Service quality factors influencing customer satisfaction, loyalty, and retention in the hospitality industry in Ghana: a case study in the Volta region

Abstract

Issues pertaining to service quality, customer satisfaction, customer loyalty and customer retention are major concerns in the Ghanaian hotel industry that requires attention because of their impact on strengthening the Ghanaian hospitality industry to contribute meaningfully to Gross Domestic Product continually. That notwithstanding, a knowledge gap was identified in the literature on the direct and indirect (mediating) effects of service quality on customer satisfaction, loyalty and retention in the Ghanaian hotel industry. To contribute to the literature and fill the existing knowledge gap, this study was conducted to determine the direct and indirect (mediation) impact of service quality factors (responsiveness, reliability, tangibility, assurance, empathy) on customer satisfaction, customer loyalty and customer retention among hotels in the Volta Region of Ghana. A quantitative survey methodology was adopted. A total of three hundred and eighty-nine (389) customers were sampled from twenty-two (22) hotels in the Volta Region of Ghana. Standardized questionnaires were used in the collection of data. Ethical issues such as confidentiality, informed consent and anonymity were ensured during the data collection process. Statistical Package for Social Sciences (SPSS) version 26 and Smart PLS 4 were used to analyse the data gathered. Standard multiple regression analysis and Partial Least Squares (PLS) Structural Equation Modelling were used to test the hypotheses. The result of the study showed that significant positive relationships exist between service quality factors (empathy, assurance) and customer retention. At the same time, tangibility, responsiveness and reliability had non-significant relationships with customer retention. The study also found that service quality factors (responsiveness, tangibility and empathy) had significant positive relationships with customer satisfaction, while reliability and assurance had non-significant relationships. The result also showed that a significant positive relationship was found to exist between service quality factors (responsiveness, empathy, assurance) and customer loyalty. The study also found a significant positiverelationship between customer satisfaction and loyalty. However, a non-significant relationship was found to exist between customer satisfaction and customer retention. Rather, customer loyalty and customer retention were found to be positively related. For mediation effects, it was found that customer loyalty mediates the relationship between customer satisfaction and customer retention. It was also found that customer satisfaction mediates the relationship between service quality and customer loyalty. Customer loyalty also mediated the relationship between service quality and customer retention. Customer satisfaction did not mediate the relationship between service quality and customer retention. Based on the study's results, the study recommended the need for hotels in the Volta Region to develop a customer-focus organisational culture centred on training and development of skills such as empathy and assurance. It is important for hotels to conduct training needs assessment to identify the specific service quality skills that their employees are lacking and develop training programs to equip them with strong interpersonal skills such as active listening, empathy and emotional intelligence, among others, to improve customer outcomes in terms of customer satisfaction, customer retention and customer loyalty. Secondly, hotels in the Volta Region need to develop an improved operation-centric strategy focused on making them more responsive to the needs and expectations of their customers. To achieve this, hotels in the Volta Region of Ghana must improve the responsiveness of their communication channels such as online chats, emails, phone calls, and social media handles, by being available 24/7 to ensure that customer needs are addressed promptly. Employees of hotels must also be equipped through training programs on how to respond appropriately to customer requests in real-time. It is also important for hotels in the Volta Region to use technology that enhances responsiveness, such as online booking systems, mobile apps and artificial intelligence, such as chatbots, to improve their responsiveness to their customers. The study also recommends that hotels in the Volta Region adopt and implement loyalty programs for their customers by offering rewards and incentives to customers who frequently patronise their services. Loyalty programs of hotels can be based on points,and by the accumulation of certain points, customers could receive rewards, such as free meals during their stay or reduced hotel cost by a certain percentage.