Understanding hotel re-patronage intention: Application of customer equity

Esther Lew Kim, Purdue University

Abstract

Customer's re-patronage intention to hotel has been attained a considerable amount of interest by both of academia and industry since retaining customer is more efficient than attracting new customers. Many efforts have been made to determine the factors inducing customer's re-patronage, and the model of perceived quality – satisfaction – behavioral has been centered in related research. However, perceived quality and customer satisfaction are likely to be affected by customer's feelings at the moment of purchase. Thus, the long-term based evaluation, which may be consistently assessed by customer, are required for better understanding of re-patronage intention. Several researchers have asserted that customer's re-patronage can be attained when customers perceive their transaction with the hotel is valuable through the complex concept of market exchange. Since this market exchange involves various values that customer may perceive over several transactions, the comprehensive concept of customer value, which embraces several customer's perceived values at a time, is required to represent the long-term based evaluation. Thus, the current study proposed the extended model of perceived quality – satisfaction – behavioral intention by adopting the concept of customer equity to provide better understanding of re-patronage intention to hotel. Accordingly, the current study investigated the relationships among perceived quality, satisfaction, customer equity drivers (value equity, brand equity, and relationship equity). A structural equation modeling technique was utilized to test the proposed model. The findings of this study supported the both of the existing model of quality – satisfaction – behavioral intention, and the extended model which adopted the customer equity drivers. Specifically, satisfaction, which is affected by perceived quality, significantly influenced customer's re-patronage intention; all three customer drivers also have significant and positive impacts on customer's re-patronage intention. While the direct effect of satisfaction was the most salient construct among the constructs directly influencing customer's re-patronage intention, the total effect of perceived quality was the strongest after considering both of direct and indirect effects. The total effect of value equity, which can be enhanced by the high level of perceived quality, was the strongest among three customer equity drivers. The results of the study emphasize the role of perceived quality, suggesting that the high level of short-term and long-term evaluations can be obtained through the enhanced perceived quality. This study is theoretically and managerially meaningful to the service marketing literature. It addresses the importance of perceived quality and customer equity drivers in an inclusive service delivery context, while providing the theories of customer equity which is a novel concept in the field of hospitality. Limitation and the suggestions for the future study are also discussed.

Degree

M.S.

Advisors

Jang, Purdue University.

Subject Area

Management

COinS