Evaluating Customer Loyalty in South Africa's Hotel Industry: The Effect of Service Quality and Brand Equity.
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Authors
Ragunanan, S.
Issue Date
2024-05
Type
Thesis
Language
en
Keywords
Alternative Title
Abstract
The hotel industry in South Africa is fiercely competitive, characterised by a diverse array of accommodation options ranging from international hotel chains to boutique establishments. In this highly competitive landscape, establishing and maintaining customer loyalty is paramount for hoteliers, as it not only ensures repeat business but also serves as a powerful differentiator in a crowded market. Understanding the factors that drive customer loyalty is essential for hoteliers seeking to differentiate their offerings and create lasting relationships with their guests.
The primary objective of this study was to evaluate the effect of service quality and brand equity on customer loyalty in South Africa’s hotel industry. The study also determined the mediating effect of tangibles, responsiveness, reliability, empathy, and assurance on customer loyalty through service quality. Additionally, the study aimed to establish the mediating effect of brand attachment and brand attitude on customer loyalty through brand equity. The research was guided by a positivist paradigm and employed a quantitative methodology, utilising a descriptive research design. Data was gathered through an online self-administered survey completed by 379 respondents, using a questionnaire developed based on existing empirical studies. The data analysis involved the utilisation of structural equation modelling (SEM) with SmartPLS version 3. This method was employed to establish the relationships between customer loyalty, service quality, and brand equity.
The findings unveiled noteworthy and statistically significant relationships between these pivotal constructs. The study confirms that service quality has a significant impact on customer loyalty, which subsequently leads to a positive effect on brand equity. Furthermore, the findings indicate that customer loyalty acts as a mediator in the relationship between service quality and brand equity, underscoring the important role of customer loyalty in augmenting brand value within the hotel industry. Additionally, the findings indicate that brand attachment and brand attitude enhance the impact of customer loyalty on brand equity, emphasising the significance of emotional connections in cultivating robust hotel brands.
The study provides valuable insights for hotel managers and marketers seeking to customise their strategies for guests, to improve customer loyalty. These strategies include enhancing service quality across all variables, building strong emotional connections with guests through focused branding efforts, and utilising customer loyalty programs to strengthen brand attachment. The study concludes with practical recommendations for hoteliers to enhance customer loyalty, emphasising the importance of delivering exceptional service experiences, building strong brand equity, and understanding the cultural nuances that influence consumer behaviour. Overall, this research contributes to the body of knowledge in both academia and industry, offering actionable insights for hotel managers and marketers striving to achieve sustainable competitive advantage in the South African hotel industry.