Service Quality and Customer Satisfaction in UK Hospitality Sector

This report delves into the critical relationship between service quality and customer satisfaction within the UK hospitality sector, with a specific focus on Air BNB. The study explores the impact of service quality on customer loyalty and satisfaction, analyzing factors such as room quality, location, booking ease, and customer service efficiency. Through literature review, research methods, and data analysis, the report identifies the importance of service quality in ensuring customer retention and positive business outcomes. The research addresses gaps in existing literature by investigating how service quality influences customer footfall at accommodation providers like Air BNB in the UK. Findings are discussed and analyzed, leading to recommendations for hospitality businesses, including Air BNB, to enhance service quality and improve customer satisfaction and loyalty. The report highlights how businesses can meet customer expectations and ensure long-term success.

Running head: SERVICE QUALITY AND CUSTOMER SATISFACTION
Service Quality and Customer Satisfaction
Name of the Student
Name of the University
Author Note

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Table of Contents
1. Chapter 1 - Introduction...........................................................................................................2
1.1. Background Overview: About Service Quality and Customer Satisfaction in the
Hospitality Sector in the UK........................................................................................................3
1.2. Problem Statement............................................................................................................5
1.3. Research Aims and Objectives.........................................................................................5
1.4. Research Questions...........................................................................................................6
1.5. Research Hypothesis.........................................................................................................6
2. Review of Literature.................................................................................................................8
2.1. Gaps in the Review of Literature....................................................................................14
3. Chapter 3 – Research Methods...............................................................................................15
3.1. Research Philosophy.......................................................................................................15
3.2. Research Design..............................................................................................................16
3.3. Data Collection...............................................................................................................16
3.4. Analysis of the Data........................................................................................................17
3.5. Sample Size and Sampling Technique............................................................................17
3.6. Ethical Factors for Consideration...................................................................................17
3.7. Limitations of the Study..................................................................................................19
3.8. Purpose of the Study.......................................................................................................19
4. Chapter 4 – Discussion and Analysis.....................................................................................20

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4.1. Findings of the Study......................................................................................................20
4.2. Discussion.......................................................................................................................28
4.3. Analysis...........................................................................................................................30
4.3.1. Service Quality has a Positive Impact on Customer Loyalty and Satisfaction...........30
4.3.2. Importance of Service Quality for Customer Loyalty and Satisfaction in the
Hospitality Industry...................................................................................................................31
4.3.3. Service Quality impacts Customer Satisfaction and Loyalty for Air BNB Customers
in the UK....................................................................................................................................32
4.3.3.1. Good Quality of the Rooms.....................................................................................32
4.3.3.2. Strategic Location of the Air BNB Homes and Apartments...................................33
4.3.3.3. Easy Booking Facilities...........................................................................................34
4.3.3.4. Efficient Customer Care Services............................................................................34
5. Chapter 5 – Conclusion and Recommendations.....................................................................36
5.1. Recommendations...........................................................................................................37
References and Bibliography.........................................................................................................41

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1. Chapter 1 - Introduction
Ensuring customer satisfaction is paramount for any business enterprise, if it seeks to
ensure customer retention and that too, over the long term (Nunkoo et al. 2019). It is the goal and
objective of every business, be it a large-scale business or a small or medium sized enterprise, to
ensure that customers are fully satisfied and content with the products or services that they have
been sold, as this can ensure that the customers will return again in the future to purchase those
same or related products as offered by that business or at the very least, recommend the business
and its products and services to people they know (Myo et al. 2019). One of the most crucial
ways by which businesses seek to ensure that their customers are as satisfied as possible with the
services they are provided or the products that they are sold is to look into the quality of such
items (Gerdt et al. 2019). Customers are likely to make a repeated purchase of an item if the
quality of the same meets the necessary standards and helps the customer to meet the objectives
or purpose for which that product or service had been procured in the first place. In the
hospitality industry in particular, ensuring service quality is of the utmost importance as this is
what really decides whether or not clients or customers are likely to endorse a certain hotel,
restaurant or guest house, or whether they are likely to criticize it to the extent that it would make
existing and prospective customers never want to have anything to do with that business again
(Thaw and Zulkiffi 2019). Hospitality entrepreneurs and managers need to go out of their way to
make sure that customers are happy with the services that they provided so that they may
generate positive feedback about the same, ensuring good reputation and good business for the
concerned enterprises for a long span of time (Gerdt et al. 2019). This assignment investigates
how service quality plays an important role in ensuring customer satisfaction in the hospitality

