English
Chinese
The Determinants of Customer Satisfaction in Chinese Guest House Market
Acknowledgement
I appreciate my tutor who offered me construction and specific advises to my research. I am grateful to those respondents who provided data.
Abstract
This research aims to examine how factors influencing on consumers satisfaction could be used to improve guest houses’ competitiveness in China. The research has the purpose to identify the impacts of service quality, customer orientation and prices on customer satisfaction so as to make recommendations to Chinese guest houses.
The research uses the following research methodologies: qualitative approach, inductive approach, interviews, convenience sampling technique, and thematic approach for data analysis.
It finds that customers consider selecting a guest house as a process of exploring their travelling destination and gaining joy. They expect to experience local customs and habits by living a guest house and heart-warming services. Some of customers experienced emotional trauma and other customers could be family travellers and couples. The important factor affecting customer satisfaction is customer relationship. These guest houses focus on maintain good relationship with guests to ensure high level of customer satisfaction. It is important to make guests perceive that guest house value and concern them. Customers in guest house market are sensitive to price and have great commitment when they make purchase decisions. The owners should stay at their guest houses every day or in long term. Guest houses should take advantage of cost leadership, develop customer-oriented strategy and services, and pay heavy attention to empathy and responsiveness in term of service quality.
1.3 Research Aim and Objectives
1.5 Brief Overview of Literature
1.6 Brief Overview of Research Methodology
1.7 The structure of this dissertation
2.4 The Competitiveness of Guest House
2.4.1 Customer Satisfaction and Competitiveness
Chapter Three Research Methodology
3.2 Qualitative VS. Quantitative Research
3.4.2 Inductive Vs Deductive Approach
3.4.5 Interview Explanation of Interview Questions
3.6 Research Ethical Consideration
3.7 Research Validity and Reliability
6.2 Recommendations for further research
Appendix II – Transcript of Interview
Chapter One Introduction
1.1 Research Background
With the rise of Chinese tourism industry, guest houses have been fast growing with unique services and characteristics. Most of Chinese guest houses are located around natural travelling attractions and a large proportion of them is located in Yunnan, Tibet, Qinghai where have spectacular natural environment and viewpoint as well as ancient hesitate.
According to FMI (2019), travel and tourism industry was expected to climb to CNY 11,225 billion, which would account for 9.4% of GDP, by 2026. Also, the domestic travelling spending is estimated to reach CNY 6930.4 billion in 2026 (FMI, 2019). The total contribution of travel and tourism industry to GDP was 11.3% in 2019 and it is expected to reach 12.9% in 2028 (Statista, 2020a). The guest house market is booming in China with growing demands. Chinese travellers desire to have unique experiences, which motivates them to choose guest houses rather than hotels.
There are over 6000 guest houses in Yunnan, alone. It estimated that the number of Chinese guest houses reached 1,341,000 in 2019 (Statista, 2020a). The number of guest houses kept increased. As increasing industry, some of existing issues shouldn’t be ignored, and new challenges keep emerging. In the cost of immaturity of guesthouse’s business model, it leads to a batch of guest houses losing their investment rather than making profit. In fact, there is polarization in Chinese guesthouse market, the earlier guesthouse owners making huge amount of profit while the latecomers facing the closure under the severe market competition. Some research indicated that guesthouses are the substitute of hotel room while travellers wanted to try new services and have novel experiences.
1.2 Research Significance
The studies investigating guest houses are rare. There is no study investigating the determinants of competitiveness in Chinese guest house market. Thus, this research is academically significant that covers a research gap.
1.3 Research Aim and Objectives
This research aims to examine how factors influencing on consumers satisfaction could be used to improve guest houses’ competitiveness in China. The research has the purpose to identify the impacts of service quality, customer orientation and prices on customer satisfaction so as to make recommendations to Chinese guest houses. The expected results can help these guest houses to properly develop service quality, customer orientation and prices thus improving customer satisfaction and competitiveness.
In order to achieve this aim, the research objectives are:
1) To identify factors influencing on customers satisfaction at guest houses in China
2) To analyse the relationship between customers satisfaction and the competitiveness of guest houses
3) To examine to what extent these factors have been used to measure the guest houses competitiveness in China
4) To draw conclusions and make recommendations to guest houses and future research
1.4 Research Question
(Include the main research question here by turning the research aim to a question)
The main research question is how a Chinese guest house to use service quality, customer orientation and prices to improve customer satisfaction and thus competitiveness.
