Customer Satisfaction in the Hotel Industry: A Case Study from Sicily

In order to be successful in the market it is not sufficient to attract new customers managers must concentrate on retaining existing customers implementing effective policies of customer satisfaction and loyalty. In hotel industry customer satisfaction is largely hooked upon service quality. A management approach focused on customer satisfaction can improve customer loyalty, thus increasing the positive image of the touristic destination. Hence, exploring the importance for customers of hotel attributes in hotel selection is indispensable. Research on the topic of guest satisfaction, which translates into the consideration of whether or not customers will return to a hotel or advise it to other tourists, is pivotal to the success of the hospitality business. Neglecting to pay attention to those hotel attributes considered most important by guests, may lead to negative evaluation of the hotel, thus restricting the chance of repeat patronage. We perform a qualitative analysis of a large hotel in Sicily (IT), the Sporting Club Hotel in the town Cefalù, using the Critical Incident Approach (Hayes, 2008). Through the analysis of this case we evaluate the overall customer satisfaction level for the hotel and for each supplied service . We conclude discussing the result and proposing improvement in customer satisfaction management of the hotel.


Introduction
Customer satisfaction is a business philosophy which tends to the creation of value for customers, anticipating and managing their expectations, and demonstrating ability and responsibility to satisfy their needs. Quality of service and customer satisfaction are critical factors for success of any business (Gronoos, 1990;Parasuraman et al., 1988). As Valdani (2009) points out: enterprises exist because they have a customer to serve. The key to achieve sustainable advantage lies in delivering high quality service that results in satisfied customers (Shemwell et al, 1998). Service quality and customer satisfaction are key factors in the battle to obtain competitive advantage and customer retention. Customer satisfaction is the outcome of customer's perception of the value received in a transaction or relationship, where value equals perceived service quality, compared to the value expected from transactions or relationships with competing vendors (Blanchard & Galloway, 1994;Heskett et al., 1990;Zeithaml et al., 1990). In order to achieve customer satisfaction, it is important to recognize and to anticipate customers' needs and to be able to satisfy them. Enterprises which are able to rapidly understand and satisfy customers' needs, make greater profits than those which fail to understand and satisfy them (Barsky & Nash, 2003). Since the cost of attracting new customers is higher than the cost of retaining the existing ones, in order to be successful managers must concentrate on retaining existing customers implementing effective policies of customer satisfaction and loyalty. This is especially true in the hotel industry.
Nowadays one of the biggest challenges for managers in the hotel industry is to provide and sustain customer satisfaction. Customer requirements for quality products and service in the tourism industry has become increasingly evident to professionals (Lam & Zhang, 1999;Yen & Su, 2004). Guest relationships are a strategic asset of the organization (Gruen et al., 2000) and customer satisfaction is the starting point to define business objectives. In this context, positive relationships can create customer's higher commitment and increase their return rate. Long-term and reciprocally advantageous relationships between customers and the hotel is becoming progressively important because of the highly positive correlation between guests' overall satisfaction levels and the probability of their return to the same hotel (Choi & Chu, 2001). Hotels are increasing their investments to improve service quality and the perceived value for guests so as to achieve better customer satisfaction and loyalty, thus resulting in better relationships with each customer (Jones et al., 2007). Relationship quality has a remarkable positive effect on hotel guests' behavior: it creates positive word of mouth (WOM) and increments repeated guest rates (Kim et al., 2001).
In this paper, after a review of the main literature on customer satisfaction and retention in the hotel industry, we confront a real case (Hotel Sporting Club of Cefalù, Sicily, Italy) and analyze, using a qualitative methodology, whether there is a positive correlation between the customer oriented business philosophy, adopted by the management of Sporting Club, and the achievements obtained in terms of customer satisfaction. We study the case of Sporting Club Hotel using the critical incident approach (Hayes, 2008) with semi-structured and unstructured interviews (Lindlof & Taylor, 2002), that we performed to both management and customers. Our empirical study gathers information by the combined use of different interview methodologies in order to evaluate the influence of customer oriented business philosophy on customer satisfaction. We analyze the results to highlight eventual gaps among managers' expectation and results and to evaluate the overall customer satisfaction level for the hotel and the specific one for each service supplied. We conclude discussing the results and proposing improvements in customer satisfaction management for the hotel.

