The Importance of Good Service from Customer Viewpoint in Luxury Hotels in Indonesia

The aim of the research is to determine the importance of good service from customer viewpoint in luxury hotels in Indonesian market. Issues in terms of service have been identified for the five star hotels in Indonesian market because it is proposed that the hotels are unable to consider the viewpoint of the customers in terms of service. The customers have complained that the employees do not act promptly and lack empathetic behavior while communicating with them. Additionally, the employees of the luxury hotels in Indonesian market lack assurance and reliability. In spite of being luxurious in nature, the infrastructure and designs are not up to the standard that would ensure customer satisfaction. Investigating the importance of good service quality from customer viewpoint is significant because this provides an opportunity to know what according to the customers is termed as a good service quality. The research will also provide an opportunity to identify the main issues that the luxury hotels in Indonesia market encounter while taking into account the viewpoint of the customers and the impact it has on the level of customer satisfaction.

Running head: DISSERTATION
The Importance of Good Service from Customer Viewpoint in Luxury Hotels in Indonesia
Name of the Student:
Name of the University:
Author’s Note:

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Acknowledgement
Thank you to all of those who have helped listened and encouraged me throughout this study. I
am indebted to my supervisor ……………………. whose guidance, advice and patience have
been immeasurable. My sincere thanks to all members of the…………… [Mention your
university/college name], both staff and students, whose continuous support have made this
thesis possible.
I would like to thank all of the participants in the study: students, teachers and Local Education
Authorities, for the time and help given throughout. Without their participation, this research
would not have been possible. In this context, I am also thankful to them, whose research work
helped me to execute this paper well.
Finally, I thank my family, without whom this thesis would not have been started or completed!
Your encouragement and support have never faltered; thank you.

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Abstract
The aim of the research is to determine the importance of good service from customer viewpoint
in luxury hotels in Indonesian market. Issues in terms of service have been identified for the five
star hotels in Indonesian market because it is proposed that the hotels are unable to consider the
viewpoint of the customers in terms of service. The customers have complained that the
employees do not act promptly and lack empathetic behavior while communicating with them.
Additionally, the employees of the luxury hotels in Indonesian market lack assurance and
reliability. In spite of being luxurious in nature, the infrastructure and designs are not up to the
standard that would ensure customer satisfaction. Investigating the importance of good service
quality from customer viewpoint is significant because this provides an opportunity to know
what according to the customers is termed as a good service quality. The research will also
provide an opportunity to identify the main issues that the luxury hotels in Indonesia market
encounter while taking into account the viewpoint of the customers and the impact it has on the
level of customer satisfaction.
Positivism philosophy, deductive approach, descriptive design and survey research strategy, all
of which have proved to be effective for the effective completion of the research investigation.
The technique of primary data collection and that of qualitative data analysis has been used by
selecting 200 customers using simple random probability sampling technique.
Customer satisfaction is positively associated with the five dimensions of service quality in hotel
industry, namely, tangibles, reliability, responsiveness, assurance and empathy. The following
statement can be made because the co-relation values obtained lies between 0 to +1. the values of
the co-relation analysis that good service quality in terms of tangibility, reliability,

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responsiveness, reliability and empathy determines the level of customer satisfaction for luxury
hotels in the Indonesian market. The gap scores indicate that the customers feel that the luxury
hotels in Indonesian market needs improvement in terms of the five service quality dimensions.
The regression analysis justifies the customers’ perception of improving service quality, as the p-
value obtained between the different dimensions of service quality and customer satisfaction
is .000 that indicates significant differences thereby, justifying that good service quality has an
impact on customer satisfaction and the customers’ perception about improvement in the luxury
hotels in Indonesian market is required for achieving customer satisfaction.

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Table of Contents
Chapter 1: Introduction....................................................................................................................9
1.0 Overview...........................................................................................................................9
1.1 Problem statement...............................................................................................................11
1.2 Research aim........................................................................................................................11
1.3 Research objectives.............................................................................................................12
1.4 Research questions...............................................................................................................12
1.5 Research rationale................................................................................................................12
1.6 Structure of the dissertation.................................................................................................13
1.7 Summary..............................................................................................................................14
Chapter 2: Literature review..........................................................................................................15
2.0 Overview..............................................................................................................................15
2.1 Conceptual framework.........................................................................................................15
2.2 Concept of service quality...................................................................................................16
2.3 Dimensions of service quality.............................................................................................17
2.4 SERVQUAL model of service quality................................................................................19
2.5 Challenges in measuring service quality.............................................................................22
2.6 Concept of customer satisfaction.........................................................................................23
2.7 Factors affecting customer satisfaction...............................................................................24

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2.7.1 Employee behavior.......................................................................................................24
2.7.2 Up-to-date facilities......................................................................................................25
2.7.3 Dependable nature of the hotels...................................................................................26
2.7.4 Individualized services.................................................................................................26
2.7.5 All day accessibility and availability............................................................................27
2.7.6 Successful delivery of promises...................................................................................28
2.8 Luxury hotels of Indonesian market....................................................................................28
2.9 Service quality issues for luxury hotels in Indonesian market............................................30
2.10 Impact of service quality on customer satisfaction............................................................31
2.11 Summary............................................................................................................................32
Chapter 3: Research Methodology................................................................................................33
3.0 Overview..............................................................................................................................33
3.1 Research Outline..................................................................................................................33
3.2 Research Philosophy............................................................................................................34
3.2.1 Justification of the research philosophy.......................................................................34
3.3 Research Approach..............................................................................................................35
3.3.1 Justification of the research approach...........................................................................35
3.4 Research Design..................................................................................................................36
3.4.1 Justification of the research design...............................................................................36
3.5 Research Strategy................................................................................................................37

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3.5.1 Justification of the research strategy.............................................................................37
3.6 Sampling technique and sample size...................................................................................38
3.6.1 Justification of sampling technique and sample size....................................................38
3.7 Data Collection Process.......................................................................................................38
3.7.1 Justification for data collection process........................................................................38
3.8 Data Analysis technique......................................................................................................39
3.8.1 Justification of data analysis technique........................................................................39
3.9 Ethical Considerations.........................................................................................................39
3.10 Accessibility Issues............................................................................................................40
3.11 Summary............................................................................................................................40
Chapter 4: Data analysis................................................................................................................41
4.0 Overview..............................................................................................................................41
4.1 Descriptive analysis.............................................................................................................41
4.1.1 Demographic.................................................................................................................41
4.2 Inferential analysis...............................................................................................................43
4.2.1 Co-relation analysis......................................................................................................43
4.2.2 Gap analysis..................................................................................................................49
4.2.3 Regression analysis.......................................................................................................51
4.3 Summary..............................................................................................................................54
Chapter 5: Conclusion and recommendations...............................................................................55

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5.0 Conclusion...........................................................................................................................55
5.1 Linking with objectives.......................................................................................................56
5.2 Recommendations................................................................................................................58
5.3 Future scope of the study.....................................................................................................59
References......................................................................................................................................61
Appendix 1.....................................................................................................................................68
Survey questionnaire.................................................................................................................68

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List of Figures
Figure 1: Luxury hotels in Indonesia market.................................................................................10
Figure 2: Conceptual framework...................................................................................................16
Figure 3: Change in total room supply in Indonesian market.......................................................29
Figure 4: Five largest hotel markets in Indonesia and growth in classified hotel supply..............30

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Chapter 1: Introduction
1.0 Overview
Effective and excellent service is of utmost significance for the hotels as they are highly
customer centric. Therefore, satisfied customer base for the hotels determines that the hotel is
offering service that is good and satisfactory for them. According to Timm (2014), customers
consider a service to be good when their needs, demands and expectations are fulfilled regardless
of anything. Therefore, the five star hotels should emphasizes in considering the perspectives of
the customers for ensuring that the service provided or offered by them is good. Good service to
the customers help in ensuring customer satisfaction thereby, developing loyal customer base.
The needs and demands of the customers in terms of service are inconsistent and keep on
changing. This makes it difficult for the hotels to know the definition of good service from the
perspective of the customers (Lu et al., 2015). However, it is important for the hotels regardless
of their organizational size, ensure good service for the target audiences. Good service quality
makes the customers feel that they are valued for the hotels. Considering the perspectives of the
customers is significant because this offers the provision of fulfilling the needs and demands of
the customers thereby, satisfying them. Apart from the customer benefits, the luxury hotels are
also benefitted if customer satisfaction is considered. The hotels are able to ensure customer
satisfaction and develop a highly loyal customer base. As a result, the hotels are able to rely and
count on the return on investment irrespective of the market scenario of the hotel industry in
Indonesian market.

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The luxury hotel is defined as the hotels that offer luxurious experience in terms of
accommodation for the customers. However, there is no fixed standard of defining luxury
because four out of the five hotels declare them to be luxurious.
Figure 1: Luxury hotels in Indonesia market
(Source: Jaakkola & Alexander, 2014)
Indonesian market of luxury hotels is composed of Bali, Bandung, Jakarta, Surabaya and
Yogyakarta where customer complaints in terms of service quality has been witnessed that have
affected the level of customer satisfaction negatively.