- What are the characteristics of consumers who choose guest house?
- How does service quality affect customer satisfaction?
- How does customer orientation affect customer satisfaction?
- How does price affect customer satisfaction?
- What are the recommendations to Chinese guest houses?
1.5 Brief Overview of Literature
This research discusses the factors affecting guest houses’ competitiveness in China. Then, it makes recommendations to Chinese guest houses to help them to improve competitiveness. It starts with literature review to analyse the knowledge related with guest houses and the factors affecting their competitiveness. Then, the research studies these factors in the context of China by analysing the primary data. It analyses the primary data and gets results and then discusses them with the literature review. Lastly, it generates conclusions and then makes recommendations.
1.6 Brief Overview of Research Methodology
This research adopts qualitative approach in order to generate convincing findings. It uses inductive approach to explore new insights related with Chinese guest houses. The data collection approach is interviews to dig out insights and the research plans to interview 10 respondents. Then, the research uses convenience sampling technique. It means that all participants voluntarily involve into this research. By this sampling technique, the research can fast collect enough sample size.
1.7 The structure of this dissertation
This dissertation is presented in an organised way. The first chapter introduces the context of Chinese guest house, research aims and significance. As the next chapter, the Literature Review discusses the knowledge related with customer satisfaction, service quality, price, and customer orientation. The third chapter justifies the research methodologies including qualitative research, inductive approach, interviews, and convenience sampling. The fourth chapter analyses primary data from interviews and the fifth chapter discusses the findings of Chapter Four with the knowledge discussed in the literature review. Additionally, the last chapter summarises the results in accordance with research objectives, declares the research’s limitations and makes suggestion for further research.
Chapter Two Literature Review
2.1 Introduction
The chapter reviews literature related to customers’ satisfaction and competitiveness in hotel industry especially for guest houses. It critically discusses the knowledge and theories related with guest houses, customer satisfaction, and the competitiveness of guest house. It starts with the principle of guest house and then discusses the theories of customer satisfaction. Then, it discusses the factors affecting competitiveness of guest house, including service quality, customer orientation and price.
2.2 Guest Houses
The guest house is a sub-sector of travel & tourism industry (Ramukumba and Ferreria, 2016). It has various forms of tourism services, whereas their common as include to provide beverage, food and accommodation in the environment featuring family style (Ramukumba and Ferreria, 2016). Some small hotels also can offer the services same with guest houses. However, the major difference between small hotels and guest houses is that guest houses offer a more homely environment. A guest house can be a home, a renovated home, or a building constructed as a residential living to offer accommodation, with public areas for its guests (George, 2012). A guest house is defined as an economical hotel-like accommodations which are attractive to budget-oriented customers (Moswete et al., 2019).
The jobs of guest houses have the following characteristics: low skills, low wages, and low security (Moswete et al., 2019). This means that guest houses have less capability to offer professional services.
Chinese Guest House
Wang and Hung (2015) study customer perceptions of critical success variables for guest houses in China. They study finds that the rising Chinese tourism industry has been facilitating the rise of guest houses in some destinations. Chinese guest house business is highly dependent on customers (Wang and Hung, 2015). Customer experience acts an important role in the industry. Thus, it is significant for guest houses to evaluate and fully understand their guests’ experience (Wang and Hung, 2015). The critical determinant of guest houses’ success is customer perceptions. Therefore, customer satisfaction is an important factor. Furthermore, Wang and Hung (2015) find that vital variables affecting customer experience including home atmosphere, room facilities, service, cleanliness, location, and cost performance. Cost performance is the primary factor affecting customer experience (Wang and Hung, 2015). Moreover, it is important for guest houses to monitor, evaluate and response user-generated comments. They should pay attention to online comments of customers and make improvements.