Literature overview
In the past, tourism has been often considered as the natural outcome of environmental and cultural resources of a specific territory. In this view, the role of hospitality enterprises cannot influence demand levels and is merely limited to the supply of services to tourists. Le Blanc & Nguyen (1996) suggest that marketing efforts should be directed to highlight the environmental characteristics of the location in order to attract new customers. The constant increase of demand of touristic services, and the request for higher standards by the guests, has enforced the competition among hospitality suppliers and highlighted how the attractivity of the touristic destination is influenced by the standards of the services provided by the local hotels.
In this scenario, providing high quality services and improving customer satisfaction are widely recognized as fundamental factors boosting the performances of companies in the hotel and tourism industry (Barsky & Labagh, 1992;Le Blanc, 1992,;Le Blanc et al., 1996;Stevens et al., 1995, Opermann, 1998. Hotels with good service quality will ultimately improve their profitability (Oh & Parks, 1997). In a competitive hospitality industry which offers homogeneous services, individual hoteliers must be able to satisfy costumers better then their counterparts (Choi & Chou, 2001).
To obtain loyalty and to outweigh other competitors, hotel providers must be able to obtain high levels of customer satisfaction for the service supplied. There are several studies that analyze the needs and the desires of tourists. A research by Wuest et al. (1996) defined the perception of hotel attributes as the degree to which guests may find various services and facilities critical for their stay in a hotel. Hotel's attributes such as cleanliness, price, location, security, personal service, physical attractiveness, opportunities for relaxation, standard of services, appealing image, and reputation are recognized as decisive by travelers to assess the quality of the hotel (Atkinsons, 1988;Ananth et al., 1992;Barsky & Labagh, 1992;Cadotte & Turgeon, 1988;Knutson, 1988;McCleary et al., 1993;Rivers et al., 1991;Wilensky & Buttle, 1988).
According to a survey carried out by Barsky & Nash in 2006, regarding the main hotel chains worldwide, between 2002 and 2005, the importance of loyalty programs for guest's decision on where to stay increased from 32% to 34%.
Although the search for new locations is certainly the most important factor for many tourists, several studies highlighted that there is a good portion of customers that chose to repeat their holidays' destination, showing a certain degree of loyalty (Oppermann, 1998;Fyall et al., 2003). These studies on tourists' loyalty indicate five main factors which affect the repetition of the trip to the same tourist place: the desire to reduce the risk of making a mistake when choosing an alternative destination; the chance to meet the same people again ; the emotional affection to a specific place; the possibility to explore the place better ; the desire to show the place to other people.
Hoteliers need to fully acknowledge which service attributes are most likely to influence customers' choice intentions (Richard & Sundaram, 1993). Customer satisfaction practices can help them to identify the crucial elements affecting customers' purchase experience and post-purchase behavior such as subsequent purchase and favorable word of mouth (WOM) publicity (Berkman & Gilson, 1986;Choi &Chu, 2001;Fornell, 1992;Halstead & Page, 1992;Knutson, 1988;Pizam, 1994). A satisfied guest promotes positive WOM at no cost for the enterprise and with effect and credibility that are superior to those of conventional advertising (Lee et al., 2006, Tarn, 2005, Villanueva et al., 2008. WOM effect is also amplified by the World Wide Web (Dominici, 2009;Trusov et al. 2009).
Customer satisfaction is the starting point to build customer loyalty, therefore a long-term relationship. This creates a loyalty's stock in the enterprise which improves corporate image. The consolidation of relations with guests leads to repeated patronage. On the other hand, an unsatisfied customer may represent a danger for the enterprise. A research, conducted by Cherubini (1997), shows that only 4% of unsatisfied customers complains to the business explaining the reason of their unsatisfaction, and each client who doesn't officially complain generates a negative WOM which can involve also 1000 people.
Hence, both exploring the importance for customers of single attributes in hotel selection and to systematically survey their level of satisfaction are indispensable. Research on the topic of guest satisfaction, which translates into the consideration of whether or not customers will return to a hotel or advise it to other tourists, is pivotal to the success of the hospitality business. Neglecting to pay attention to those hotel attributes considered most important by guests leads to negative evaluations of the hotel, thus restricting the chance of repeat patronage.

Methodology
Measuring customer satisfaction in the hotel industry is important in order to: know guests' opinions. Each guest has different expectations about hospitality services, thus it is important to know their impressions not only by aggregated statistics but also singularly; determine the expectations, the needs and the requests of customers; overcome the gaps between customers' expectation and services offered; supervise the operations of the enterprise as a system.
Guests' loyalty represents a homogeneous cluster which can be measured using behavioral and attitudinal variables.
In our analysis we focus on a large hotel in Cefalù on the Sicilian coast in the south of Italy. We performed the survey during the summer of 2008. In our survey we used both field and desk research methodology.
We started with a "desk" analysis and then we administered a survey to both hotel managers and guests; then we cross checked the information obtained. In chronological order we proceeded to: analyze the corporate web-page and visit the location in order to verify the truthfulness of the information supplied to customers; interview the management of the hotel to verify the existence of a customer oriented philosophy; administer a questionnaire to the director of the village to confirm the results of the interview; administer questionnaires to 100 guests (on 122 we attempted to interview) of the hotel using the Critical Incident Approach (Hayes, 2008).
The Critical Incident Approach focuses on obtaining information from customers about the services and goods they encountered in the past. This approach can be used both for customers and staff.
For our analysis we submitted semi-structured interviews to guests. We prepared an interview guide based on the desk research regards the company web-page and their promotional material.
A semi-structured interview is a flexible interview methodology, allowing new questions to be brought up during the interview as a result of what the interviewee says. The flexibility given to answers by this interview methodology gave us the possibility to shed light on particular needs of customers which may not have been perceived by the management. The incidents are then employed to create classes of satisfaction items based on shared common words, used in the incident statement. These satisfaction items are then applied to detect crucial customer quality requirements.
Using the Critical Incident Approach, we interviewed 100 customers with semi-structured interviews, asking each of them to describe 5 positive and 5 negative aspects of the overall service offered by the hotel. The 5 positive aspects are: organization; kids' club; number of services provided; family atmosphere; good entertainment. The 5 negative aspects found are: excursion prices (for some excursions); beach tidiness; insufficient shuttle service for Cefalù; room service; room tidiness and comfort.
We then used semi-structured interviews for the questionnaires about the quality of each service and we administered it to the same target. We classified 52 verbal expressions used by guests to describe specific services supplied (appendix -table1). Using the information gathered administering the interviews, we determined the level of customer satisfaction for each service supplied.
To verify the existence of a real customer oriented approach on behalf of the management, we compared, for each service supplied by the hotel, the results regards the perceptions of the quality of services of the management with those of the guests.

