Invention Journal of Research Technology in Engineering & Management (IJRTEM)

ISSN: 2455-3689
www.ijrtem.com Volume 2 Issue 10 ǁ October 2018 ǁ PP 46-51

Service Quality influence on Customer Satisfaction in Case of

Mongolia Hotel Service
1,
Erdenechimeg Batsukh, 2,Undrakhbuyan Altankhuyag, 3,TsendAyush
Munkhnasan, 4,Enkhbayar Gelegnyam, 5,Myadagbadam Erdenbileg,
6,
Darkhanbat Ganbat
1,2,3,4,56,
Research Methodology Learning Center of Mongolia

ABSTRACT: In the recent years, Service quality is a vital factor in customer satisfaction in the hotel industry,
because high service quality produces high customer satisfaction. In addition, Customer satisfaction is the
difference between service delivery and customer perception. If the quality doesn’t meet their perception, the
customer has low satisfaction. The satisfaction is used to measure customer loyalty, increase revenue and reduce
churn. In addition, it is essential to attract new customers and differentiate in the competitive market. Therefore,
the research study focus to determine the relationship of service quality and customer satisfaction in the case of
Mongolian Hotels. The study based on the SERVQUAL model which include 5 dimensions or 23 items. The survey
was gathered from 322 respondents in 5 hotels with 3 stars. Research findings show that all of SERVQUAL
dimensions have positive relationship but Tangibles, Reliability, Responsiveness has highest positive affect on
customer satisfaction.

KEYWORDS: service quality, customer satisfaction, the hotel industry

I. INTRODUCTION
In the current era, the Business environment is more competitive ever before. The firms need to maintain and
increase the service quality continuously for sustainable business growth. The firm’s sustainable growth depends
on meeting customer's demands and needs. First of all, Manufacturing firms paid attention for the quality since
1980 so on the topic was most popular used in the service industry. Drucker (1973) stated customers with high
satisfaction are a key factor of business and, if the firms provide service with high quality for them, customers
will be more satisfied. It means service quality directly positive effect on the customer satisfaction which increases
repurchasing or customer loyalty. In the case of delivering services that meet customer demands, Customers
become more favorable to the firms, also they spread positive word-of-mouth within familiar range ( Jaworski &
Kohli, 1990). Some financial research study suggests that when increases customer satisfaction rate by just 5
percent, it possible to grow firm’s profits from 30 to 70 percents ( Sasser and Reichheld, 1990). It implies the
satisfaction is a key point on profit growth. In the recent years, Hotel industry of Mongolia has rapid growth by
cause of International Travelers. For meeting their demand and attracting them, Hotels are competing strongly
for high service quality. As of today, 532 hotels operate in Mongolia and 70% of them locates in Ulaanbaatar city.
It means competition is high among placed hotels in the capital city, as well as hotel managers always face
customer transition problems. Past research studies recognized the importance of service quality on customer
satisfaction in Hotel industry but the topic was investigated most popular in other countries than Mongolia. To
fulfill this gap, Thus, research study focused to measure customer satisfaction and service quality of hotels in
Ulaanbaatar.

II. LITERATURE REVIEW

Service Quality: Service quality is consumer measurement which how well a provided service for consumer
expectations. According to Parasuraman (1988), Service quality is defined as a service meeting on customer
expectation. In another word, it is a deviation between perceived service and customer expectations. The quality
possible to be different depends on the individual’s needs and demands. It means provided services meets, exceeds
or fails for customer expectations ( Taylor & Cronin, 1992; Parasuraman & Berry; 1993). According to Czepiel
(1990) defined, The service quality is the difference between service performance and customer expectations.
Previous research literature recognizes the service quality is a vital factor on customer satisfaction ( Machoy and
Spreng, 1996) and it possible to make differentiation or competitive advantage compared to competitors ( Gray
and Boshoff, 2004). Turban (2002) defined that customers prefer service quality when competitors have the same
price and other cost elements. Generally, consumers don’t know detailed information about technical activity and
elements of service, therefore, functional quality becomes the main impact which measures service quality for

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 Service Quality influence on Customer Satisfaction in…

consumers ( Donabedian, 1982). According to Ekinci (2003) stated that customer satisfaction depends on the
measurement of service quality. Wilkins ( 2007) suggested the quality directly increase customer satisfaction,
repurchasing behavior as well as secure long-term profit in firms. In order to evaluate service quality, service
firms need to measure customer satisfaction continuously (Prayuhda & Harsanto, 2014).