More importantly, culture has strong impacts on consumer behaviour (Jawal, 2014). Chinese culture is unique and highly different from Western culture. Thus, it is important to understand Chinese culture to study the guest house market. In Hofstede’s national culture dimension, Chinese culture is characterised by high power distance, low individualism, low uncertainty avoidance, high long-term orientation, and low indulgence (Hofstede-Insights, 2020). With low score on individualism, China is a typical collectivist country where people concern their relationship with others (Hofstede et al., 2010). They rely on Guanxi (social connections) to solve most of problems in their life and work (Zhang and Khare, 2009). They have a highly hierarchical society and value their faces in life. They advocate harmony and relationship with others. Also, with low uncertainty avoidance, Chinese people prefer to use relationships, social networks and Guanxi to reduce uncertainties rather than rules (Hofstede et al., 2010). Thus, relationship is considerably important to Chinese people. With high long-term orientation and low indulgence, Chinese people are frugal and thrifty. They are sensitive to prices and evaluate cost performance when they are making purchase decision (Liu et al., 2011). The two dimensions also make Chinese people constricted and review indulgencing themselves as guilt. They are inclined to cynicism and pessimism. With high score on masculinity, Chinese people have strong need for achievement and tend to have less family time and leisure time but focus on work (Hofstede et al., 2010).
Hofstede’s culture theory
(Source from: Hofstede-Insights, 2020)
This section critically discusses the definition, principles and theories of customer satisfaction, the relationship between customer expectation and customer satisfaction and the concept of customer value.
Customer satisfaction refers internal feelings of a buyer which could satisfy or dissatisfy with the evaluation of services (Oliver, 1980). The commonest theory for customer satisfaction is the expectancy disconfirmation theory (Barsky, 1992). In this theory, customer satisfaction is viewed as a status which perceived quality meets expected quality (Oliver, 1980). It is an evaluation of perceived quality and expectation. The difference between customer expectation and product quality determines customer satisfaction. If perceived quality meets or exceeds expected quality, customers are satisfied (Dominici and Guzzo, 2010). If perceived quality exceeds expected quality, the level of customer satisfaction is higher. By contrast, if perceived quality is lower than expected quality, so they are dissatisfied (Gomez et al., 2004). Thus, the quality of a product or service can strongly affect customer satisfaction.
Customer satisfaction is related with expected quality. Many factors affect customer expectation, including price and pervious experience (Shapiro and Gomez, 2012). The past consumption experience of a buyer can strongly affect their expectation on service quality (Anderson and Sullivan, 1993). Also, price is a predictor of quality and customers use prices to expect quality (Anderson and Sullivan, 1993). A higher price makes customers to have a higher expectation on prices.
Perceived value is the outcome of customers’ assessment of a product based on their perceived quality (Anderson, 1994). There are many factors affecting consumers’ perceptions of value, including monetary costs, non-monetary costs, customers’ tastes, and customer characteristics (Shapiro and Gomez, 2012). These factors affect how a customer perceive a value. Customers determine whether the quality is worth its prices (Shapiro and Gomez, 2012)
2.4 The Competitiveness of Guest House
This section reviews existing knowledge to build a theoretical framework covering service quality, customer orientation, and price. It starts with the discussion of the relationship between customer satisfaction and competitiveness and justification of the impacts of customer satisfaction. Then, it discusses the relationship between each of the three factors and customer satisfaction. Previous studies find that the determinants of customer satisfaction include service quality (Chia and Muiz, 2020 and Foster et al., 2016), customer orientation (Hennig-Thurau, 2004) and price (Chen et al., 2015; Foster et al., 2016; and Wang and Hung, 2015). Thus, this research uses the three factors to build the theoretical framework.
2.4.1 Customer Satisfaction and Competitiveness
Bitner and Hubbert (1994) state that customer satisfaction is a main element used to evaluate a firm’s competitiveness and success. Customer satisfaction is viewed as one of the most important competitive advantages in hotel industry. It can strongly affect a hotel’s performance. Customer satisfaction is an important element to identify whether customer needs are fulfilled or not (Bitner and Hubbert, 1994). It is related with the gap between expectations and experiences. Particularly in the service sector, companies also pay heavy attention to customer satisfaction. They use customer satisfaction as an index to evaluate the quality of their products and services. Customer satisfaction is vital and fundamental for a company to develop competitiveness. It also is an important index of corporate performance.
Furthermore, hotels view developing customer satisfaction as a strategy of improving competitiveness. Customer satisfaction is a strong foundation of customer loyalty and related with the strong capability of retaining customers (Guo et al., 2012). Satisfied customers make more contributions to the service providers. They have positive word of mouth and are less likely to purchase from other service providers. Customer satisfaction is an important way to keep long-run customer relationship (Jiradilok et al., 2014). Thus, this research uses customer satisfaction to measure a guest hotel’s competitiveness.
