The Relationship between Service Quality and Customer Satisfaction and Retention in Ghana's Luxury Hotels

(ProQuest: . denotes formulae omitted.)IntroductionRationally, every organization would want to achieve its short- and long-term market and financial targets to ensure growth. Growth in an organization is often a reflection of market success, more often in terms of sustainable customer patronage and market share. It is argued that sustainable market success and organizational growth in the services sector is based on customer satisfaction that serves as a foundation of customer loyalty and retention (Gustafsson et al., 2005; and Ganiyu, 2012), where service quality is the root of customer satisfaction (Agyapong, 2011; and Angelova and Zekiri, 2011). Though service quality, customer satisfaction and customer retention are popular topics in marketing literature and are important to managements, in practice, attainment of customer retention is often of a relatively higher priority to organizations owing to its long-term effect on marketing and the organization at large (Gan et al., 2006; and Keiningham et al., 2006). Primarily, efforts to achieve service quality in service organizations are geared towards customer retention.Customer retention is viewed by marketers as the grand result of service quality (Gan et al., 2006; and Angelova and Zekiri, 2011). Invariably, customers' perceived service quality is a precursor to customer retention. Some writers also identify it as a measure of the sustainability of patronage in the market (Kheng et al., 2010; and Keiningham et al., 2014). In this respect, Kheng et al. (2010) contend that customer retention is the final market indicator of success in terms of how sustainable customer patronage is. Practically, improved level of customer retention enhances patronage in the market, and this impacts market performance in the organization. This scenario is confirmed to be characteristic of all service sectors (Osman and Sentosa, 2013; and Msoka and Msoka, 2014), but through a survey of the literature on the subject Liang (2008) found that the hotel sector more strongly relies on customer retention for survival.Generally, empirical studies (Saeed et al., 2011; and Saleem and Raja, 2014) have shown that customer retention is the basis of the growth of hotels. Moreover, customer retention is positively influenced by customer satisfaction (Gan et al., 2006; Keiningham et al., 2006; Saeed et al., 2011; and Saleem and Raja, 2014), where service quality is confirmed a primary driver of customer satisfaction (Gustafsson et al., 2005; and Ganiyu, 2012). In many studies, service quality, customer satisfaction and customer loyalty are confirmed as significant moderators of customer retention (Gan et al., 2006). Evidently, the need for hotels to ensure a high level of customer retention to survive has been strongly acknowledged in the literature. This has been largely done in comparative studies that tend to reflect a stronger effect of customer retention on growth in the hotel sector relative to other sectors.There is a school of thought that service quality, customer satisfaction and customer retention are more sensitive to firm performance in the hotel sector because of the multicultural and multiracial nature of the customers of hotels (Liang, 2008). Unlike a bank which is likely to have a majority of its customers being the native people, hotels often have most or many of their customers who have foreign cultural backgrounds. A situation of this nature makes hotel success and performance more dependent on customer satisfaction and retention relative to other services sectors (Liang, 2008; and Poku and Zakari, 2013). A recent study (i.e., Saleem and Raja, 2014) shows that this evidence is strongly supported in the luxury hotels sector. This is probably because the multi-cultural nature of the customer-base of luxury hotels is stronger.Besides its increasing contribution to GDP, employment and tourism in Ghana (Poku and Zakari, 2013), the luxury hotel subsector is gradually expanding in terms of the number of hotels in it. …