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For the current research, the significance of good service quality in five star hotels in
Indonesian market are studied by taking into account the luxury hotels of Indonesian market.
Taking into account, this sector helps in determining the impact and significance of good service
quality from customer perspective in ensuring effective, excellent and good service for the five
star hotels in Indonesian market.
1.1 Problem statement
Issues in terms of service have been identified for the five star hotels in Indonesian
market because it is proposed that the hotels are unable to consider the viewpoint of the
customers in terms of service. The first problem or complaint witnessed among the customers in
terms of good service quality is responsiveness of employees upon their visit. The customers
have complained that the employees do not act promptly and lack empathetic behavior while
communicating with them. In case of any query, the employees of the luxury hotels in
Indonesian market lack assurance and reliability. Therefore, customer satisfaction in the luxury
hotels of Indonesian market is affected negatively (Pan & Nguyen, 2015). Second complaint
received from the customers is in terms of the tangible aspects of the luxury hotels of Indonesian
market. Being luxurious in nature, the infrastructure and designs are not up to the standard that
would ensure customer satisfaction. Therefore, the uncertainty in the viewpoint of the customers
makes it difficult to define good service quality according to them (Saarijärvi, Grönroos &
Kuusela 2014).
1.2 Research aim
The aim of the research is to determine the importance of good service from customer
viewpoint in luxury hotels in Indonesian market.

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1.3 Research objectives
The objectives of the research are:
 To understand the concept of good service quality
 To measure the significance of good service quality in five star hotels in Indonesian
market
 To investigate the issues encountered in providing good service quality in five star hotels
in Indonesian market
 To provide suitable recommendations for ensuring good service quality in five star hotels
in Indonesian market
1.4 Research questions
The research questions are:
 What do you mean by good service?
 What is the significance of good service in five star hotels in the Indonesian market?
 What are the issues encountered in providing good service in five star hotels in the
Indonesian market?
 What are the suitable recommendations for ensuring good service in five star hotels in the
Indonesian market?
1.5 Research rationale
Investigating the importance of good service quality from customer viewpoint is
significant because this provides an opportunity to know what according to the customers is
termed as a good service quality. As a result, it will be easy to determine the impact of not
providing good service quality by considering the customer viewpoint and ensuring customer

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satisfaction (Selviaridis & Norrman, 2014). The viewpoint of each customer is different from
one another that make it difficult for the luxury hotels in Indonesia market to understand what
good service for each of them is. The research is significant because this will also help in
analyzing the factors that help in providing good service quality in the the luxury hotels in
Indonesia market (Lusch & Vargo, 2014). As a result, it will be easier in comparing and
contrasting the significance of good service quality by considering the viewpoint of the
customers and ensuring customer satisfaction.
The research will also provide an opportunity to identify the main issues that the luxury
hotels in Indonesia market encounter while taking into account the viewpoint of the customers
and the impact it has on the level of customer satisfaction. After identifying the gaps, the
research will help in finding methods of providing good services quality in the the luxury hotels
in Indonesia market by considering the factors of customer satisfaction in terms of service
quality (Wang, Hsu & Chih, 2014). Hence, the research is significant because the current study
will help in determining the significance of good service quality on customer satisfaction the
luxury hotels in Indonesia market.
1.6 Structure of the dissertation
The entire dissertation is categorized into six chapters that include introduction, literature
review, research methods, data analysis, findings and interpretations, conclusion and
recommendations. As the chapter name indicates, the introduction chapter forms the research
aim and objectives based on the background information, problem statement and research
rationale mentioned in the chapter. For developing the second chapter, similar and relevant
information about the research topic is investigated as well as critically evaluated thereby,
conducting extensive study.

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The third chapter is termed as the research methods that define the different types of
methodological tools that are used while undertaking a study. Each of the methodological tools
are described and justified for being selected for the current study. In the fourth chapter, the
collected data is analyzed by implementing the methods mentioned in the previous chapter. The
analyzed data is further interpreted and discussed by referring and justifying the findings with the
information mentioned in the literature review chapter. Finally, the last chapter concludes the
overall dissertation by highlighting the gap addressed and providing suitable recommendations
for overcoming the gap.
1.7 Summary
Thus, in this chapter, it can be summarized that hotel service are highly customer centric
and the hotels regardless of their organizational size need to emphasize on considering the
viewpoint of the customers. It can be said that considering the viewpoint of the customers help in
ensuring good service for five star hotels in the Indonesian market because this provides an
opportunity to know the customer needs and desires and fulfill them accordingly. Increased
competition is noticed among the five star hotels of the Indonesian market that signifies offering
good service to the customers for gaining competitive advantage. Offering good service to the
customers thereby, results in customer satisfaction that leads to loyal customer base. However,
considering the huge customer base for the five star hotels of the Indonesian market, taking into
account the customer viewpoint is difficult.

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0
20
40
60
80
100
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East
West
North
H1: Reliability
H2: Tangibility
H3: Assurance
H4: Responsiveness
H5: Empathy
Chapter 2: Literature review
2.0 Overview
The literature review section is structured in a way that deeper understanding about the
independent and dependent variables are gathered with the aim of achieving the aim and
objectives of the research. The views and opinions of different authors are mentioned and
analyzed critically in order to develop a quality-enriched study. For this study, good service
quality for luxury hotels in Indonesian market and its impact on customer satisfaction is
analyzed. The service quality for luxury hotels of Indonesian market is studied by referring to the
5 dimensions and SERVQUAL model that would help in determining the customer expectation
and perception and its impact on the level of customer satisfaction.
2.1 Conceptual framework

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Figure 2: Conceptual framework
(Source: Created by the Author)
2.2 Concept of service quality
The quality of the service offered by the business organizations determines the success of
customer centric industry largely. According to Dabholkar (2015), the concept of service quality
highlights the assessment that is undertaken for determining whether the service offered has the
ability of fulfilling the expectations of the customers availing their products and services.
Satisfactory and effective service quality can be ensured by the business organizations by
identifying and addressing the issues promptly and regularly. However, as argued by Bansal and
Taylor (2015), the idea of service quality is highlighted as a contemporary conceptualization that
main agenda is to determine the gap between the expectation and the perception of the
customers. Henceforth, service quality is calculated by the equation (SQ = P - E).
As known, the hotel industry is highly customer centric and the customers extremely
specific about their wants and needs that need to be addressed while they avail the services.
Similar is the case of luxury hotels in Indonesian market where the customers expect good
service quality when they avail the service of the luxury hotels (Dhar, 2015).
It is assumed that the kind of service quality hotel sector should offer are empathetic,
caring and warm. Good service quality for luxury hotels in Indonesian market is expressed and
determined in terms of accommodation, drinks and food that helps in establishing a positive
relationship between the hotels and the customers and ensure customer satisfaction (Yarimoglu,
2014). However, the present situation of luxury hotels in Indonesian market is different; as

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several complaints has been registered and witnessed that is questioning the customer
satisfaction largely.
2.3 Dimensions of service quality
Various dimensions determine successful and effective service quality in the hospitality
sector. Effective service quality is determined by the successful implementation of five
dimensions that includes empathy, tangibles, reliability, responsiveness and assurance (Kitapci,
Akdogan & Dortyol, 2014). While selecting a hotel, the customers have a level of expectation
that they wish to receive when availing the services. However, the service they get is not always
what they expect. Therefore, the aforementioned dimensions of service quality help in
determining the gap between the perception and the expectation of the customers.
Tangibles: Tangibles is one of the five dimensions of service quality that indicates
appropriateness and satisfaction of the quality of service. As mentioned by Thaichon et al.,
(2014), as known, first impression is the last impression; the initial impression of the selected
hotel largely influences the service quality of the respected hotel. The first impression can be
categorized in terms of the physical appearance of the employees, the décor, the interior and the
behavior of the staffs it has been found that customers prefer to avail the services of the hotels
with fancy interior designs, updated technology and well-behaved employees instead of hotels
offering outdated facilities, décor and equipment.
Responsiveness: Apart from the tangibles, being responsiveness is also a crucial dimension of
the service quality. As opined by Sharma (2015), giving prompt response is significant, as this
indicates effective service quality. Responsiveness highlights promptness and spontaneity the
employees show towards the enquiry and request of the customers. The willingness of the

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employees to help the customers regards positive responsiveness. Acting promptly towards the
request and need of the customers makes them feel valued and important for the business
organization. As a result, the service quality is rated high and ensures customer loyalty and
satisfaction. This helps in creating better reputation of the hospitality industry, as the customers’
perception is exceeded.
Assurance: Assurance is another important service quality dimension that ensures improved
customers’ perception. According to Kaura, Durga Prasad and Sharma (2015), assurance
highlights the trust and confidence the customers on the business organizations. The customers
are assured that they will not be provided below standard services and their expectation will not
be compromised. Confidence and trust are two major factors that influence the customers’
perception positively while availing the service of a hotel. Positive customers’ perception helps
in positive word of mouth that helps in attracting more customers in future.
Reliability: Reliability in the hospitality sector is important, as this highlights service efficiency
for the hotels. Reliability indicates that the customers can rely of each aspects and services
offered by the hotel organization. Thus, reliability indicates high quality and superior service
offered by the business organization in the hospitality sector that has been promised. The ability
to keep the promise and offer more than what is promised ensures successful and effective
reliability. Failure to keep the promise questions the reliability of the business organizations in
the hospitality sector thereby, affecting the perception of the customers negatively (Rauch et al.,
2015).
Empathetic: As mentioned, the services in the hospitality sector indicate warmth, care and
empathy. Being empathetic indicates that the hospitality sector is well aware of the needs and

