Dissertation: Good Service from Customer Viewpoint in Luxury Hotels

This dissertation investigates the significance of good service quality from the customer's perspective in luxury hotels within the Indonesian market. The research addresses issues in five-star hotels, where customer viewpoints on service quality are often overlooked. The study explores customer complaints regarding employee responsiveness, empathy, assurance, reliability, and the tangible aspects of hotel infrastructure. Employing a positivism philosophy, a deductive approach, a descriptive design, and a survey research strategy, the study collected primary data from 200 customers using a simple random probability sampling technique. The findings reveal a positive correlation between customer satisfaction and the five dimensions of service quality (tangibles, reliability, responsiveness, assurance, and empathy). Gap and regression analyses further support the importance of improving service quality in these hotels to enhance customer satisfaction. The study concludes with recommendations for improving service quality, emphasizing the need for hotels to prioritize customer viewpoints.

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:

1DISSERTATION
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.

2DISSERTATION
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,

3DISSERTATION
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.

4DISSERTATION
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

5DISSERTATION
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

6DISSERTATION
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

7DISSERTATION
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

8DISSERTATION
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

9DISSERTATION
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.

10DISSERTATION
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.

11DISSERTATION
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.