver a superior services. Customerswho perceive superior service quality are more satisfied with the resort hotel and in turn become loyal customers.
Importantly, this study also identifies the significantly impact of service quality on both perceived value and corporate image. This finding implies that customers who believe they receive superior service quality are more willing to pay a higher price for their accommodation and will form favourable image of the resort hotel. Service
Quality has no direct impact on customer loyalty. However, service quality impactson customer loyalty via customer satisfaction. The analysis also indicatesthe direct impact of corporate image on customer loyalty and customer satisfaction. Customers who havea favourable impression of their stays are more satisfied and tend to revisit the resort hotel. In addition, maintaining positive perceived value is important and can not be neglect by resort hotel management as the results indicate that customer perceived value has a significant impact on customer satisfaction and corporate image.This findings imply that customers who believe they receive value for money are more satisfied and will have a favourableimpression of the resort hotel. Although, the causal path from customer perceived value to customer loyalty is insignificant, the mediating analysis confirms that customer perceived value impacts on customer loyalty via customer satisfaction. This finding implies that if customers receive value for money they will be more satisfied and may become more loyal customers.
In summary, although the results of this study have confirmed the interrelationships between all five marketing constructs, providing superior service is most important for resort hotels. Superior service quality leads to high level of customer perceived value, corporate image, customer satisfaction and customer loyalty. This study also confirmOutcome Quality as the most important driver of the overall service quality.
Lastly, resort hotel management can use the sub-dimension identified in this study for measuring service quality and developingtheir marketing strategy.
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Proceedings of 23rd International Business Research Conference
18 - 20 November, 2013, Marriott Hotel, Melbourne, Australia, ISBN: 978-1-922069-36-8
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