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demands of the customers and is fully drawn towards fulfilling the needs and demands of the
customers. As mentioned by Huang et al., (2014), empathy is service quality helps in developing
positive customers’ perception, satisfied and loyal customers are established.
Therefore, it can be inferred that the luxury hotels in Indonesian market are failing to
emphasize on the five dimensions of service quality that is restricting them in providing good
service quality that is affecting the customer satisfaction negatively.
2.4 SERVQUAL model of service quality
In the hotel industry, SERVQUAL model is highly recommended and popular for
measuring the level of customer happiness and satisfaction. The idea of the model focuses on
analyzing the good service quality from the viewpoint of the customers by finding the difference
between the perception and expectation of the customers (Parasuraman, Zeithaml & Berry,
1985). Satisfactory and effective service quality in the luxury hotels of Indonesian market helps
in building positive customer perception that in turn influences customer satisfaction, loyalty and
retention. The luxury hotels of Indonesian market is highly competitive due to increased number
of luxury hotels offering similar products and services thereby, making flawless and impeccable
service quality even more necessary (Parasuraman, Zeithaml and Berry 1985). The SERVQUAL
model is formulated on the seven gaps that probably exists in the service quality and the formula
of measuring it is “Q = P – E”.
Gap 1: The very first gap in the model is the difference between the expectation and perception
of the customers. The gap is formed due to the difference in the expectation of the customers
because the service standard of the luxury hotels of Indonesian market might differ from what
the customers want while availing the service of the hotels. In addition to, luxury hotels have

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several layers of management that results in ineffective communication. As a result, the higher
management fails to gather deeper insight about the actual desires and needs of the customers.
Similar is the case of the luxury hotels of Indonesian market that fails to gather in-sight about the
customers’ needs and desires thereby, broadening the service quality gap.
Gap 2: The difference between the perception of the management and the specification of the
service is aid to be the second gap. This gap arises due to various reasons such as lack of goal
clarity, commitment issues towards service quality by the employees and unequal task
standardization. Therefore, the customers are left unattended and not important during their visit
to the hotels, as the employees are busy solving their own issues. As a result, the customers’
develop negative perception about the service quality of the hotel. Similar is the case of the
luxury hotels of Indonesian market that has given rise to the second gap, as the employees to
meet customer expectation upon visiting the luxurious hotels.
Gap 3: The difference between the specification and delivery of the service offered by the
luxury hotels of Indonesian market is said to be the third gap. According to this gap, the
employees don not have clarity in terms of the job roles and responsibilities. In addition to, the
employees are unable to fulfill their job roles and responsibilities due to inadequate guidance,
supervision and leadership. As a result, both individual as well as team performance is
questioned thereby, leading to the development of negative customer perception. Similar is the
case of the luxury hotels of Indonesian market that has given rise to the third gap, as the service
quality is compromised due to lack of clarity among the employees in terms of job roles and
responsibilities.

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Gap 4: The difference between the service delivery and external communication is said to be the
fourth gap. At certain instance, the business organization promise out of their reach to the
employees as well as the customers and failure in fulfilling the promise results in broadening the
gap. The employees feel demotivated as the business organization fails to keep their promise that
in turn is reflected in the service they provide to the customers resulting in customer
dissatisfaction and negative customer perception as well. Similar is the case of the luxury hotels
of Indonesian market that has given rise to the fourth gap, as dissatisfied employees has resulted
in the development of negative customers’ perception and customer satisfaction.
Gap 5: The difference between the customer expectation and the service perception gives rise to
the fifth and the most important service quality gap. This gap is solely related to the customers
and justifies the foundation of the SERVQUAL model. Customer perception about the service
does not only depend on the service but extrinsic factors such as competitive advantage and word
of mouth. The aims of the luxury hotels of Indonesian market are to provide distinctive service to
make the customers happy and fulfill their expectation in terms of desires and needs. Unable to
do so results in the customer expectation and service perception gap. Similar is the case of the
luxury hotels of Indonesian market that has given rise to the fifth gap, as they are unable to fulfill
the expectation of the customers in terms of good service quality perception.
Gap 6: The difference between the employee perception and customer expectation is said to be
the sixth gap. Failure in understanding the expectation of the customers has a prompt effect on
the service provided by luxury hotels of Indonesian market thereby, affecting the satisfaction of
the customers negatively. Similar is the case of the luxury hotels of Indonesian market that has
given rise to the sixth gap, as the employees are unable to figure out what the customers expect
in terms of good service and it does not coincide with the perception of the employees.

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Gap 7: The difference between the perception of the employees and the managers gives rise to
the seventh gap. This gap arises due to lack of effective communication between the managers
and the employees due to which the employees do not have a clear idea of what the managers
expects out of them in terms of good service quality. Similar is the case of the luxury hotels of
Indonesian market that has given rise to the seventh gap, as the managers are unable to cascade
information in terms of good service quality to the employees that is prohibiting the employees
to fulfill the needs and desires and affecting customer satisfaction largely.
Hence, it can be inferred that luxury hotels of Indonesian market is unable to provide and
ensure good service quality to the customers due to which customer satisfaction is compromised
and affecting their image in the business sector. Increased complaints in terms of employee
behavior, delivering promise, up-to-date facilities and personalized services in the luxury hotels
of Indonesian market that is affecting the customer satisfaction.
2.5 Challenges in measuring service quality
As the definition of excellent service differs from customers to customers, measuring
service quality is often challenging. According to Mosadeghrad (2014), measuring service
quality is a major issue because it is a result of the judgmental value that includes both the
perception and expectation of the customers. As a conclusive definition of service quality is yet
to be developed, business organizations have focused on the quality of the service offered to the
customers for defining exceptional service quality. From the viewpoint of the customer, service
quality is said to be subjective, as it is dependent on individual interpretation to which the
customers are exposed that makes measuring it even more challenging.

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Service quality is explained with the help of SERVQUAL model that is criticized due to
scarcity of theoretical support. Additionally, the model is also criticized due to the lack of strong
empirical evidence based of service performance (Han et al., 2015). Measuring service quality is
challenging because quality is assessed by focusing on the measures and dimensions whereas
satisfaction is assessed by focusing on the transaction results. Thus, the subjective nature of the
customer expectation and service quality makes service quality measurement difficult and
challenging. However, the present situation of luxury hotels in Indonesian market is different; as
several complaints has been registered and witnessed that is questioning the customer
satisfaction largely.
2.6 Concept of customer satisfaction
Achieving and maintaining customer satisfaction is of utmost significance for the
business organizations. As mentioned by Saeidi et al., (2015), customer satisfaction is defined as
the measure of how services and products offered by a company meet or exceed the expectation
of the customers. However, as argued by Agnihotri et al., (2016), the concept of customer
satisfaction highlights the number of customers whose recorded experience with a company, its
services and products surpass the expectation of the customers. The business sector has become
highly competitive thereby, making it significant for the business organizations of any sector to
have a satisfied customer base. This provides an opportunity to gain competitive advantage and
sustain the fierce competitive market. Similar is the case of luxury hotels in Indonesian market
where the hotels are luxury hotels are unable to surpass the expectation and perception of the
target customers that is affecting customer satisfaction negatively.

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2.7 Factors affecting customer satisfaction
From the aforementioned concept, it can be inferred that customer satisfaction of the
luxury hotels in Indonesian market is necessary, as this would help them to ensure customer
loyalty, identify customer needs, reduce churn, maximize overall revenue, and retain existing
customers as well as attracting new customers (Orel & Kara, 2015). The different factors that
affect customer satisfaction are employee behavior, up-to-date facilities, dependable nature of
the hotels, individualized services, 24/7 services and delivering promises successfully.
2.7.1 Employee behavior
Employees are one of the key internal stakeholders for the business organizations whose
effort and hard work plays a significant role in achieving customer satisfaction. As hotel industry
is highly customer centric, appropriate and suitable employee behavior is highly recommended.
According to Liu et al., (2016), the employees should be extremely polite, patience and show
adequate warmth during the first encounter with the customers. This creates a positive and
satisfied first impression about the employees and the business organization. Creating a positive
first impression is crucial, as this leaves a long-lasting impact on the customers. However, as
argued by Medrano et al., (2016), some customer take the advantage of the warmth and patience
shown by the employees and make unnecessary and unjustified demands that is difficult to
fulfill.
As mentioned by Alhelalat, Ma’moun and Twaissi (2017), giving prompt service is
another aspect of the employee behavior that is highly appreciated and acknowledged by the
customers during their visit. Spontaneous service makes the customers feel that they are highly
significant and valued for the organization thereby, making them satisfied. Similar is the case of

25DISSERTATION
the luxury hotels in Indonesian market where issues in terms of employee behavior has been
encountered that compromised with the satisfaction level of the customers.
2.7.2 Up-to-date facilities
Change is the only constant things and the needs, expectations and desires of the
customers have changed drastically and rapidly over the years. This has made is necessary for
the hotels or the luxury hotels to consider the present needs of the customers and include it as
their facilities while offering them services. In the recent days, the travelers are tech-savvy and
are comfortable using mobile phone apps or mobile website. As mentioned by Chen, Yu and
Batnasan (2014), having WiFi connections for the hotels is necessary and significant because the
tech-savvy travelers are self-sufficient and comfortable for bookings, meetings and conferences.
In addition to, apart from leisure travelers, having secured WiFi connection provides opportunity
for being prepared for business meetings and conferences. Enjoying holiday while experiencing
effortless technology affects customer satisfaction largely, as the customers do not have to
compromise one aspect for enjoying another aspect.
However, as argued by Radojevic, Stanisic and Stanic (2015), offering up-to-date
facilities to the customers also includes services such as babysitting services in request and care
valet and private parking. Going out is pretty natural for the families and the facilities such as of
babysitting opportunity and valet car parking lifts the customer satisfaction experience among
the employees. However, it can be seen that luxury hotels in Indonesian market are failing to
consider the perception of the customers due to which they have been unable to consider the up-
to-date facilities that customers’ expect due to which good service quality is compromised.