Analysis and results
From the unstructured interviews administered to the management, it emerged that Sporting Club Hotel's target are families. Families are considered by the hotel's management the ideal target because they are more sensitive to customer loyalty policies. The hotel has a good repeated patronage rate with 20% of guests that have already spent their holidays in the hotel in the past. The hotel works especially during summer and national holidays and gives several possibilities of trips to visit the main touristic attractions in Sicily. In 2008 it had about 35.000 guests. Desk analysis shows that the corporate vision refers specifically to customer satisfaction. Respondents were asked to describe 5 positive and 5 negative aspects about the overall service perception, and could answer with minimum 1 to maximum 2 phrases for each question for the specific services (from 2 to 8 of the list above). Verbal expressions obtained have been first grouped by service questioned (table 1 of the appendix) and expression and then classified according to the judgment of the expression when the interviewee was asked about the service. The tables 2 to 9 (appendix) show the results of the semi-structured interviews regarding the attributes and expressions used by interviewees.
What emerges from the semi-structured interviews is an overall positive customer satisfaction level. The main strengths of the hotel are: the restaurant, the entertainment program and the organization; the weaknesses are the beach and the rooms.
We compare the results about the managers' perceptions of quality of the hotel's services of the management with those of guests, using the Customer Satisfaction Convergence Matrix (Cuomo, 2000).

Figure 1. here
In the case analyzed both management and customers have an overall positive perception, so we can assert that the management has a realistic perception of the level of customer satisfaction.

Conclusions
Our qualitative analysis of the Sporting Hotel of Cefalù (IT) shows that the level of customer satisfaction is good both considering the overall evaluation and the single services (6 out of 8 of the single aspects examined). Human resource management in particular results to be specially effective in entertainment and restaurant service.
By interviewing the hotel's management about the results, it emerged that they didn't have the perception of the gaps we found in beach and room services. Though the latter service heavily depends on the quality of the hotel's structure, a certain degree of improvement maybe obtain through a concrete effort towards their customization.
In general, the main factor which limits the Sporting Club Hotel's ability to achieve higher customer satisfaction levels is the standardization of services that reduces the possibility to customize the offer for specific guest needs. Indeed, from the unstructured interviews to the hotel's management it became apparent that the organizations adopts a "push" marketing approach. The offer of touristic services is decided by the management and not in collaboration with customers nor considering their specific needs. Moreover customer satisfaction is not used to differentiate the services supplied.
Another weakness of the customer satisfaction management system of the hotel is that a structured CRM (Customer Relationship Management) system has not yet been implemented. Even if a customer database exists, the data collection is not even planned, and the data gathered can't be easily found and used by management for marketing decisions. Any benchmarking information about customer satisfaction levels is missing, so the management doesn't have a clue about what competitors are doing.
The Sporting Club hotel has a good potential to satisfy customers and compete, but to improve its customer satisfaction standards the management needs to adopt new and more advanced CRM procedures. The decision process about the key issues regarding customer satisfaction, should not be based only on accounting and cost data, but also on a customer database created ad hoc.
Even if the case we studied has been chosen because it is representative of other similar businesses in the area, the main limit of this research is that it is circumscribed to only one hotel. We plan in the near future to make other qualitative analysis on other hotels in the same area and compare the results in order to obtain a wider view about customer satisfaction in Sicilian hotels.  (21) 30. The price of some trip is too high (9) 37. The beach is not so fine (23) 44. The staff is excellent (6) 2. There is a kid's club (24) 12. Very good hotel transfer service (21) 16. Reception service at arrival is very good (32) 19. Towels are dirty (28) 25. The cafeteria is nice (5) 31. Good trips (37) 38. Good access to the seaside (7) 45. There are many amusing activities (3) 3. Many services offered (19) 13. Transfer is ok (12) 17. The staff is good (44) 20. Room is good (11) 26. There is a large choice of foods at the restaurant (24)