Moreover, customer satisfaction has strong and profound influences on a company (Giese and Cote, 2000). It positively affects customer relationship, loyalty, and retention. To be specific, satisfied customers tend to have greater relationship with service providers (Guo et al., 2012). Customer satisfaction allows companies to develop and maintain long-term relationship with customers (Giese and Cote, 2000). Customer satisfaction encourages repeat purchase and customer loyalty (Jiradilok et al., 2014). Generally, it can contribute to customer retention.
Many studies suggest that a positive relationship between service quality and customer satisfaction in hotel industry (Chia and Muiz, 2020; Foster et al., 2016; and Muresan et al., 2013). Chia and Muiz (2020) study the guest house business in the Maldives by an explorative research. The study finds that important factor facilitating for a guest house’s success is service quality.
Service quality is vital for hotel industry and hotels make efforts to improve service quality in order to maximise customer satisfaction (Saleem and Raja, 2014). It relates with customer satisfaction and then customer loyalty (Saleem and Raja, 2014). Furthermore, service quality is viewed as an assessment between service expectation and the actual received quality (Parasuraman et al., 1985).
Foster et al. (2016) study the impact of price and service quality on customer satisfaction in Indonesian hotel industry. The study finds that the evidence that service quality strongly affects customer satisfaction. Muresan et al., (2013) study the important factors affecting guest house’s customer satisfaction in countryside areas of Romania. The study finds that service quality is an important factor, whereas these guest houses fail to meet customers’ expectations in term of SERVQUAL model.
In the model, service quality is measured by five dimensions: reliability, assurance, tangibles, empathy, and responsiveness (Parasuraman et al., 1991). According to Parasuraman et al. (1991), reliability means the capability to provide the promised service in a dependable and accurate way. Assurance refers to employees’ knowledge and courtesy to gain customers’ trust (Parasuraman et al., 1998). Tangibles mean the appearance of physical facilities, equipment, personal, and communication materials. Empathy means the attention to care customers and individualised attention to them. Responsiveness refers to the willingness to assist customers and offer fast service (Parasuraman et al., 1998). These five dimensions are interrelated (Parasuraman et al., 1998). Many studies adopt SERVQUAL model to measure service quality in hotel industry (Muresan et al., 2013).
Zeithaml et al. (1988) illustrate that low service quality is related with four gaps in terms of SERVQUAL model, including knowledge, standards, delivery, and communication gaps. Knowledge gaps means the difference between customer-expected service and manager’s perception of expected service. This means the extent of which the management’s understanding on customer expectation is valid, accurate and reliable. A large knowledge gap could be caused by the shortage of marketing research, upward communication, and highly hierarchical management structure (Zeithaml et al., 1988). Standard gap means the gap between manager-expected service and the actual standards. The gap is caused by the shortage of managerial commitment to service quality, objective setting, and work procedure (Zeithaml et al., 1988). Delivery gap refers to the disparity between standards of service quality and service provided by employees (Zeithaml et al., 1988). Additionally, communications gap is the disparity between the purposes of service delivery and the service communicated to clients. The communication problem results from shortage of horizontal communications, weak communication and advertising, inappropriate communications between sales and operations, and overpromising (Zeithaml et al., 1988).
Figure 2: SERVQUAL Model
Narangaja and Hu (2018) argue that service quality has a strong relationship with hotel performance. Hotels can reach a higher service quality by achieving improvements in employees, service delivery, guest facilities and surroundings (Narrangaja et al., 2018). This means that hotel service quality is related with employees and physical environment.
Customer orientation refers to the willingness of an organisation and its employees to achieve customer expectation (Chen and Popovich, 2003). It is common organisational strategy of hotels to reach their target customers. With customer orientations, hotels consider their customers as the most important things. Customer orientation is a part of Customer Relationship Management (CRM) program and it positively affects customer satisfaction and organisational performance (Baru, 2019). It is beneficial for organisations to motivate employees to have customer-oriented behaviour. In hotel industry, companies are advised to adopt customer orientation strategy and develop their organisational cultures and regulation, HRM and structures. Customer orientation is an effective approach against competitors, as it can boost customer satisfaction in long-term and then contribute to customer loyalty (Jiradilok et al., 2014). Customer orientation motivates employees to offer greater level of services to improve customer satisfaction. Therefore, it is a strategy for hotels to enhance their strengths. There is a positive correlation between customer orientation and satisfaction (Brown et al., 2002). Also, customer orientation is indirectly associated with corporate performance (Krasnikov et al., 2009). Therefore, it is prominent for all hotels to implement customer-centric strategy and they have to adapt their organisational cultures, regulations, HRM and policies to ensure the implementation of the strategy (Krasnikov et al., 2009). In hotel industry, customer orientation is an important strategy that improves customer satisfaction and retention (Wu and Li, 2011). Customer-centric approach motivates employees to offer high level of services thus contributing to customer experience and satisfaction (Wu and Li, 2011). Under intensive competition, the approach helps hotels to secure their competitive advantage by improving customer experience (Morgan et al., 2009). However, these studies focus on the impacts of customer orientation in hotels rather than guest houses. There are significant differences between hotels and guest houses. Therefore, the influences of customer orientation in guest house should be studied.