26DISSERTATION
2.7.3 Dependable nature of the hotels
Customer satisfaction is highly dependable by the dependable and trustworthy nature of
the business organizations. Similar is the case of the hotel industry, where the customers are
highly satisfied when they feel that they are able to trust and count of the hotel and the services
offered by them. As opined by Ahmed et al., (2014), in order to develop trust within the
customers, it is necessary for the business organizations to ensure safety and security of the
customers. For instance, the hotels need to have operating surveillance cameras so that each
corner of the hotel is watched. In addition to, the hotels should have 24/7 security personals on
duty for ensuring effective security for the customers, the children and belongings. From the
perspective of the customers, safety and security is one of the key aspects they look for while
selecting hotels and influences customer satisfaction.
However, as argued by Han and Hyun (2015), apart from safety and security, the
employees feel hotels to be dependable and trustworthy if emergency services are offered to
them. For instance, medical emergency can happen to anyone and the hotels should have the
provision of providing emergency medical facilities and prevent accidents and fatalities. Luxury
hotels in Indonesian market are no exception to this expectation of the customers where the
perspective of the customers’ highlights medical facilities are must for the ones staying in the
hotel (Dincer & Alrawadieh, 2017).
2.7.4 Individualized services
The service preference and perspective of each customers are highly distinctive and often
creates challenge for the business organizations. Considering the high customer centric nature of
the luxury hotels in Indonesian market, offering individualized service to each customers is
highly challenging yet the luxury hotels make an effort in fulfilling those upon request. As

27DISSERTATION
mentioned by Ding et al., (2017), some individuals have special dietary requirements due to
medical conditions or personal preferences. For example, some individuals prefer gluten free or
dairy free products for meals. Apart from offering healthy and delicious foods to the customers,
hotels offer individualized services for the customers in terms of food specifications.
Considering the customer’s perspectives in terms of food and fulfilling them ensures customer
satisfaction, as they feel valued and obliged towards the luxury hotels.
However, as criticized by Wang and Groth (2014), individualized services such as
wheelchair facilities for disabled customers also affect the level of customer satisfaction.
According to the perspective of the customers, luxury hotels should have facilities for disabled
individuals so that they can travel without being left alone. Luxury hotels in Indonesian market
should also offer individualized services to the customers, as these aspects of the customers’
perception helps in achieving customer satisfaction.
2.7.5 All day accessibility and availability
Customers can ask for services at any point of the time and the business organizations,
such as hotels, should be ready to offer them services without failure. According to George and
Kumar (2014), the hotels should be available for offering 24/7 room services to the customers.
The hotel employees should not refuse offering service to the customers, as this creates a
negative image about the hotel and affects customer satisfaction largely. However, as argued by
John and Roitimi (2014), apart from room services, 24/7 services include requests and
complaints of the customers irrespective of anything. Services and facilities that should be
offered by the hotels according to the perspective of the customers includes sightseeing, car
booking, room service, free access to WiFi, underground garage, specially equipped room for
disabled and permission to bring in pets. According to the perspectives of the customers, luxury

28DISSERTATION
hotels in Indonesian market should offer 24/7 services and facilities to the customers in order to
achieve satisfaction successfully (Dincer & Alrawadieh, 2017).
2.7.6 Successful delivery of promises
The customers are highly particular while selecting specific hotels for their stay.
Customers consider the promises made by the hotels and based on those promises they select
hotels for their stay with the expectation that the promises made will be delivered and fulfilled.
According to Tripathi (2014), promises in terms of discounts and offers such as complimentary
meals should be delivered by the hotels without failure. The perspective of the customers attracts
them towards such promises, as the customers get financial benefits in return if promises are
delivered on time and successfully. Similar is the case of luxury hotels in Indonesian market,
where it is necessary for the luxury hotels to fulfill and deliver the promises that has been made
by them to the customers and achieve customer satisfaction.
2.8 Luxury hotels of Indonesian market
Over the past few years, the tourism industry of Indonesia has increased considerably and
2014 was one of the years that witnessed record-breaking international arrivals. It is estimated,
that Indonesia welcomed 9.4 million international travelers that resulted an increased GDP of
7.2%. Such huge demand of tourism and travelling has resulted in the growth of hotel room
supply and number of classified hotels in the past years. An estimated 756 classified hotels were
opened in Indonesia ranged 2009 to 2014 with a cumulative room count of 77,000. The opening
of new luxurious hotels for combating with the demand of the tourist influx was noticed between
2013 and 2014 (Dincer & Alrawadieh, 2017).

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Figure 3: Change in total room supply in Indonesian market
(Source: Najib & Sosianika, 2017)
The vast majority of the hotel supply growth in the recent years was a result of the
continuously developing budget and economy class of the hotels. The investments in the hotel
sector increased rapidly due to the expanding middle class, growth of Indonesia’s aviation
industry and demand of international and domestic tourism economy.

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Figure 4: Five largest hotel markets in Indonesia and growth in classified hotel supply
(Source: Chu, Tang & Luo, 2016)
Therefore, from the aforementioned data and figures, it can be inferred that the luxury
hotels of Indonesian market have increased number of hotels that has given rise to tough
competition. Because of tough and fierce competition, it is necessary for the luxury hotels in
Indonesian market to ensure good service quality and achieve customer satisfaction.
2.9 Service quality issues for luxury hotels in Indonesian market
The quality of service in the hotel industry is a major concern for hotel businesses
because quality has become a key integrating concept that is emphasized on largely for ensuring
customer satisfaction. According to Liat, Mansori and Huei (2014), the way the guests or the
customers are treated is a major concern in the hotel industry that defines service quality. The
expectation and perception of individual employees differ largely due to distinctiveness in their
opinions and views. This makes treating the customers difficult, as considering the perspectives
of each customer is extremely difficult and challenging in the hotel industry. Therefore, offering
personalized service is not possible to all the customers that results in severe service quality
issues.
However, as argued by Setiawan and Sayuti (2017), the behavior of the employees
serving the customers defines service quality largely and issues in the employee behavior are
commonly witnessed. Lack of empathy, prompt services, patience and effective communication
are common issues in the hotel industry that affect service quality negatively. The customer
complains that they were not attended with proper greetings and warmth upon their visit to the
hotel that affects their level of satisfaction largely. The customers develop a negative opinion

31DISSERTATION
about the hotel and the service they offer that leads to the development of dissatisfaction. In
addition to, lack of up-to-date facilities and additional facilities such as free WiFi connection,
sightseeing offers and lounge facilities for entertainment also defines the quality of service
provided by the hotels. If the hotels are unsuccessful in fulfilling the needs and demands of the
customers in terms of the aforementioned aspects, customer dissatisfaction is evident.
Similar is the case of luxury hotels in Indonesian market where relevant service quality
issues has been witnessed that has led to customer dissatisfaction.
2.10 Impact of service quality on customer satisfaction
As known, service quality is considered as an attitude that is related to the level of
satisfaction for the employees that is derived from the difference due to the existing difference
between the expectation and perception of the customers. According to Khan and Fasih (2014),
the customers feel satisfied when their expectation and perception are fulfilled upon visiting the
hotel. When the customer feel satisfied with the service quality offered to them, it creates a
positive image about the luxury hotel in the eye of the customers. The customers come back to
the same hotel in the future and refer the hotel and their service to others by spreading positive
word of mouth. This provides an opportunity for the hotels to retain customers in future as well
as attract new customers. As a result, customer satisfaction due to good service quality provides
an opportunity for the luxurious hotels in Indonesian market to gain competitive advantage.
However, as argued by Paul, Mittal and Srivastav (2016), if the customers are not given
according to their perceptions, dissatisfaction occurs. If the customers are not happy with the
service they receive when they visit a hotel customer dissatisfaction occurs. Similar is the case of
luxury hotels in Indonesian market, where the hotels should aim towards achieving customer
satisfaction by offering and ensuring good service quality. This will provide an opportunity to

32DISSERTATION
achieve competitive advantage and survive the intense and rapidly growing hotel industry of the
Indonesian market.
2.11 Summary
Therefore, in this chapter, it can be summarized that good service quality is crucial for
the luxury hotels in Indonesian market according to the perception of the customers and plays a
significant role in ensuring and developing satisfied customer base. However, things are not
happening the way it has been expected for the luxury hotels of the Indonesian market. The
industry is witnessing huge complaints from the customers in terms of the quality of the service
that is offered to them upon their visit to the luxury hotels. Such service quality complaints is
affecting the customer satisfaction and needs to be eradicated for the improving their standard in
the hotel sector in Indonesian market.

