An Investigation of Determinants of Customer Satisfaction in Hotel Industry

This study investigates the determinants of customer satisfaction in the hotel industry, focusing on Hotel Malaysia. It explores various factors and their impact on customer satisfaction levels. The research aims to identify the factors affecting customer satisfaction in the hotel industry in Malaysia and provide insights for improving customer satisfaction levels. The study includes a literature review on customer satisfaction, customer loyalty, and customer expectations. It also discusses the significance of the research and its implications for the hotel industry.

Running head: AN INVESTIGATION OF DETERMINANTS OF CUSTOMER
SATISFACTION IN HOTEL INDUSTRY
An investigation of determinants of customer satisfaction in “Hotel
Industry: A case of “Hotel Malaysia
Component 1: Literature Review
Name of the Student
Name of the University

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Table of Contents
Assessment Component 1: Literature review..................................................................................4
1.0 Introduction...........................................................................................................................4
1.1 Background............................................................................................................................4
1.2 Purpose and Problem Statement............................................................................................6
1.3 Significance of research.........................................................................................................6
1.4 Research Aim.........................................................................................................................7
2.0 Literature Review.................................................................................................................8
2.1 Customer Satisfaction............................................................................................................8
2.2 Customer Loyalty..................................................................................................................9
2.3 Customer Expectations........................................................................................................11
2.4 Customer Relationship Management (CRM)......................................................................13
2.5 Matrix analysis.....................................................................................................................14
3.0 Conclusion...............................................................................................................................15
3.1 Implication for future research............................................................................................15
3.2 Research Questions..............................................................................................................15
3.3 Research Objectives.............................................................................................................15
3.4 Research Framework...........................................................................................................16
References......................................................................................................................................17

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Assessment Component 1: Literature review
1.0 Introduction
1.1 Background
Malaysia has been a federation including Sabah and Sarawak, known as East Malaysia
and southern part of Malay Peninsula. The diversity of the country has been the main attraction
for tourism. According to Malaysian Tourism Satellite Account, there has been increase by 15.5
million number of tourist from 115.3 million in 1010 to 131.0 million in 2011 (Hamid et al.
2018). According to Business Dictionary, hotels have been commercial establishment that helps
in providing guests services, meals and lodging for tourists. Based on the level of services
provided by hotels, it can be divided into several categories of luxury or economic. However,
small increment in the customer loyalty will cause huge increment in customer satisfaction level.
Hotel Malaysia has been one of the budget hotel in Malaysia providing rooms and meals at
reasonable costs to tourists (Ali and Amin 2014). It include simple rooms have large spaces and
decorated in an attractive manner.

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Figure 1: Tourists arrivals in Malaysia
(Source: Liat, Mansori and Huei 2014)
The Hotel Malaysia has been one of the popular hotels in Malaysia. The hotel has been
able to satisfy their customers with their services. However, in recent years, this hotel has been
facing problems in customer satisfaction arena, Due to this most of the customers are not
booking their rooms in the hotel (Ali et al. 2018). Meeting of needs and expectations of
customers have been helping in increasing customer satisfaction. The deep analysis and
understanding about customer satisfaction have been key points of success of business in hotel
industry. There have been decrease in the sales of hotel in the market. The market of the hotel
has been gradually going done in recent past years.
Figure 2: Hotel industry in Malaysia
(Source: Mohammed and Rashid 2018)
The above figure shows that there have been gradual decrease in hotel industry of
Malaysia. Various hotels in the country have been not able to meet requirements of customers in
the market. The Malaysia Hotel has been decreasing its price to attain customers in the hotel.
This have been creating loss for the Hotel in the market.

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1.2 Purpose and Problem Statement
The purpose of the study is to investigate determinants of customer satisfaction in hotel
industry including Hotel Malaysia. This research will study various factors and determinants that
will help in improving customer satisfaction level in hotels.
Most of the hotels in the Malaysian hotel industry has been facing decline in their
businesses in the market. The Hotel Malaysia has been facing problems regarding the customer’s
engagement and satisfaction level in the market. The hotel has been facing problems with vacant
rooms and absence of tourists and customers (Lahap et al. 2016). Due to this, the revenue of the
hotel has been going down in the market. The hotel has been decreasing its budget for rooms,
meals and other services in due course. Customers have been continuously posting negative
feedbacks and complaints over the internet websites. The feedbacks of customers have been
taken into account as room service of the hotel has been poor and unavailable at correct time.
There have been limited researches done on identifying factors affecting customer satisfactions
in hotel industry.
1.3 Significance of research
The significance of the research to study the factors affecting the customer satisfaction
level in the hotel industry of Malaysia. There have been very few researches done in the hotel
industry of Malaysia regarding this area of concern. Customer satisfaction level in hotel industry
has been an alarming situation for the country (Kasiri et al. 2017). This research will help in
identifying various factors and determinants for the decrease in the customer satisfaction level.
Addressing of requirements and desires for clients have been helping in expanding consumer loyalty.
These are interrelated to one another that helps in expanding consumer loyalty. Lodgings need to
comprehend client desires that assistance in empowering representatives for concentrating on

