Effect of service quality on customer retention in hotel sector (a case of 5 selected hotels in gambella town, Ethiopia)

Abstract

The success of any organization lies on the availability of customers. So, to achieve customer retention strategy service sectors need to have preparing quality service in any business direction in each and every dimension. The objective of the study was to indicate the effect of service quality on retaining existed customers of the 5 selected hotels in Gambella Regional State at Gambella Town. Therefore, the study tries to designate those effects of the service quality in relation to retention of customers. The study employed descriptive type of crosssectional in time with survey design in addition to quantitative and qualitative type of data was used for the purpose of the study inferential statistics is also considered. In order to collect the primary data the modified service quality model of HOLSERV model were used with in an item of 22 questions of customer perception. This is collected through convenience sampling techniques from the regular customers of those hotels. The total number of questions should be 400 (Cochran, 1963) with confidence level of 95% additionally 4% contingency were added purposively. The collected questionnaires from the respondents were 351 (87.7%) and open ended questions were also attached together. Moreover, 7 questions for testing the effect of customer retention were distributed to support the model questions The SPSS V.20 was also used to process the primary data which were collected from the quantitative parts of the questionnaires. The finding indicated that service quality dimension has positively correlated and they have a strong correlation with that of customer retention. Moreover, to retain existed customers service quality of hotel sectors (tangibility, reliability, responsiveness, confidence and communication) plays a vital role for keeping the profitability of any business by creating retained and loyal customers. Stakeholders be remind that customer oriented market is better that money oriented to generate wealthy maximization instead of profit maximization.