33DISSERTATION
Chapter 3: Research Methodology
3.0 Overview
This chapter enables us to understand the various different steps that can be under taken
by a researcher in order to ensure the execution of a successful and effective research study. In
this context, it is vital and significant for the researcher to develop a proper and accurate
methodological framework that provides an important insight in to the research philosophy,
approach, design, strategy, sampling size, data collection and data analysis techniques.
Moreover, in order to ensure the quality of the research study, it is important that a proper data
collection technique should also be developed, which has been done in this research investigation
(Hughes & Sharrock, 2016). This chapter also discusses about the different accessibility issues
and the significant research ethics that have been taken in to consideration for the effective
completion of the research study.
3.1 Research Outline
The research has followed the different methodologies of positivism philosophy,
deductive approach, descriptive design and survey research strategy, all of which have proved to
be effective for the effective completion of the research investigation. In accordance with the
research study, the participants for the research study have been chosen with the aid of random
probability sampling technique (Bansal, Smith & Vaara, 2018). The research aims to determine
the importance of good service from customer viewpoint in the luxury hotels in the Indonesian
market. For this purpose, the candidates that have been chosen as a part of the target group are
the 200 customers who avail or have availed the services of the different five stars hotels in the
region Indonesian market. For the effective execution of the research study, the technique of

34DISSERTATION
primary data collection and that of qualitative data analysis has been used. They have proved
effective for gathering all the relevant data and for analyzing this given data to understand the
importance of good service from customer viewpoint in the luxury hotels in the Indonesian
market.
3.2 Research Philosophy
The different types of research philosophy that are in existence are that of pragmatism,
positivism and interpretivism. According to Punch (2013), the positivism philosophy includes
the description and observation for the phenomenon under research investigation from the point
of view of the research aim and research objective. This philosophy also enables the researcher
to undertake and facilitate the utilization of statistical analysis. Moreover, it has been observed
that the collated features of interpretivism and positivism philosophy forms an important part of
the pragmatism philosophy. The use of pragmatism philosophy can hardly be noticed in the
research investigation as this often results in increasing the complexity of the research study.
Interpretivism philosophy aids the researcher in understanding the various differences that exist
among the human beings in the society. It also aids in the proper analysis of such differences
which can be observed.
3.2.1 Justification of the research philosophy
In the opinion of Singh (2015), this research study has been conducted by employing the
positivism philosophy. The use of this philosophy is significant as it allows the researcher to
prove the hypothesis that has been formulated. Moreover, the researcher can describe and
observe the occurrence of each phenomenon from the point of view of the aim of the research as
well as the objectives of the research. Furthermore, the use of this philosophy is justified as the
research study follows a deductive approach. As a consequence, the research is able to

35DISSERTATION
importance of good service from customer viewpoint in the five star hotels in the Indonesian
market. Furthermore, the utilization of the positivism philosophy has allowed the researcher to
observe the various human senses and their opinions in the context of the five star hotels in the
region of the Indonesian market.
3.3 Research Approach
The two different types of research approaches that are in existence in the context of
research study are those of deductive approach and inductive approach. According to Vaioleti
(2016), inductive approach refers to that research approach where different theories and relevant
concepts are formulated based on the various observations that have been made in the research.
The application of the inductive research is considered to be risky in the sense that often times,
incorrect observations can lead to the formulation of consequent incorrect theories and concepts.
Moreover, the inductive approach can leads to the change in the priority of the researcher in the
form of proving the aims of the research and its objectives to that of developing new theories and
concepts (Colorafi & Evans, 2016). On the other hand, deductive approach includes the
deduction of observations from the various existing theories and concepts. Thus, deductive
approach eliminates or at least reduces the probability of developing any incorrect observations
as the researcher has the chance to refer to the already proven and existing concepts and theories
(Nassaji, 2015).
3.3.1 Justification of the research approach
In accordance with the knowledge as mentioned above, deductive approach has been
applied in the course of the research. This follows from the view point that deductive research
approach is most suited in that research study which has employed the positivism philosophy
(Bulmer, 2017). In addition to this fact, the deductive research has allowed the research to

36DISSERTATION
importance of good service from customer viewpoint in the five star hotels in the Indonesian
market by referring to the various concept of consumer feedback its inter linkage to that of good
service. Deductive approach has enabled the researcher to use these theories and concepts to
analyze the information in the literature review section to effective develop the discussion
section of the research study.
3.4 Research Design
The different existing types of research design include those of explanatory, descriptive
and exploratory research designs. Each of these above mentioned research designs are different
from each other due to their unique characteristics. According to Bauer (2014), the very idea of
exploratory research design facilitates the researcher in understanding and exploring the different
issues within the research study. Exploring such issues provide an opportunity to the research to
minimize their impact. On the other hand, explanatory research design aids the researcher in
explaining the occurrence of the different issues and the reason behind them. Explaining such
issues helps the observer to give an in depth analysis of the prevailing issues in the research
study (Merriam & Grenier, 2019). However, it can be noticed that the characteristics of both the
explanatory and exploratory research design forms a part of the descriptive research design.
3.4.1 Justification of the research design
In this research study, the descriptive research design has been employed due to its
benefits. The application of the descriptive research design has proved to the most suitable for
this research study as it allows both the exploration of the different potential issues that a
customer might face with regards to the service provided by a five start hotels and in explaining
the feedback that has so been received (Taylor, Bogdan & DeVault, 2015). This follows from the
fact that in the Indonesian market, there are many five start hotels. As a result, the travelers

37DISSERTATION
staying there are expectant to receive certain good services in lieu of the payment given to the
hotels. As a consequence, the research has been able to understand the different issues that a five
start hotel might face and has also been able to determine the importance of good service from
customer viewpoint in the five star hotels in the Indonesian market.
3.5 Research Strategy
The different existing research strategies are those of survey, interview, case study and
that of action research. The research study enables the researcher to choose an effective action
plan which helps in the offering of a proper direction to the thoughts and efforts of the
researcher. This helps to a great extent in the conduction for the research study. According to
Silverman (2016), action research attempts to provide the results in an effective manner to the
researcher. On the other hand, the case study research enables the researcher to understand the
relationship between the real situations by giving reference to certain similar scenarios. The
research strategy of survey facilitates in the collection of important and relevant data from a
large population. On the other hand, interview research strategy employs the collection of data
from the people through the method of personal communication.
3.5.1 Justification of the research strategy
In this research study, the survey research strategy has been employed. The use of this
research strategy has allowed the researcher to collect the relevant data by providing the
developed questionnaire to a large population of the target group. As a consequence, the
researcher has been able to analyze the data in appropriate terms by understanding the
relationship between good service and customer feedback in the context of the five start hotels in
the Indonesian market. Furthermore, the research strategy of survey has allowed the researcher to

38DISSERTATION
study more than one variable at the same time. However, the details provided by each participant
of the research study have varied which proved to be quite difficult to analyze and synthesize.
3.6 Sampling technique and sample size
The different sampling techniques which are widely in use in the contemporary times in
the context of research are those of random probability and non-probability sampling technique.
Random sampling technique provides an equal opportunity to all the different people of the
target group to be a part of the research study (Villafuerte et al., 2017).
3.6.1 Justification of sampling technique and sample size
In this research study, the random sampling technique has been employed. This flows
from the fact that it has allowed the researcher to select all those customers who have visited a
five star hotel in the Indonesian market. The information provided by them has proved to be
useful in determining the importance of good service from customer viewpoint in the five star
hotels in the Indonesian market. 200 customers have been taken as the sample size those were
surveyed for determining good service quality for the hotels.
3.7 Data Collection Process
The two types of data collection technique are those of primary and secondary. Primary
data collection refers to the process of collecting data firsthand from the people who form part of
the target group under study (Smith, 2015). Secondary data collection technique refers to the data
that is gathered from various sources of books, journals and articles.
3.7.1 Justification for data collection process
In this research study, primary data collection technique has been employed. A total of
100 people have been surveyed who form a part of the target group. This has proved to be

39DISSERTATION
effective for the researcher to determine the importance of good service from customer
viewpoint in the five star hotels in the Indonesian market.
3.8 Data Analysis technique
The two different types of data analysis technique are those of qualitative analysis and
quantitative analysis. In the case of quantitative data analysis, the various figures are taken in to
consideration (Sutton & Austin, 2015). This, the researcher is able to know the number of people
who has given a positive feedback and those who have given a negative feedback. On the other
hand, qualitative analysis is concerned with the quality of the collected data. This includes the
interpretation of the data in detail and supporting it with relevant information.
3.8.1 Justification of data analysis technique
In the course of the research, the technique of quantitative data analysis gas been
employed. This is significant as the researcher has been able to collect data from the various
customers who have formed part of the target group. Their responses have been analyzed in an
objective manner with the help of figures. This has enabled to determine the importance of good
service from customer viewpoint in the five star hotels in the Indonesian market.
3.9 Ethical Considerations
A research can be effectively completed when certain ethical considerations are taken in
to consideration (Ketefian, 2015). One of the most important ethical consideration is that of
maintaining the confidentiality of the data where the identity of the candidates from whom the
data is collected is kept secret. Another important consideration is that of the voluntary
participation for the candidates (Lloyd & Hopkins, 2015). The candidates under investigation
have the freedom to withdraw from the study at any point of time.