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accomplishing high consumer loyalty. It empowers representatives on concentrating on satisfying
desires for clients. It give inspiration to understanding desires for clients and promoter so as to
satisfy. In hotel industry, desires for clients have been changing in the market. There have been
fragments of clients on extravagance rooms and medium rooms (Ali 2015). This research will help
in mitigating these challenges in attaining customer satisfaction in hotel industry. This study will
help Hotel Malaysia to attain competitive advantage in the market and attain large number of
customers in the hotel. The concept of Customer Relationship Management (CRM) will be
discussed in study. It will help ion understanding various strategies to increase level of
satisfaction among customers.
1.4 Research Aim
The aim of the research is to investigate various determinants and factors affecting
customer satisfaction in hotel industry in Malaysia.

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2.0 Literature Review
2.1 Customer Satisfaction
Satisfaction has been defined as overall performance evaluation based upon all
experiences with the organizations. Satisfaction has been influenced by various factors including
products and services offered by organizations. There have been various subjective factors
including needs of customers and emotions. It plays a crucial role in creating values for
customers. Customer satisfaction plays a crucial role in the development of companies in market
(Mohamad et al. 2017). Hotel industry has been an important sector in which customer
satisfaction is an important part. Satisfaction of customers have been helping in retaining
customers in the hotels. Customer satisfaction has been considered as the starting point for
creating and strengthening relationship with customers in the market. Customer satisfaction has
been helping in increasing customer loyalty in hotels. Customers have been looking for enhanced
services and products provided by hotels in the market.
Meeting of needs and expectations of customers have been helping in increasing
customer satisfaction. The deep analysis and understanding about customer satisfaction have
been key points of success of business in hotel industry (Yusof et al. 2017). However, small
increment in the customer loyalty will cause huge increment in customer satisfaction level.
Employee quality, rom qualities and values are the main factors that affect customer satisfaction
in hotel industry (Battour et al. 2017). A fulfilled client spreads positive Word Of Mouth, the
impact was superior to traditional publicizing.

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Customer satisfaction can be enhanced by benchmarking. As commented by Ayob,
Wilson-Evered and McGrath (2017), benchmarking helps hotels in learning strategies from other
players in the industry. This help in creating a competition in the market. As argued by
Mohammed, Rashid and Tahir (2017), many hotels do not reveal their secrets to competitors in
the market. Therefore, it creates problems for the hotels to survive in the market. However, there
has been no requirements of any kind of sensitive information in hotel industry. Therefore, most
of the hotels feel comfortable in revealing their secrets of their success.
2.2 Customer Loyalty
Customer loyalty has been gaining preferences in relationship marketing for maintaining
marketing scheme and customer service. Customer Loyalty has been recognized as prominent
source of competitive advantages for hotels and other organizations in the market. It has been
affecting performance of the hotels in the market. The use of the customer loyalty has been
helping in attaining customers in the hotels and other organization (Ali et al. 2016). Customer
loyalty refers to a degree by which a customer repeats their purchasing and availing services
from any company. The service provider have to take a keen look at needs of the customers to
maintain the customer loyalty in the market. The process of attaining customers in the market
can be termed as customer loyalty. Loyal customers are important assets for company. The
behavior of customers to repeatedly using same services form hotel helps in increasing the level
of satisfaction in the customers. Hotel Malaysia has been one of the spending lodging in
Malaysia giving rooms and suppers at sensible expenses to travelers. It incorporate basic rooms
have expansive spaces and embellished in an alluring way. Hotel industry has been one of the
focused ventures in the 21st century (Liat 2018). The Hotel Malaysia has been one of the
mainstream lodgings in Malaysia. The Hotel has possessed the capacity to fulfill their clients