SERVQUAL model : The model is most popular used to measure consumer expectations related to service
quality. First of all, Parasuraman (1991) introduced the SERVQUAL instrument and has been used in multiple
industries to measure service quality. The model consists of Reliability, Assurance, Tangibles, Empathy and
Responsiveness dimensions and measurement process of SERVQUAL is performed by providing scores for each
dimension. Reliability is defined as the capacity to provide the promised service accurately and dependably (
Kandampully, 2007). In another word, the reliability is to provide the promised service accurately and dependably
( Zeitnaml, 2006). Assurance is an employee’s ability to convey confidence, trust, and courtesy ( Kandampully
2007). According to Zeithaml (2006), it is the courtesy and knowledge of the worker as well as the ability to
inspire confidence and trust. Tangibles are physical elements which include advertisement materials, equipment,
and facilities (Seo, 2012). Empathy is an employee’s special attention for customers ( Kandampully, 2007) and
an essential part of service quality since the relationship is produced between customer and employee.
Responsiveness is the willingness to help consumers in prompt service. According to ( Harsanto & Prayuhda,
2014), it is the employee’s wishes to be quick and supportive for service.

Customer Satisfaction; The satisfaction is an evaluation or attitude of the consumer about service or product (
Oliver, 1980). According to Kotler (2000), customer satisfaction is an individual’s pleasure feelings or results of
customer comparison between performance and expectation. In additionally, The satisfaction is the result of
psychological reactions and evaluation based on own experience with a service/ product ( Yi, 1990). The
satisfaction is a key factor to measure service quality as well as the direct effect on business performance ( Morgan
& Mittal, 2005 ). Most researches in hotel industry mentioned the importance of the satisfaction because it is an
integral part of a hotel’s value position (Maghzi, 2011).

Relationship of Service Quality and Customer Satisfaction: Customer satisfaction is directly affected by
service quality and depends on the ratio between purchaser’s perception and service performance. In case that
service performance exceeds assumption, the consumer will be highly delighted or satisfied ( Kotler & Armstrong,
2006). It means the quality has a positive relationship with the satisfaction. In addition, An unsatisfied customers
share their negative idea of service to 20 people in familiar range and therefore, companies need to care providing
dissatisfaction for customers. Kuo (2009) made research in the service industry, the result showed customer with
a higher satisfaction has stronger repurchase intention and more suggest the service into familiar range. In
addition, purchasing intention well be higher in the case of consumer satisfaction is higher. It means service quality
direct and indirect positive effect on customer satisfaction. They concluded that service quality improvement not
based on customer needs can’t improve customer satisfaction and not all quality improvement can’t be essential
for the satisfaction. Thus, Right defining the quality’s dimensions is a most essential factor in the beneficial
improvement of customer satisfaction ( Kim & yang, 2004).

III. DATA AND METHODOLOGY

For research study, primary data were collected from customers of 5 three-star hotels in Ulaanbaatar city. The city
has 1.3 million or highest population compared to other cities in Mongolia and there is high customer shift.
Questionnaire design has 34 questions which measure service quality dimensions and customer satisfaction for
hotels. 352 customers participated in the survey and 30 customers were rejected by reason of unqualified filling.
Finally, data of 322 respondents was planned to use in research. Most of the questions based on a 5-point Likert
scale which express 1 (strongly disagree), 2 (disagree), 3 (neutral), 4 (agree), 5 (strongly agree). In order to
analyze, SPSS 21 software was used and made Descriptive statistics, Reliability test, Correlation, and Regression
analysis.

Research framework: The framework design has been produced using previous literature and possible to easily
understand proposed hypothesizes. In the framework, Depend variables were defined SERVQUAL dimensions
which include Tangibility, Reliability, Responsiveness, Assurance, Empathy and Independent variable is
Customer Satisfaction. Previous literature approved SERVQUAL dimensions has a positive relationship with
Customer satisfaction and, therefore, the below framework was drawn by Picture 1.

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 Service Quality influence on Customer Satisfaction in…

Picture 1: Conceptual framework

H1+: Tangibility

H2+: Reliability

Customer Satisfaction
H3+: Responsiveness
Data analysis
H4+: Assurance

H5+: Empathy

Demographic information: The demographic shows statistical information of respondents, such as gender, age,
education, salary. Below Table1 demonstrates demographic information of respondents. In the statistical result,
Male respondents are 58% or higher compared to females as well as people aged 20-29 are dominant. In addition,
75% of respondents have a bachelor and master degree, 51% has 500,000₮-1100,000₮ monthly income.