In service industry, customer orientation of employees positively affects customer satisfaction, commitment, and retention (Hennig-Thurau, 2004). Customer orientation is the major factor affecting service company’s success. It is obvious for companies to develop their employees’ customer orientation. The behaviour of service employees makes customers perceive greater level of perceived quality. In other words, making employees to commit to customer orientation can improve service quality.
Employees’ customer orientation includes four dimensions: technical skills, social skills, motivation, and decision-making authority (Hennig-Thurau, 2004). To be specific, employees have technical skills which enable them to offer customer-oriented service. Secondly, employees have social skills to develop and keep good relationship with employees and take customers’ perspective during interactions. Thirdly, they should have the motivation to meet customer demands. Fourthly, employees have a certain level of autonomy to provide customer-oriented services. In accordance with Hennig-Thurau (2004)’s argument, Gazzoli et al., (2013) highlight that a company has to ensure its employees to be willing to put customer into first place. Otherwise, the company is unlikely to successfully implement its customer orientation. To develop employees’ willingness and commitment to customer orientation, a company needs to cultivate proper organisational culture led by its leaders (Gazzoli et al., 2013). A proper organisational culture facilitates employees to put customers in the first place. Leaders act an important role in shaping such culture by setting great examples to employees (Gazzoli et al., 2013). This means that they put customers in the first place, thus creating the atmosphere that encourages employees. Gazzoli et al. (2013) highlight that employee is a critical factor affecting the implementation of customer orientation. Therefore, offering employees proper training and development is important to run customer orientation.
Foster et al. (2016) finds that price is a strong factor affecting customer satisfaction. Wang and Hung (2015) study the vital factors affecting the success of guest houses in China in the perceptions of customers. This study finds the following vital factors including home atmosphere, in-room facilities, other facilities, service, cleanliness, location, and value for money. Value for money is the major factor affecting customer experience and all these factors have significant a relationship with customer experience (Wang and Hung, 2015).
Chen et al. (2015) study the impact of price on guest satisfaction in hotel industry. The study finds that a low level of prices in room, food and beverage can contribute to a higher level of guest satisfaction. On the other hand, a higher price level in room, food and beverage can result in a lower level of customer satisfaction.
There is a connection among price, quality, and satisfaction. Price is related with the cost to buy a product and a reflection of product quality (Chen et al., 2015). This argument is supported by the study of Stiglitz (1987). The perceived prices positively affect customers’ perceived quality in service industry (Parasurman et al., 1991; Bojanic, 1996). This is can be explained by the argument that guests have lower expectation when the price is lower. With lower expectations, it is easier for hotels to meet or exceed customers’ expected quality. According to Swan and Trawick (1981), perceived prices positively affect guests’ perceived quality in restaurants.
2.5 Research Gaps
Many studies investigate the relationship between customer satisfaction and service quality (Chia and Muiz, 2020; Foster et al., 2016; and Muresan et al., 2013), customer orientation (Wu and Li, 2011) and price (Foster et al. 2016; and Wang and Hung, 2015). However, these studies did not focus on guest house. A large proportion of these studies focus on hotels rather than guest house. However, there are many prominent differences between hotels and guest houses. Meanwhile, many studies show the evidences supporting a positive relationship between customer satisfaction and competitiveness (Bitner and Hubbert, 1994; Guo et al., 2012 and Giese and Cote, 2000), whereas none of these focuses on guest house. Given that previous studies do not cover guest houses, it is important for this research to focus on them.