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with their administrations. Be that as it may, as of late, this Hotel has been confronting issues in
consumer loyalty field, Due to this a large portion of the clients are not booking their rooms in
the lodging (Ali, Amin and Ryu 2016). Addressing of necessities and desires for clients have
been helping in expanding consumer loyalty. The profound investigation and comprehension
about consumer loyalty have been key purposes of accomplishment of business in Hotel
industry. There have been decline in the offers of lodging in the market.
The market of the Hotel has been step by step going done in later past years. The
determinants of customer in order to maintain the loyalty in the hotels have been a crucial point
in the market. Management need to look after the loyalty of customers by enhancing their
services offered to customers. Customers need to be provided with proper services with quality.
As indicated by Liat et al. (2017), compassion is characterized as the capacity of to comprehend
another person's feelings and encounters. In addition, capacity to know shoppers' longing,
conduct and feeling is the meaning of compassion also. One of the indicator of trust is sympathy.
At the underlying period of relationship building, compassion plays a basic job in building trust.
Besides, tuning in and sympathy are fundamental elements of consumer loyalty (Leong et al.
2015).
Stage Identifying marker Description
Cognitive Loyalty to data related to
price and features.
Brand performance.
Affective Loyalty in Liking. A liking attitude toward
brand development.
Conative Loyalty in intention. Behavioral intention stage

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influenced by repeated
Ideas of positive affect
towards the brand.
Action Loyalty for making actions
and coupled with overcoming
obstacles.
Motivated in previous loyalty
stage has been transformed
into readiness of act.
Table 1: Stages and description of loyalty phases
(Source: Dedeoğlu and Demirer 2015)
For achieving high level of customer satisfaction, management needs to be working for
adapting needs of customers in the market. Hotels have been giving a lot of input in managing
customer needs and fulfilling expectations. Hotels have been helping in maintaining a keen
approach in the development in the strategies for increasing customer satisfaction level. In hotel
industry, customer loyalty has been enhanced by combined efforts of all stakeholders (Dedeoğlu
and Demirer 2015). Therefore, involvement of stakeholders helps in maintaining customer
loyalty in the hotels. Managers in hotels have been focusing in retaining existing customers
rather than new customers. A loyal customers can help people in bringing different other
customers to the hotel. This marketing scheme is called as word of mouth marketing. Customer
loyalty has been focused on how well customers are happy with services provided by hotel.
Nature of management and customer loyalty are basic components of customer satisfaction in
hotel industry.

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2.3 Customer Expectations
Customer expectations have been core thing of both customer satisfaction and customer
services. It has been important for hotels to know expectations of customers in the market. When
expectations of customers are high, and reality has been short, this create disappointment among
customers. Customers have been looking for enhanced quality of services from hotels in the
market. As commented by Kandampully, Zhang and Bilgihan (2015), customers have been
satisfied with several hotels in the market due to their luxury rooms and quality services. As
argued by Ali, Dey and Filieri (2015), budget hotels have been unable to meet expectations of
the customers in the market. It has been the responsibilities of hotels to provide excellent room
services to customers for meeting to their expectations. Customer satisfaction has been helping in
increasing customer loyalty in hotels (Ali, Hussain and Ragavan 2014). Customer Loyalty has
been recognized as prominent source of competitive advantages for hotels and other
organizations in the market. Hotel industry has been an important sector in which customer
satisfaction is an important part. It has been affecting performance of the hotels in the market
(Tanackovic, 2013).Meeting of needs and expectations of customers have been helping in
increasing customer satisfaction.
These are interrelated to each other that helps in increasing customer satisfaction. Hotels
have to understand customer expectations that help in enabling employees for focusing on
achieving high customer satisfaction. It enables employees on focusing on fulfilling expectations
of customers. It provide motivation for understanding expectations of customers and advocate in
order to fulfil. In hotel industry, expectations of customers have been changing in the market.
There have been segments of customers on luxury rooms and medium rooms. Satisfaction of
customers have been helping in retaining customers in the hotels. Customer satisfaction has been