Table 1: Demographic of Respondents

Male 58%
Gender
Female 42%
20-24 32%
25-29 28%
30-34 18%
Age
35-39 12%
40-44 8%
45 > 2%
High school 9%
Bachelor 42%
Education
Master 34%
Doctor 15%
500₮< 16%
501₮-800₮ 39%
Salary 801-1100₮ 18%
1101-1400₮ 13%
1400₮> 14%

Reliability Analysis : It helps to assess the goodness of step and indicates accuracy. This research uses the popular
test of inter-item consistency reliability that will be the coefficient of the Cronbach alpha. Cronbach's alpha is a
measure of internal consistency, that is, just how closely related a set of items are as a set (UCLA, 2012). The
Cronbach’s value deploys between 0 and 1. In case that value is near to 1, data has high internal consistency.
Otherwise, if the value is near to 0, data has lower reliability or can’t possible to use for research. In the below
table, Cronbach’s alpha is 0.783. It means the overall reliability of data is most comfortable for data analysis.

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 Service Quality influence on Customer Satisfaction in…

Table 2: Reliability Statistics

Cronbach's Alpha Cronbach's Alpha Based N of Items

on Standardized Items
.783 .764 322

Table 2 shows the reliability results of each dimension and customer satisfaction. Most of the results are higher
than 0.7 and it means each variable in acceptable levels.

Table 3: Reliability Statistics of each item

Variables Cronbach's alpha Items
Tangibility 0.856 4
Reliability 0.687 3
Responsiveness 0.724 5
Assurance 0.738 4
Empathy 0.722 5
Customer satisfaction 0.812 4

IV. CORRELATION ANALYSIS

The analysis is used to measure the linear relationship between the independent and dependent variables. The
correlation result shows each dimension have a positive relationship with customer satisfaction. In addition,
Tangibility ( r=0.452, p<0.05), Reliability (r=0.672, p<0.01), Responsiveness (0.715, p<0.05) have highest
positive relationship with customer satisfaction compared to Assurance (r=0.364, p<0.05) and Empathy (r=0.218,
p<0.05).
Table 4: Result of Correlation Analysis

TANG RELI RESP ASSU EMP SATI

Tangibility 1
Reliability .452 1
Responsiveness .532* .354* 1
Assurance .382** .281** .476* 1
Empathy .642** .467** .322* .516** 1
Customer
satisfaction .456* .672** .715* .364* .218* 1
**. significant at the 0.01 level (2-tailed). *. significant at the 0.05 level (2-tailed).

Regression Analysis : Regression analysis defines the average mathematical relationship between two or more
variables. In addition, the result of the analysis is expressed by R square which shows how the data is near to
the regression line. Below table shows a model summary and adjusted R square 0.622 (R²=.647). It means that
the model explained 64.7 percent of the variance.

Model Summary

Model R R Square Adjusted R Std. The error of

Square the Estimate
1 .681a .647 .622. .654982

In the below table, Betta Coefficients are positive and it means service quality dimensions has a positive
relationship with customer satisfaction. From the regression analyse, The following outputs have been produced:
Tangibles (β=.468, p < 0.01 ), Reliability (β=.572, p < 0.05 ), Responsiveness (β=.428, p < 0.01 ), Assurance
(β=.202, p < 0.05), Empathy (β=.326, p < 0.05). In the previous correlation analysis, Tangibles, Reliability,
Responsiveness dimensions have a highest positive relationship with customer satisfaction and regression result

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 Service Quality influence on Customer Satisfaction in…

was same as. Therefore, result approved our proposed hypothesis and Tangibles, Reliability, Responsiveness are
most essential on Mongolia customer satisfaction for the hotel industry.

Table 6: Regression coefficients

Unstandardized Standardized
Coefficients Coefficients
Model T Sig.
Std.
B Beta
Error
(Constant) .468 .186 14.292 .034
TANG .628 .394 .594 13.572 .009
RELI .572 .568 .531 10.661 .012
1
RESP .428 .786 .413 8.981 .000
ASSU .202 .621 .179 12.752 .047
EMP .326 .822 .298 18.978 .022

Table 7: Hypothesis result

Hypothesis Status
H1: Tangibles highest positive relationship with Customer Satisfaction Supported
H2: Reliability highest positive relationship with Customer Satisfaction Supported
H3: Responsiveness highest positive relationship with Customer Satisfaction Supported
H4: Assurance positive relationship with Customer Satisfaction Supported
H5: Empathy positive relationship with Customer Satisfaction Supported

V. CONCLUSION
In the recent years, Mongolian hospitality industry has extraordinary growth ever before. Especially, Ulaanbaatar
city is a dominant market and there is a higher customer shift compared to other locations. The research
investigated the relationship of service quality and customer satisfaction in case of hotels with 3 stars in
Ulaanbaatar. The result showed Tangibles, Reliability, Responsiveness in Hotels are a most important factor on
customer satisfaction for Mongolians. Thus, Mongolian hotel managers need to focus internal/ external
appearance, providing accurate and dependable services, employee’s attitude to increase the satisfaction.

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