40DISSERTATION
3.10 Accessibility Issues
In the course of the research, certain challenges have been faced by the researcher where
one of them was constrains in time. The researcher did not have enough time to conduct a proper
survey where all the relevant customers were taken in to consideration. Moreover, the researcher
had to work in the confines of a limited budget where he could not travel to other parts of
Indonesia in order to get more information.
3.11 Summary
Thus, in this chapter, it can be summarized that this chapter has summed up the different
methods that has been taken up by the researcher for completing the research work successfully.
This chapter has also justified the selection of the different methodologies along with describing
each of the tools briefly.

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Chapter 4: Data analysis
4.0 Overview
This section is developed with the aim of analyzing the data collected through survey.
The survey data collected has been analyzed by using both descriptive and inferential analysis
that helps in calculating the gap score and determining the customers’ perception about good
service quality for luxury hotels in Indonesian market thereby, identifying the needs of
improvement. Using both descriptive and inferential analysis provided an opportunity for the
researcher to conduct an in-depth analysis about good service quality for luxury hotels in
Indonesian market and its impact on customer satisfaction. Thus, it is easy to identify the issues
that hotels face while delivering effective services in terms of the five dimensions and how it
affects the level of customer satisfaction.
4.1 Descriptive analysis
4.1.1 Demographic

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43DISSERTATION
From the demographic analysis, it can be seen that the present section majority of the
respondents for the survey were both male and female customers of the luxury hotels in
Indonesian market aged 21-25 years and 36 years and above those avail the hotel services
annually with an average monthly income of RM 2000-2500. In addition to, the educational
background of the demographics is undergraduate students followed by some of the employed
customers. Parents with the children visit luxury hotels in Indonesian market for relaxation and
leisure purpose away from their hectic and fast pace life. This is reason that demographics
highlight both male and female employed and student customers aged 21-25 years and above 36
years.
4.2 Inferential analysis
4.2.1 Co-relation analysis
A statistical technique that determines the strength of the association between two
variables is termed as co-relation analysis. The value of co-relation analysis ranges between -1 to
+1. If the co-relation value value obtained is 0, then it signifies no association between the
variables. On the other hand, positive association between two variables is indicated, if the co-
relation results obtained lies between 0 to +1. However, on the contrary, negative association
between the variables is indicated, if the co-relation results obtained lies between 0 to -1. Two
variables are said to be strongly associated, if the co-relation results obtained are more than 0.7.
Correlations
Dependent_varia
ble
Tangible_dimensions_expectation Pearson
Correlati
on
.540**
Sig. (2-
tailed)
.000

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N 200
Reliability_dimensions_expectatio
n
Pearson
Correlati
on
.539**
Sig. (2-
tailed)
.000
N 200
Responsiveness_dimensions_expec
tation
Pearson
Correlati
on
.681**
Sig. (2-
tailed)
.000
N 200
Assurance_dimensions_expectatio
n
Pearson
Correlati
on
.641**
Sig. (2-
tailed)
.000
N 200
Empathy_dimensions_expectation Pearson
Correlati
on
.559**
Sig. (2-
tailed)
.000
N 200
Dependent_variable Pearson
Correlati
on
1
Sig. (2-
tailed)
N 200
**. Correlation is significant at the 0.01 level (2-tailed).
The results obtained from the above conducted co-relation analysis highlights positive
association between the five aspects of service quality and customer satisfaction. All the co-
relation values obtained ranges between 0 to +1 thereby, signifying strong association.
The co-relation value obtained between tangible dimension and customer satisfaction
is .540 that signifies positive association, as the value lies between 0 to +1. This means that the
customers expect that luxury hotels in Indonesia should provide up-to-date luxury equipment,

45DISSERTATION
visually appealing physical facilities, have neat and well-dressed employees to service them and
well-maintained interior and exterior of the luxury hotels. This makes the stay of the customers
pleasant and relaxing and the customers are able to connect with the hotels and feel homely
during their stay.
Similar is the case of the luxury hotels in Indonesian market, where good service quality
according to the customers’ perception signifies ensuring up-to-date luxury equipment, visually
appealing physical facilities, have neat and well-dressed employees to service them and well-
maintained interior and exterior of the luxury hotels. Thaichon et al., (2014) mentions in the
literature review mentions that tangibles is one of the five dimensions of service quality that
indicates appropriateness and satisfaction of the quality of service. The customers consider the
first impression as the last impression and the first impression is categorized in terms of the
physical appearance of the employees, the décor, the interior and the behavior of the staffs it has
been found that customers prefer to avail the services of the hotels with fancy interior designs,
updated technology and well-behaved employees instead of hotels offering outdated facilities,
décor and equipment.
The co-relation value obtained between reliability dimension and customer satisfaction
is .539 that signifies positive association, as the value lies between 0 to +1. This means that the
customers expect that luxury hotels of Indonesian market should handle their reservation is
handled efficiently, the rooms are ready as promised, the electronic equipment of the rooms
worked effortlessly thereby, receiving the value for the money that is being paid by them.
Getting reliable service during their stay at the hotel makes the customers feel homely and
relaxed thereby, satisfying them.

46DISSERTATION
Similar is the case of the luxury hotels in Indonesian market, where good service quality
according to the customers’ perception signifies ensuring effective handling of their reservations,
fulfilling the promises made by the hotels while booking such as uninterrupted service of the
electronic equipment. Rauch et al., (2015) in the literature review section mentions that
reliability in the hospitality sector is important, as this highlights service efficiency for the hotels.
Reliability indicates that the customers can rely of each aspects and services offered by the hotel
organization. The ability to keep the promise and offer more than what is promised ensures
successful and effective reliability. Therefore, it is essential for the luxury hotels in Indonesian
market to ensure and offer reliable services to the customers, as this ensures positive customer
satisfaction. As a result, the customers’ perception about good service quality indicates reliable
service during their stay in the hotels.
The co-relation value obtained between the responsiveness dimension and customer
satisfaction is .681 that signifies positive association, as the value lies between 0 to +1. This
means that the customers of the luxury hotels in Indonesian market should ensure prompt
response to the customers by the employees in terms of their query, information, resolving issues
and hassle free check-in and check-out services. Prompt and efficient services by the employees
of the hotel thereby, make the customers feel valued and significant. The sense of importance
among the customers helps in developing positive perception thereby, ensuring customer
satisfaction.
Similar is the case of the luxury hotels of Indonesian market, where good service quality
according to the customers’ perception signifies prompt response to the customers by the
employees in terms of their query, information, resolving issues and hassle free check-in and
check-out services. Sharma (2015) in the literature review section mentions that responsiveness

47DISSERTATION
highlights promptness and spontaneity of the employees shown towards the enquiry and request
of the customers. Giving prompt response is significant because acting promptly towards the
request and need of the customers’ makes them feels valued and is important for the luxury
hotels, as this result in high rated service quality and high customer satisfaction. As a result, this
helps in creating better reputation of the hospitality industry, as the customers’ perception is
exceeded. As a result, the customers’ perception about good service quality indicates responsive
service during their stay in the luxury hotels.
The co-relation value obtained between the assurance dimension and customer
satisfaction is .641 that signifies positive association because the value lies between 0 to +1. This
means that the customers expect the luxury hotels of Indonesian market is trustworthy, safe,
secured and communicating with the employees are polite and secured. Assured service quality
makes the staying experience of the customers in the luxury hotels highly pleasant and relaxed,
as the customers do not have to worry about their security.
Similar is the case of the luxury hotels in Indonesian market, where good service quality
according to the customers’ perception signifies trustworthy, safe, secured and communicating
with the employees are polite and secured. Kaura, Durga Prasad and Sharma (2015) in the
literature review section also states that assurance is another important service quality dimension
that highlights trust and confidence of the customers on the business organizations. The
customers are assured that they will not be provided below standard services and their
expectation will not be compromised. Confidence and trust are two major factors that influence
the customers’ perception positively while availing the service of a hotel. As a result, the
customers’ perception about good service quality indicates assured service to the customers
during their stay in the luxury hotels of Indonesian market and affects customers’ perception.