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considered as the starting point for creating and strengthening relationship with customers in the
market. Therefore, hotels needs to be clear about expectations of customers in the market.
Hotels need to be focused on customer services that might help in maintaining a keen approach
in the development of the hotel.
2.4 Customer Relationship Management (CRM)
The concept of Customer Relationship Management (CRM) has been depended on
strategic approach of organizations with their customers. These strategies have been helping in
managing their interaction with customers in the market. The relationship between customers
and companies have been an important factor in the growth of companies. Customers have been
looking for enhanced services and products provided by hotels in the market (Ali, Amin and Ryu
2016). In hotel industry, there have been process involving in channelizing services provided to
customers. As argued by Ali, Dey and Filieri (2015), hotel industry in Malaysia has been facing
problems in CRM policies. CRM policies in hotel industry have been facing problems related to
management of customers. As mentioned by Ayob, Wilson-Evered and McGrath (2017), CRM
policies include getting feedbacks and reviews on the services provided by hotel. It has been critical
for lodgings to know desires for clients in the market. At the point when desires for clients are high,
and reality has been short, this make disillusionment among clients. Clients have been searching for
upgraded nature of administrations from lodgings in the market.
As remarked by Kandampully, Zhang and Bilgihan (2015), clients have been happy with a
few Hotels in the market because of their extravagance rooms and quality administrations. As
contended by Ayob, Wilson-Evered and McGrath (2017), spending Hotels have been not able meet
desires for the clients in the market. It has been the duties of lodgings to give amazing room
administrations to clients for meeting to their desires. Consumer loyalty has been helping in

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expanding client steadfastness in lodgings (Radojevic, Stanisic and Stanic 2015). In this way,
lodgings should be clear about desires for clients in the market. Hotels should be centered on client
benefits that may help in keeping up a sharp methodology in the improvement of the lodging. Due to
lack in CRM policies in Malaysian hotel industries, various customers have been providing negative
reviews and comments over the services offered by the hotels.
In Hotel Malaysia, services to customers have been at minimum level. CRM has been one of
the effective ways of developing a healthy relationships with customers in the market. Technology
based CRM helps in hotels in manipulating extra workload over employees. It also help in retaining
customers in the market (Radojevic, Stanisic and Stanic 2015). Technology improves marketing of
different services provided by hotels. The impact of technology in hotel industry has been helping in
creating opportunities for various hotels to increase their growth in the market. The integration of IT
in the CRM activities of hotels have been creating opportunities in the market. CRM technology
helps in improving marketing capabilities by providing useful information and data about customers.
2.5 Matrix analysis
Author Year Customer
satisfaction
Customer
loyalty
Customer
expectation
CRM
Mohamad
et al. 2017
2017 It plays a crucial
role in creating
values for
customers.
Customer
satisfaction
plays a crucial
role in the
development of
companies in
market.
The use of the
customer
loyalty has been
helping in
attaining
customers in the
hotels and other
organization.
When
expectations of
customers are
high, and reality
has been short,
this create
disappointment
among
customers.
Customers have
been looking for
enhanced quality
of services from
hotels in the
market.
The
relationship
between
customers and
companies
have been an
important
factor in the
growth of
companies.
Radojevic, 2015 Meeting of Customer It has been the . The

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Stanisic
and Stanic
2015
needs and
expectations of
customers have
been helping in
increasing
customer
satisfaction. The
deep analysis
and
understanding
about customer
satisfaction have
been key points
of success of
business in hotel
industry
Loyalty has
been recognized
as prominent
source of
competitive
advantages for
hotels and other
organizations in
the market.
Hotel industry
has been an
important sector
in which
customer
satisfaction is
an important
part.
responsibilities of
hotels to provide
excellent room
services to
customers for
meeting to their
expectations.
Customer
satisfaction has
been helping in
increasing
customer loyalty
in hotels
integration of
IT in the CRM
activities of
hotels have
been creating
opportunities in
the market.
CRM
technology
helps in
improving
marketing
capabilities by
providing
useful
information and
data about
customers.
3.0 Conclusion
3.1 Implication for future research
The future research might focus on the implementation of technical aspects of achieving
customer satisfaction in hotels. The implementation of several advanced technology in managing
customers relationships might help in enhancing satisfaction level of customers in the hotel
industry. Online advertising of services by hotels is required that might attract several
customers.
3.2 Research Questions
The research questions have been mentioned below:
 How is the relationship between customers and hotels in the hotel industry of Malaysia?
 What are factors affecting customer satisfaction level in the hotel industry of Malaysia?
 What are strategies for mitigating these challenges of customer satisfaction in hotel
industry of Malaysia?

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3.3 Research Objectives
The objectives of the research have been mentioned below:
 To examine relationship between customers and hotels in the hotel industry of Malaysia
 To identify factors and determinants affecting customer satisfaction level in the hotel
industry of Malaysia
 To recommend strategies for mitigating these challenges of customer satisfaction in hotel
industry of Malaysia
3.4 Research Framework
Figure 2: Conceptual Framework
(Source: Created by Author)

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