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industry with special reference to Air BNB in the UK. The research objectives and aims as well
as the research questions are quite clearly stated, existing literature on the subject of hospitality
and customer satisfaction has been reviewed, the research methods are aptly described, the
findings of the study are discussed and analyzed and the project report concludes with a number
of important recommendations that hospitality enterprises including Air BNB can take into
consideration to ensure service quality and customer satisfaction in the most effective way
possible.
1.1. Background Overview: About Service Quality and Customer
Satisfaction in the Hospitality Sector in the UK
The extent to which customers derive happiness from an existing product or service
depends a lot on the quality of this product or service. A product or service of high quality is
generally something that is free of defects and which is guaranteed to ensure long lasting service
or which can be used over a long period of time without showing any wear or tear or issue
(Nunkoo et al. 2019). When it comes to services in particular, high quality services are generally
those that are rendered in a timely manner, ensuring comfort and relaxation and convenience for
the person who is availing the service. The hospitality industry is one that is based on the
provision of comfort services to customers be it in the form of food, accommodation, taxi or cab
service or all the three put together (Eshetie et al. 2016). People working in the hospitality
industry have to ensure that customers are not given the scope to complain about the services that
they are provided with, as if this does turn out to be the case, the concerned customer may
generate a negative review or comment about the service quality of the hospitality business,
publishing this on platforms that are likely to be accessed by people around the world, and
resulting in negative publicity about the business (Eshetie et al. 2016). In most cases, the

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dissatisfaction of a customer when seen to arise in the domain of hospitality is compensated for
through the provision of deals and discounts on future services or by providing customers with
an outright refund for the inconvenience caused, which in turn leads to a lot of financial loss for
the hospitality business. Hence to ensure customer satisfaction through the provision of high
quality services is something that is imperative for all enterprises, especially those that are seen
to function in the hospitality sector (Myo et al. 2019).
The hospitality industry or sector has been undergoing an immense transformation in
recent years, all over the year, and the United Kingdom is no exception. The hospitality scene is
characterized by revolutionary changes, with hotels and guest houses and even hostels for that
matter, not being of the same type and design that they were before (Gerdt et al. 2019). The
hospitality sector today is also characterized by the emergence of novel forms of
accommodation, a well-known example in this respect being that of Air BNB. Air BNB is a
business that allows customers to avail home stays, putting them up at lavishly decorated and
furnished homes or apartments, and charging them a fee that is far less than what customers
would have to pay had they put up at a regular hotel or a guest house (Thaw and Zulkiffi 2019).
There is a catch here of course. Air BNB does not provide the same services that a hotel does. It
does not offer house-keeping facilities, nor does it offer room service or in room dining or
wakeup call services for that matter. Customers simply get to book the accommodation, and are
provide with certain rooms, or an entire house or apartment for their stay, depending on their
accommodation needs and requirements (Myo et al. 2019). The fact that Air BNB allows
customers to avail comfortable, clean and well-furnished accommodation at cost-effective rates
has led travelers around the world to make more extensive use of Air BNB services in the place
of hotels and guest houses, especially budget travelers and backpackers (Myo et al. 2019).

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Air BNB has been functioning in the United Kingdom for quite some time now and has
managed to acquire a name for itself over here. The United Kingdom is one of the most popular
travel destinations in the world and it receives travelers from all corners of the globe, all around
the year, for business and for leisure (Gerdt et al. 2019). Air BNB is seen to run its operations
across the length and breadth of all the three countries that fall within the purview of the United
Kingdom be it England, Wales or Scotland, with customer footfall being quite high in the
summer months, the summer being a peak business season for the travel, tourism and hospitality
industry (Gerdt et al. 2019).
1.2. Problem Statement
Existing literature on the subject of service quality has a lot to say about how service
quality is vital for all businesses, and how it needs to be ensured at all cost. The literature does
not however point out to the ways by which service quality can specifically influence or have an
impact on the satisfaction that is experienced by customers and that too in the hospitality
industry in the UK. Neither does the literature mention anything about how service quality
maybe influencing customer footfall, if at all, at accommodation destinations like Air BNB in the
UK. This gap in the literature will be adequately addressed in the current investigation that is
being undertaken on the subject.
1.3. Research Aims and Objectives
The main objectives and aims of this project happen to be as follows -
 To assess the importance of service quality in ensuring customer satisfaction and loyalty
 To understand how service quality influences customer loyalty and satisfaction in the
hospitality industry

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 To determine the ways by which service quality impacts customer loyalty and customer
satisfaction for customers who avail Air BNB services in the UK
 To recommend the ways by which Air BNB and other hospitality businesses in the UK
can look into the matter of service quality, to ensure customer satisfaction and loyalty
over the long term
1.4. Research Questions
The primary questions that are to be addressed by this study are as follows –
RQ 1 – What is the important role that is played by service quality in ensuring customer
satisfaction and loyalty?
RQ 2 – How does service quality influence customer satisfaction and loyalty in the hospitality
industry?
RQ 3 – What are the ways by which service quality can have an impact on customer loyalty and
customer satisfaction for customers who are seen to avail Air BNB services in the UK?
RQ 4- What are the measures that can be taken by Air BNB and other hospitality businesses in
the UK for looking into the matter of service quality in order to ensure customer satisfaction and
customer loyalty in the long term?
1.5. Research Hypothesis
The research hypothesis for testing is as follows –
Hypothesis 1 – Service quality has an impact on customer satisfaction and customer loyalty in
the hospitality sector in the UK

