CUSTOMER LOYALTY IN BUDGET HOTEL IN BEIJING, CHINA

Abstract

The hotel industry contributes significantly to Gross Domestic Production. Furthermore, its contribution is increasingly year by year. Out of hotel industry, budget or economic hotels has developed rapidly and profoundly. However, they face the challenge of fierce competition since the number of budget hotels are raising from 2006 to 2016. In addition, the competition from Airbnb also can not be ignored. Under intense competition, it is critically important for budget hotels to remain a sustainable customer loyalty. The research chooses Beijing to determine the factors influencing customer loyalty towards budget hotel since Beijing is not only the capital of China, but also the economic, cultural and military centre of China. Furtherly, the research investigates how service quality with SERVQUAL, switching cost, and perceived value influence customer loyalty towards budget hotel in Beijing, China based on Hanting Hotel. Home Inns, Super 8 and 7 days in Dong Cheng, Xi Cheng, Chao Yang, Hai Dian and Feng Tai districts. In addition, the research is also aimed at investigating the prominent factor that can influence customer loyalty over budget hotel in Beijing, China. There are 200 customers of these four hotels being selected for the study. In terms of service quality, by use of the SERVQUAL model through survey questionnaire and interviews, the study reveals that “tangibility, reliability, responsiveness and empathy” have a significantly positive influence on customer loyalty towards budget hotel in Beijing, China. However, this is significantly negative relationship between “assurance” and customer loyalty over budget hotel in Beijing, China.
Moreover, perceived value can positively contribute to customer loyalty. Nevertheless, this is no significant relationship between switching cost and customer loyalty over budget hotel in Beijing, China. The study recommends that budget hotels should focus on service quality and perceived value with improving facilities, increasing service awareness of employees and providing individual attention and customised services.