This chapter reviewed literatures and theories related with customer satisfaction. The guest house is a sub-sector of travel & tourism industry. The major difference between small hotels and guest houses is that guest houses offer a more homely environment. Chinese guest house business is highly dependent on customers. Chinese culture is characterised by high power distance, low individualism, low uncertainty avoidance, high long-term orientation, and low indulgence. It refers internal feelings of a buyer which could satisfy or dissatisfy with the evaluation of services. Customer satisfaction is related with expected quality. Perceived value is the outcome of customers’ assessment of a product based on their perceived quality. Customer satisfaction is a main element used to evaluate a firm’s competitiveness. Previous studies show that customer relationship has relationship with service quality, customer orientation and price.
Chapter Three Research Methodology
It uses the following research methodologies: qualitative approach, inductive approach, interviews, convenience sampling technique, and thematic approach for data analysis. This chapter justifies why to choose these methodologies and explains how to use them.
3.2 Qualitative VS. Quantitative Research
This research adopts qualitative approach to study the determinants of guest house’s competitiveness in China. Qualitative research is developed based on interpretivism that allows inquirers to directly perceive research theme to find out insights. It is effective to measure dynamic and ambiguous behaviours, feelings, and emotions, which are hard for quantitative research to measure (Saunders et al., 2012). By qualitative research, researcher can experience, feel, and perceive a research phenomenon (Saunders et al., 2012). It is beneficial for the researcher to study those phenomena closely linked to its context. The Chinese guest house market is closely associated with its context including Chinese customers, competition environment, macroenvironment, and so on. This is a social and business phenomenon that contains many variables which cannot be quantified. Furthermore, with a less structured research framework, qualitative research is much more flexible and suitable for exploratory analysis. This means that qualitative research enables the researcher to explore out factors and issues in the house market. More importantly, qualitative research helps inquirers to understand the context of research phenomenon. It also allows researchers to use their own views to make explanation of a research phenomenon.
Quantitative research is not suitable to study Chinese guest house market, because it overly focuses on the collection and analysis of numerical data. Based on positivism philosophy, quantitative research is constricted by its rigour structure to explore variables (Saunders et al., 2012). By effectively analysing quantitative data, a research can find convincing evidences, but not all variables and behaviour can be quantified. Many behaviours, feelings and variables may be neglected by quantitative research, so it cannot find out insights. Even though the results of quantitative research are less controversial and arguable, such research is not appropriate for social research, behaviour research and to study those phenomena closed related with its context. The Chinese guest house market is intimately related with its context and Chinese customers, so it is not suitable for this research to adopt quantitative research.
3.3 Secondary Research
This research collects secondary data for the literature review. All sources of the data are reliable from journals.
Research methods are designed to implement a research and collect data. This dissertation conducts a qualitative research that is supported by inductive approach, interviews for data collection, convenience sampling and thematic approach for data analysis.
3.4.2 Inductive Vs Deductive Approach
Inductive approach is the best choice for this research to study the factors affecting competitiveness of Chinese guest house. Inductive approach enables the researcher to observe Chinese guest house market, find out insights, and explore out variables affecting the market’s competitiveness. In alignment with explorative research, inductive approach begins with observations and then develop explanations. Inductive reasoning uses observations as its foundation to create generalisations and ideas. Given that purpose of this research is to explore the factors affecting competitiveness of the industry, it is proper for this research to use inductive approach to explore those factors. By this approach, this dissertation can describe the phenomenon of factors affecting Chinese house market’s competitiveness. More importantly, the approach is designed to create meanings from data set to find out patterns, connections, and relationship to generate theory (Goddard and Melville, 2004). Also, it also tolerates researchers to design research questions based on existing theory (Bernard, 2011). In this dissertation, the researcher considers the theories in the Literature Review to design research questions and take advantage of inductive reasoning to generate theories based on premises. Moreover, inductive approach focuses on dynamics, robustness, and resilience (Bernard, 2011), while the Chinese guest house industry is dynamic with the changes in external environment.
On the other hand, deductive approach is improper for the purpose of this dissertation. It runs researches based on existing knowledge and thus cannot generate new insights and theories. Nevertheless, this dissertation plans to find new insights related with competitiveness of Chinese guest house market. Thus, it plans to use inductive approach rather than deductive approach.
3.4.3 Interviews
Survey is applied as research strategy to collect qualitative data. It is a fast method for researcher to collect primary data and has many data collection techniques including interviews and questionnaires.