48DISSERTATION
The co-relation value between empathy dimension and customer satisfaction is .559 that
signifies positive association, as the value lies between 0 to +1. This means that the customers
expect that luxury hotels in Indonesia should have employees those listen to the needs of the
customers carefully, given individual attention and understanding specific needs and convenient
operating hours for all the customers. This makes the customers believe that the employees of the
luxury hotels are empathetic towards themselves thereby, developing positive customers’
perception about good service quality.
Similar is the case of the luxury hotels in Indonesian market, where good service quality
according to the customers’ perception signifies that employees those listen to the needs of the
customers carefully, given individual attention and understanding specific needs and convenient
operating hours for all the customers. In the literature section, Huang et al., (2014) mentions that
services in the hotels indicate warmth, care and empathy. Being empathetic indicates that the
hospitality sector is well aware of the needs and demands of the customers and is fully drawn
towards fulfilling the needs and demands of the customers thereby, developing positive
customers’ perception and resulting in customer satisfaction. As a result, the customers’
perception about good service quality indicates empathetic service to the customers during their
stay in the luxury hotels of Indonesian market and affects customers’ perception.
Apart from highlighting the significance of individual service quality dimensions, the
highest co-relation value obtained is .681 in terms of responsiveness dimension. This indicates
that the luxury hotels in Indonesian market should focus on ensuring responsive service quality
to the customers by ensuring prompt response to the customers by the employees in terms of
their query, information, resolving issues and hassle free check-in and check-out services. As a

49DISSERTATION
result, customers’ perception about good service quality will be developed for the luxury hotels
in Indonesian market.
4.2.2 Gap analysis
The difference between the expectation of the customers and what is being delivered to
them is calculated in SERVQUAL model by calculating the gap. In this section, the gap between
the expectation and perception of the customers for luxury hotels in Indonesian market is
calculated. The gap score obtained for each service quality dimension indicates each of the
service quality dimensions that need to improve for the luxury hotels in Indonesian market.
From the below table, it can be inferred that luxury hotels in Indonesian market have
failed to fulfill the expectation of the customers in terms of the individual service quality
dimension and needs improvement.
From the gap score obtained in the tangible dimension of service quality for the luxury
hotels in Indonesian market highlights that attributes of tangle dimensions are fulfilled
appropriately due to which the expectation of the customers are not fulfilled. The co-relation
values obtained indicates positive association between tangible dimension and customer
satisfaction. However, the gap score reveals that luxury hotels in Indonesian market have failed
to use up-to-date equipment, visually appealing physical facilities, interior and exterior design of
the hotels to a certain extent that needs further improvement.
The gap score obtained in the reliability dimension of service quality for the luxury hotels
in Indonesian market highlights that the hotels are failing in handling the reservations efficiently,
providing uninterrupted electronic services and delivering the customers that is being promised
thereby, giving the value for the money paid by them. The gap score indicates that the luxury

50DISSERTATION
hotels in Indonesian market need to be more active and prompt in offering reliable service to the
customers. As a result, the customers’ perception about good service quality will be developed
for the luxury hotels and the customers will be able to achieve customer satisfaction.
Dimensions
Expectation Perception
Mean
Std.
Deviatio
n Mean
Std.
Deviatio
n Gap
Tangible_dimensions 4.4200 .59613 4.46 .678 0.04
Reliability_dimensions 4.4100 .59470 4.41 .620 0.00
Responsiveness_dimensio
ns
4.3725 .56488 4.35 .671
-0.02
Assurance_dimensions 4.4550 .54953 4.42 .621 -0.04
Empathy_dimensions 4.3500 .67808 4.40 .716 0.05
The gap score obtained in the responsiveness dimension of service quality for the luxury
hotels in Indonesian market indicates that the hotels are failing to provide prompt service to the
customers that is resulting is delayed service to the query, issues and information made and
asked by the student. As a result, the customers are developing a feeling of being less valued and
insignificant for the hotels and develop the perception that hotels only care about the money and
not the expectation of the customers. As a result, the customers feel that the hotels are not
delivering that is promised by them during the time of booking. Therefore, customers’ perception
about good service quality in luxury hotels in Indonesian market signifies that the hotels should
offer and ensure responsive while providing service.
The gap score obtained in the assurance dimension of service quality for the luxury hotels
in Indonesian market indicates that the luxury hotels are failing to offer and provide assured
services to the customers. This indicates that the luxury hotels are not offering trustworthy, safe
and secured services to the customers that are affecting their perception about good service

51DISSERTATION
quality. Customer complaints have been received in terms of safety while transacting with the
employees and safe and secured environment while staying. As the customers’ complaints are
remaining unattended for long, the customers are feeling insignificant and undervalued that is
having a negative impact on the level of customer satisfaction. Therefore, customers’ perception
about good service quality in luxury hotels in Indonesian market signifies that the hotels should
offer and ensure assurance while providing service.
The gap score obtained in the empathy dimension of service quality for the luxury hotels
in Indonesian market indicates that the luxury hotels are failing to offer and ensure empathy
while providing services. The employees are not listening to the needs of the customers carefully
and not giving individualized services by considering individual needs. Due to such an attitude,
the customers are developing the perception that they are not wanted by the luxury hotels and the
hotels are more interested in making money rather than fulfilling the needs and expectations of
the customers. Therefore, customers’ perception about good service quality in luxury hotels in
Indonesian market signifies that the hotels should offer and ensure empathy while providing
service to the customers.
4.2.3 Regression analysis
In a statistical test, no significant difference is highlighted in the null hypothesis. If the
results obtained for the p-value is less than 0.05, then null hypothesis is rejected by indicating
significant difference between the independent and dependent variable. On the other hand, if the
p-value is more than 0.05, then the null hypothesis is accepted thereby, indicating no significant
difference between the independent and dependent variables.

52DISSERTATION
Model Summary
Model R R Square Adjusted R
Square
Std. Error of
the Estimate
1 .745a .555 .544 .40221
a. Predictors: (Constant),
Empathy_dimensions_expectation,
Tangible_dimensions_expectation,
Reliability_dimensions_expectation,
Responsiveness_dimensions_expectation,
Assurance_dimensions_expectation
ANOVAa
Model Sum of
Squares
df Mean
Square
F Sig.
1
Regression 39.171 5 7.834 48.428 .000b
Residual 31.384 194 .162
Total 70.555 199
a. Dependent Variable: Dependent_variable
b. Predictors: (Constant), Empathy_dimensions_expectation,
Tangible_dimensions_expectation, Reliability_dimensions_expectation,
Responsiveness_dimensions_expectation, Assurance_dimensions_expectation
From the regression analysis, it can be seen that the p-value is .000 that is less than 0.05.
This indicates that each dimension of service quality has an impact on customer satisfaction of
the luxury hotels in Indonesian market. Therefore, the luxury hotels in Indonesian market should
ensure that all the five service quality dimensions are fulfilled for achieving customer
satisfaction successfully.
Indonesian market of luxury hotels is composed of Bali, Bandung, Jakarta, Surabaya and
Yogyakarta where customer complaints in terms of service quality has been witnessed that have
affected the level of customer satisfaction negatively. Over the past few years, the tourism

53DISSERTATION
industry of Indonesia has increased considerably and 2014 was one of the years that witnessed
record-breaking international arrivals. Such huge demand of tourism and travelling has resulted
in the growth of hotel room supply and number of classified hotels in the past years. 756
classified hotels were opened in Indonesia ranged 2009 to 2014 with a cumulative room count of
77,000. The opening of new luxurious hotels for combating with the demand of the tourist influx
was noticed between 2013 and 2014. Considering the tough competition among the luxury hotels
in Indonesian market, it is important to ensure positive customers’ perception about service
quality. However, issues in the luxury hotels in Indonesian market have been noticed that has
questioned the present service quality. The way the guests or the customers are treated and the
behavior of the employees serving the customers are major concern for the luxury hotels in
Indonesian market. The customers are developing negative opinion about the service quality
offered by the luxury hotels that is hampering the level of customer satisfaction.
Therefore, it can be said that service quality issues are affecting the customers’
perception and satisfaction. The theoretical information presented in the above section justifies
the results obtained from the regression analysis because the p-value is .000. It is necessary for
the luxury hotels in Indonesian market to overcome the service quality issues, as it is giving rise
to customer satisfaction issues. If the perception of the customers not fulfilled, dissatisfaction
occurs that affects the image of the hotels negatively. Based on the identified service quality
issues, it can be inferred that the luxury hotels in Indonesian market should develop suitable
strategies for improving it. This will provide an opportunity to achieve competitive advantage
and survive the intense and rapidly growing hotel industry of the Indonesian market.

54DISSERTATION
4.3 Summary
Thus, in this chapter, it can be summarized that the level of customer satisfaction is
positively associated with the five dimensions of service quality in hotel industry, namely,
tangibles, reliability, responsiveness, assurance and empathy. The following statement can be
made because the co-relation values obtained lies between 0 to +1. Therefore, it can be said from
the values of the co-relation analysis that good service quality in terms of tangibility, reliability,
responsiveness, reliability and empathy determines the level of customer satisfaction for luxury
hotels in the Indonesian market. Apart from the co-relation analysis, the gap analysis has also
been conducted that helped in determining the difference between the expectations and
perceptions of the customers in terms of service quality that is offered in the luxury hotels in
Indonesian market. The gap scores indicate that the customers feel that the luxury hotels in
Indonesian market needs improvement in terms of the five service quality dimensions.
Minimizing the gaps would help in ensuring customer satisfaction for the luxury hotels in
Indonesian market.
The regression analysis justifies the customers’ perception of improving service quality,
as the p-value obtained between the different dimensions of service quality and customer
satisfaction is .000 that indicates significant differences thereby, justifying that good service
quality has an impact on customer satisfaction and the customers’ perception about improvement
in the luxury hotels in Indonesian market is required for achieving customer satisfaction.

