The Impact of Destination Image and Perceived Quality on Tourist Loyalty in the Indonesian Tourism Industry

This research was conducted in order to determine both direct and indirect effect of destination image and perceived quality on tourist loyalty through tourist satisfaction. This research implemented survey method, in which a total of 150 respondents participated in this research. Data were collected using questionnaires that were electronically distributed to all respondents. The data then were analysed using Partial Least Squares-Structural Equation Modelling (PLS-SEM) method. Based on the data analysis, it was concluded that both destination image and perceived quality had positive impact on tourist loyalty, either directly or indirectly through tourist satisfaction. 1 RESEARCH INTRODUCTION Indonesia is one of countries which had so many objects or places designated as tourist destination. However, not all of those places were visited by tourists. Furthermore, the rapid development of technology had helped countries to spread the information and promotional activities of its tourism destination quickly and accurately. In terms of its tourism sector, the number of tourists visited Indonesia had increased steadily for the past 15 years. According to the data published by Biro Pusat Statistik (BPS), a number of tourists visited Indonesia had increased, from a total of 195.77 million times in 2001, to 264.34 times in 2016. This trend could help explain the fact that the number of tourists visited Indonesia, either local or international tourists, had increased steadily for the past 15 years. According to Oliver (1999), tourist loyalty could be defined as a strong commitment by customers to re-visit the place or destination that he or she had ever visited before, regardless of whatever condition might hamper that scenario. Tourist loyalty played an important role in making a place as a successful tourism destination since retaining tourists could also be perceived as retaining or even improving the financial condition of a place. Furthermore, the existence of tourist loyalty could also help in indirectly promoting the place to others (for example: when a tourist promoted the place to his/her peers). Figure 1: Number of Visitors/Tourists Visiting Indonesia (2001 – 2016). Previous research by Chiu et al., (2016) had found that tourist loyalty could be affected by destination image and perceived quality, either directly or indirectly through tourist satisfaction. Furthermore, previous research by Jalivand et al. (2014) had found that satisfaction could mediate the relationship between perceived value and perceived quality towards loyalty. Moreover, previous research by Rajaratnam et al., (2015) had found that perceived destination quality could positively predict the relationship between satisfaction and behavioral intentions. Another research by Chen et al., (2011) also concluded that tourist loyalty could be predicted Keni, K. , Oktora, F. and Wilson, N. The Impact of Destination Image and Perceived Quality on Tourist Loyalty in the Indonesian Tourism Industry. DOI: 10.5220/0008488300670075 In Proceedings of the 7th International Conference on Entrepreneurship and Business Management (ICEBM Untar 2018), pages 67-75 ISBN: 978-989-758-363-6 Copyright c © 2019 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved 67 by service quality, either directly or indirectly through place attachment and tourist satisfaction. Hunt (1982) defined destination image as potential customers’ or visitors’ perception towards certain place or destination. In terms of choosing the right place to visit, the image of a place played an important role in influencing tourists or people’s opinion on visiting the place. Destination image could be defined as the reciprocal relationship between tourist and the place of destination, and both sides will gain some advantages from this relationship (Kong et al., 2015). Furthermore, Chiu et al., (2016) also found that destination image is a significant predictor towards tourist loyalty. Moreover, it could also be understood that the success of a destination could be seen from how such a place could create or shape loyalty in the tourists’ mind and heart. In regards with this statement, the high level of loyalty that tourists had towards the place could increase the number of visitors on that place. Beside destination image, perceived quality was also identified as one of factors which could increase the level of loyalty on tourists toward the place. Perceived quality was defined as tourists’ judgement toward the competitive advantages of a place or destination thoroughly (Zeithaml, 1988). Javiland et al., (2014) further argue that perceived quality is an important predictor or factor in affecting tourist loyalty, since tourist’s experience in visiting the place will serve as a main factor in making some consideration on whether or not tourists will visit the place again in the future. Previous research conducted by Yazdanifard and Mercy (2011) had stated that tourist satisfaction could be differentiated into two perspectives, either tourist satisfaction was seen as a result, or tourist satisfaction was seen as a process. If tourist satisfaction was seen as a result, then satisfaction could be perceived as a result generated from customer’s experience in visiting the place, in which it could be learned as how image and perceived quality serve as factors which affect tourist’s psychological state. If satisfaction was seen as a process, then satisfaction could be understood as the evaluation, perception, and psychological process which could alter decision-making process and serve as an important factor in mediating tourist loyalty. Based on the background above, authors would like to uncover the impact of destination image and perceived quality toward tourist satisfaction and tourist loyalty in the Indonesian tourism industry. 2 LITERATURE REVIEW 2.1 Destination Image Destination image played an important role in affecting tourists’ decision making process and their intention to re-visit the place in the future (Baloglu and McCleary, 1999). Furthermore, Zang et al., (2014, p.215) stated that “destination image is generally interpreted as a compilation of beliefs and impressions based on information processing from various sources over time that result in a mental representation of the attributes, benefits, and district influence sought of a destination. ” Furthermore, Day et al., (2012, p. 274) also explain destination image as a “set of associations that people have of the destination”. Kim and Richardson (2003, pp.218) and Pike (2008) further stated that destination image is a “totality of impressions, beliefs, ideas, expectations, and feelings accumulated towards a place over time”. Based on the definitions above, it could be concluded that destination image is a combination of faith and experience about a place which is derived from the experience that tourists had toward that place. 2.2 Perceived Quality Perceived quality had been one of the most discussed topics for the past 20 years. Parasuraman et al., (1985, pp.42) stated that perceived quality “is more difficult for the consumer to evaluate than goods quality. Service quality perceptions result from a comparison of consumer expectations with actual service performance. ” Based on the definition, then perceived quality could be understood as customer’s judgement towards a product which was used or consumed. Furthermore, Zeithaml (1988, pp.3) define perceived quality as “The consumer’s judgement about a product’s overall excellence or superiority. Furthermore, Perceived quality is: a. different from objective or actual quality, b. a higher level of abstraction rather than a specific attribute of a product, c. a global assessment that in some cases resembles attitude, and d. a judgment usually made within a consumer’s evoke set. ” Moreover, Aaker (1991 in Aziz et al., 2012, pp.214) defined perceived quality as “An intangible, overall feeling about a particular brand. High-perceived quality increases the effectiveness of marketing programs, and leads to purchase decisions, position a brand on the perceived quality dimension, provides an opportunity to charge a ICEBM Untar 2018 International Conference on Entrepreneurship and Business Management (ICEBM) Untar