Analysis of Factors Affecting Customer Retention Practice in the Hotel Industry
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Date
2015-05
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Addis Ababa University
Abstract
Customer retention has been the choice of many companies owing the fact that, it generates more profit by reducing the cost incurred in acquiring new customers. Moreover, customer retention plays a vital role in increasing customer base through positive word of mouth. This implies, customer retention is beyond satisfying and maintaining existing customers. Therefore, effort is required from companies to upgrading customer retention strategies. Hence this study aims at analyzing the factors that influence customers to stay loyal and investigate the relationship between customer satisfaction, service quality, price perception, customer trust, brand image and customer retention. A questionnaire survey was used to collect the primary data and the population of the study comprises of all the individuals who are customers of selected four star hotels in Addis Ababa for the period of the data collection which is from April 1 to April 30.Ten hotels has been selected using simple random sampling technique and a sample of 384 respondents were taken using purposive sampling technique and methodologies like correlation, multiple regression and ANOVA are used in the research. The result of correlation analysis shows moderate and high relationships between customer satisfaction, service quality, price perception, customer trust, brand image and customer retention. However the multiple regression result indicates that customer satisfaction, service quality and price perception to have a significant positive effect on customer retention. On the other hand the study reveals the absence of significant relationship between customer trust and brand image. Of the five factors service quality explains the change in customer retention more strongly followed by customer satisfaction and price perception respectively. The one way ANOVA illustrates the absence of significant difference between business customers and those who use the hotel service for entertainment purposes. This current study has its own limitation since this research is only conducted in Addis Ababa it is difficult to generalize
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customer satisfaction, service quality, price perception