55DISSERTATION
Chapter 5: Conclusion and recommendations
5.0 Conclusion
In this investigation, it can be concluded that good service quality is highly significant
according to customers’ perception in luxury hotels in Indonesian market. As known from the
information presented in the previous chapters of the study, customers are one of the significant
external stakeholders for any business organization that determines the success and profit of that
firm. Hotel industry in highly customer centric and the success of the hotels is determined by the
number of satisfied customers the hotels possess. Therefore, it is important for the hotels
regardless of their size and structure to ensure effective and good service quality thereby,
achieving customer satisfaction. Similar is the case of the luxury hotels in Indonesian market,
where the luxury hotels need to ensure good service quality in order to achieve customer
satisfaction. Issues have been identified in terms of the five dimensions of service quality in the
luxury hotels in Indonesian market. The researcher has discussed the potential reasons that have
led to service quality issues for the luxury hotels in Indonesian market thereby, investigating its
impact on the level of customer satisfaction. Therefore, undertaking the research allowed the
researcher to determine the gaps that resulted in service quality issues in luxury hotels in
Indonesian market thereby, investigating its impact on customer satisfaction.
The data analysis also shows that the five dimensions of service quality has positive
association with customer satisfaction thereby, signifying that luxury hotels in Indonesian market
should ensure good service quality for achieving customer satisfaction. The regression analysis
conducted also highlights the significant difference to be .000 thereby, signifying that service
quality has an impact on the level of customer satisfaction. Therefore, the luxury hotels in

56DISSERTATION
Indonesian market should ensure good service quality from customers’ viewpoint that would
help them in achieving customer satisfaction effectively.
5.1 Linking with objectives
Objective 1: To understand the concept of good service quality
Objective 1 is linked with literature review section 2.2 and 2.3. Both the sections of the
literature review highlights the views and opinions of service quality from different authors
along with shedding light on the dimensions of service quality that matters the most for the
customers. This helps in developing deeper understanding about the significance of service
quality that luxury hotels should consider while ensuring good service quality. On the other
hand, the entire survey questionnaire has been developed on the five major dimensions that
define service quality so that the importance of good service quality in the luxury hotels in
Indonesian market can be determined.
Objective 2: To measure the significance of good service quality in five star hotels in
Indonesian market
Objective 2 is linked with literature review sections 2.3 and 2.4. The information
presented in these sections of the literature review helps in understanding the significance of
good service quality that luxury hotels in Indonesian market should offer in order to satisfy the
customers. These sections indicate that the luxury hotels in Indonesian market should focus on
service quality aspects tangibles, reliability, responsiveness, assurance and empathy that help in
ensuring effective customer satisfaction. On the other hand, the survey questionnaire has been
developed on the 22 SERVQUAL model questions that help in investigating the expectation and

57DISSERTATION
perception of the customers in terms of good service quality for luxury hotels in Indonesian
market.
Objective 3: To investigate the issues encountered in providing good service quality in five
star hotels in Indonesian market
Objective 3 is linked with literature review sections 2.9 and 2.4. Section 2.4 of the
literature review highlights the theoretical background of the potential service quality gaps that
might arise while offering good service. In addition to, section 2.9 of the literature review section
sheds light on the potential issues luxury hotels in Indonesian market face while offering good
service quality. Both the literature review sections complement each other thereby, highlighting
the issues encountered in providing good service quality in luxury hotels in Indonesian market.
On the other hand, the gap between the expectation and perception of the survey questionnaires
developed based on the 22 SERVQUAL model questions helps in identifying the issues luxury
hotels in Indonesian market are encountering while providing good service quality that is
affecting the level of customer satisfaction.
Objective 4: To provide suitable recommendations for ensuring good service quality in five
star hotels in Indonesian market
Objective 4 is linked with literature review section 2.10. This section highlights the
impact of god service quality on customer satisfaction that can be achieved by identifying the
gaps followed by suggesting suitable recommendations. On the other hand, the gap score
calculated from the 22 SERVQUAL model questions about the service quality of luxury hotels in
Indonesian market help in suggesting probable recommendations.

58DISSERTATION
5.2 Recommendations
From the data analysis section, it can be seen that the luxury hotels in Indonesian market
should improve in all the service quality dimensions that can help in achieving customer
satisfaction. The suitable recommendations from improving service quality are furnished below:
Using designer interior
As we are talking about luxury hotels in Indonesian market, it is evident that the
customers visiting are well-aware about eminent interior designers and their work globally.
Therefore, decorating their interior of the hotels by the latest work of the renowned interior
designers will help in improving service quality of the luxury hotels in Indonesian market. The
customers visiting will feel intrigued by the physical appearance of the hotel and connect
themselves well. Therefore, the luxury hotels in Indonesian market can use renowned designers
for decorating their interiors for improving the tangible aspect of the service quality.
Treating guests as VIP
The luxury hotels in Indonesian markets will have to treat individual guests as VIP
because this will make the customers feel significant and valued for the hotels. The luxury hotels
in Indonesian market should provide minimum personalized services to individual customers that
will make satisfy the customers and make them feel important. This will help the customers
develop a positive opinion about the hotels that will facilitate positive word-of-mouth about the
hotel thereby, retaining the customers for the future as well as attracting new customers.
Encouraging communication

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The luxury hotels in Indonesian market will have to encourage the employees to
communicate effectively. The luxury hotels in Indonesian market will have to encourage
effective communication among the existing employees because this will help in clear flow of
information thereby, saving repetitive actions and fulfilling the needs of the customers
effectively. Apart from effective communication among the employees, communication between
the customers and employees should also be encouraged because this will provide an opportunity
for the employees of luxury hotels in Indonesian market to know the exact needs, desires and
demands of the customers and take necessary actions for fulfilling them.
Taking feedback and including them
As known, change is the only constant thing and the needs and demands of the customers
keeps on changing with time. Therefore, in order to ensure customer satisfaction by improving
the service quality, the luxury hotels in Indonesian market will have to take feedback from the
customers at regular interval. This will provide an opportunity for the luxury hotels in Indonesian
market to be aware of the changing needs and demands of the customers in terms of service
quality and their expectations and make adequate effort in fulfilling the expectations of the
customers.
5.3 Future scope of the study
This research mainly emphasizes on the both male and female customers of the luxury
hotels in Indonesian market aged 21-25 years and 36 years and above those avail the hotel
services annually with an average monthly income of RM 2000-2500. The educational
background of the demographics is undergraduate students followed by some of the employed
customers. Therefore, in the future, research can be conducted by focusing on different gender

60DISSERTATION
and age as well as different educational background and average monthly income. This will
provide an opportunity to know the importance of good service quality from the customers’
perception in luxury hotels in Indonesian market. As a result, the mindset and views of another
demographic about the importance of good service quality in luxury hotels van be determined
followed by comparing the difference in the opinions and the reason of the difference.

61DISSERTATION
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Appendix 1
Survey questionnaire
Demographic questions
What is your gender?
Male Female
Which age group do you belong to?
21-25 years 26-30 years 31-35 years 36 years and above
How frequently do you avail the services of luxury hotels?
Monthly Quarterly Annually Never
What is your monthly income (Ringgit Malaysia)?
2000 RM - 2500 RM
2500 RM - 3000 RM
3000 RM - 3500 RM
>3500 RM
How would you best describe your education background ?
Secondary level
Diploma level
Undergraduate
Postgraduate

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Are you a student or employed?
Student
Employed
Objective questions
Main factor Questions
Tangibles Up-to-date equipment luxury hotels of Indonesian market
Physical facilities are visually appealing in the luxury hotels of
Indonesian market
Well dressed and neat employees in the luxury hotels of Indonesian
market
Appearance of the physical facilities were visually attractive in the
luxury hotels of Indonesian market
The interior and exterior of the luxury hotels of Indonesian market
were well maintained
I'm satisfied with the facilities in the hotel
Reliability My reservation was handled efficiently in luxury hotels of Indonesian
market
My guest room was ready as promised in the luxury hotels of
Indonesian market
TV, radio, A/C, lights and other mechanical equipment worked
properly luxury hotels of Indonesian market
I got what I paid for in the luxury hotels of Indonesian market

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The employees of the luxury hotels of Indonesian market were able to
accurately answer my questions
I'm satisfied that the hotel fulfil their responsibility
Responsiveness Employees of the luxury hotels of Indonesian market responded
promptly to my requests
Informative literature about the luxury hotels of Indonesian market
were provided
The employees of the luxury hotels of Indonesian market were willing
to answer my questions
The employees of the luxury hotels of Indonesian market responded
quickly to solve my problems
The employees of the luxury hotels of Indonesian market gave prompt
room services
Check-in and check-out procedures were efficient and fast in the
luxury hotels of Indonesian market
I'm satisfied with the hotel's employees responsiveness towards my
request
Assurance Luxury hotels of Indonesian market were trustworthy
I felt safe when transacting with the employees in the luxury hotels of
Indonesian market
Employees were polite in the luxury hotels of Indonesian market
The luxury hotels of Indonesian market provided a safe and secured
environment

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I'm satisfied with the security that hotels in Indonesia provided
Empathy The employees of the luxury hotels of Indonesian market listened to
my need carefully
The employees of the luxury hotels of Indonesian market gave me
individual attention
The operating hours of the luxury hotels of Indonesian market were
highly convenient
The luxury hotels of Indonesian market has my best interest at heart
The employees of the luxury hotels of Indonesian market understood
my specific needs
I feel satisfied because the hotel give a special attention towards my
personal request

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