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Hypothesis 2 – Service quality has no impact on customer satisfaction and customer loyalty in
the hospitality sector in the UK

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2. Review of Literature
Oh and Kim (2017) have undertaken research on the subject of service quality and customer
satisfaction, arguing that the provision of quality services can have a serious and definite impact
on how happy customers are with the services they are provided. The research has been
undertaken in the context of the tourism industry, and an attempt has been made on the part of
the researchers to compare customers who have not received quality services with those who
have. In the process of doing so, the researchers have pointed out to the crucial important of
service quality and the need to look into this aspect by businesses. In the view of Oh and Kim
(2017) a business has to make the concerted effort that is necessary to engage in the retention of
customers and this in their opinion is by no means an easy job to perform. The tastes and
expectations of customers are seen to vary quite greatly depending on the age of the customer
and the nature of the travel that they appear to be undertaking. According to Oh and Kim (2017)
with respect to the tourism industry in particular, preferences and needs are evolving on a
continuous basis and it is necessary for businesses to keep up with the latest trends. Only then, as
argued by Oh and Kim (2017) can businesses do a successful job of meeting the needs and
requirements of customers and in the process, ensure customer satisfaction and even loyalty.
Minh et al. (2016) have studied the relationship that is seen to exist between customer
satisfaction, customer loyalty and service quality with the study being carried out in the context
of the retail banking sector in the country of Vietnam. Service quality as argued by Minh et al.
(2016) is something that businesses definitely need to look into if they want to establish
competitive advantage or a competitive edge over their rivals in the industry. It is stated by the
researchers that aspects such as the quick and timely turnaround of customer requests and

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demands and the provision of accurate services are what can go a long way in ensuring customer
satisfaction with services that are provided in the retail banking sector. This in turn is something
that will mediate the level of customer loyalty that is shown to the services that are offered by the
retail banking sector in Vietnam. According to Minh et al. (2016), the more satisfied customers
are, the more likely will they be to make use of banking services. Dissatisfied customers may
refrain from patronizing the bank any further and in the worst case scenario they may decide to
close their accounts with the bank. This is not something that any bank or financial institution
can afford, especially on a large scale, which is why argue Minh et al. (2016), it necessary for
banking officials to ensure the provision of quality and timely services for the benefit of
customers. This will have a deciding role to play in ensuring customer loyalty and customer
retention by the bank.
Farooq et al. (2017) have conducted detailed and systematic research on the impact that
service quality can have on the matter of customer satisfaction with special reference to
Malaysian Airlines, the national carrier of the country of Malaysia. It is quantitative research that
has been carried out on the part of the researchers with a number of structural models being used
to assess and investigate the subject matter. The results of the study reveal that performance of
airline staff and the rendition of airline services in general have an invariable impact on how
happy and satisfied that the customers are with the services that they are offered. Most of the
respondents who were subjected to analysis demonstrated that their level of satisfaction with
services offered by Malaysian Airlines were based on how timely the flights were, and the
quality of the inflight services that were made available to them. In conclusion, it is argued by
Farooq et al. (2017) that Airline officials have to take all the steps that are necessary to look into
the wellbeing of passengers not only when they are inside of the aircraft and when the flight is in

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progress but also at the time that they are waiting to board a flight, in the airport, or when they
have landed at their desired destination and are waiting for their baggage and other essentials to
arrive. They also state that the varied dimensions or aspects of service quality need to be taken
note of by airlines officials in order for them to be able to address the matter in the best possible
way.
Hapsari et al. (2016) have conducted research on the mediating role that can be played by
perceived value when it comes to the relationship that is seen to exist between customer
satisfaction and service quality. The study has been undertaken with reference to the case of
Indonesian Airlines. It is argued by Hapsari et al. (2016), that the airline industry in the
Southeast Asian region as a whole is one that is characterized by a great deal of competition.
There is plenty of rivalry in this domain and airline companies need to keep up with the latest
trends in customer satisfaction and care in order to be ahead in the game and the same holds true
for an airline company as well-known as Indonesian Airlines. According to Hapsari et al. (2016),
it is imperative for a company like Indonesian Airlines to look into the matter of service quality,
so that customers are fully content and satisfied with the onboard and off-board services that they
are offered by the company. By making sure of the fact that customers are served their meals and
other essential items on board at the right time, by ensuring that the flights are comfortable and
relaxing and that they take off on time as well, the company can go a long way in keeping its
clients happy and ensuring their satisfaction for as long as possible.
The behavioral intentions of transit passenger and the extent to which this is influenced
by the services that are offered by airlines companies has been researched upon by Ona et al.
(2015). In the view of the researchers, transit passengers are capable of behavior well or
abominably during the course of their transit and both service quality as well as customer