Interviews
Interview as a data collection technique is implemented by this research. It is a qualitative research tool that gather data by a conversation with respondents to dig out their opinions. Interview is an effective to gather qualitative data from respondents and more consistent with qualitative research (Boyce and Neale, 2006). Given that interview is a qualitative tool, it allows researchers to experience the process of data collection so as to dig out insights (Connaway and Powell, 2010). By using interview, researchers have the opportunity to find out detailed information about research phenomenon. Interview allows researchers to directly control the process of data collection and to clarify special issues during the process of data collection.
Semi-structured interview covers both structured and unstructured interviews (Jackson, 2011), which is applied to collect primary data. In this sense, the researcher asks pre-designed questions and additional questions to the respondents. The researcher asks personalised questions and further questions based on the respondents’ answers and reaction. The researcher closely obverses the respondents’ body language and tries to interpret their meaning between the lines. Furthermore, by asking further questions, the researcher can remove ambiguities and dig out deep insights, which are necessary to find out valid and important data.
The sample of the interview is 10 respondents. This research plans to interview 10 respondents who are the owners of Chinese gust house. Due to the threats of COVID-19, the researcher adopts online video to interview respondents and communicates with them by the internet.
3.4.4 Sampling
Convenience sampling is implemented in this research. It is one of non-probability sampling method that collects data from those respondents who are conveniently accessed (Saunders, Lewis, and Thornhill, 2012). By this technique, researchers can directly access the first available data source without extra conditions. Thus, the technique helps researchers to build a large sample in a fast way and conveniently access respondents. By convenience sampling, the researcher can use her social networks to access respondents and advertise the research by her social media accounts. Due to COVID-19, it is challenging to find out respondents. Convenience sampling allows the researcher to have the best chance and use her all resources to access potential respondents. This research only has about 1 month for data collection. This technique enables the researcher to have enough sample within the limited time.
Probability sampling techniques are not suitable for this research. To use these techniques, the researchers have to ensure that they have the same chance to access each one of research population. It is impossible for respondents to ensure this. Furthermore, other non-probability sampling techniques are too complicated to manage.
3.4.5 Interview Explanation of Interview Questions
The research designed some questions before the interview, showed in Appendix I. These questions are categorised into four groups. Firstly, the interview inquires the respondents’ guest house and identifies their operation experience and business scale. By asking ‘how long have you been operating your guest house?’, the research can identify a respondent’s experience and evaluate whether the respondent has enough experience to provide data. By ask ‘How many customers do you serve roughly?’, the research can understand the respondent’s business scale and evaluate the performance of his or her guest house.
The rest of the groups are developed based on the theories in the Literature Review, including service quality, customer orientation and price. The literature review has built the theoretical framework consisted of service quality, customer orientation and price. Thus, the second, third and fourth group of questions are developed based on the framework. The second group of questions is designed based literature review of service quality. These questions have the purposes to identify the relationship between service quality and competitiveness, how to effectively use service quality to improve customer satisfaction and find out the most important issue related with service quality.
The third group inquires how the respondents to develop their customer orientation. These questions are designed based on the literature review, including ‘putting customer in the first place’, ‘making them feel at home’, ‘developing employees for customer orientation’, and ‘personalised services’. The theoretical foundations of these questions are justified in the literature review.
The fourth group investigates the impact of prices on customer satisfaction, which are built based on the literature review. The group measures customers’ attitude to prices, guest house’s pricing strategy, and the connections between pricing strategy and customer satisfaction.
3.5 Data Analysis
Data analysis can be accomplished by four steps (Saunders et al., 2012):
1) Gathering the data and then transcribing the interviews
2) Evaluating all the data based on classified patterns
3) Summarising those patterns into sub-themes
4) Establishing a valid argument from those themes
This research records the time, data, and location of the interview. After data collection, the researcher transcribed conversations and then coded all interviews. The researcher analysed each questions of the interview and the primary data according to the research objectives.
Thematic analysis is a widely used techniques to analyse qualitative data. It allows researchers to conduct analysis beyond counting words and find out ideas from qualitative data (Guest and MacQueen, 2012). By thematic approach, the research analyses primary data from research theme to concepts. The finding of the interview will describe with the literature review to generate conclusions and make recommendations.
3.6 Research Ethical Consideration
This research is designed and implemented strictly in accordance with Coventry University’s ethical code. It is truthful research that straightforwardly and honestly reveals its objectives and aims by the interview cover to respondents. In other words, this research ensures that all respondents fully understand the aims of this research before they provide data by offering them a consent letter (shown in Appendix I). Meanwhile, the respondents have the right to quit during the interview or repeal their data after they completed their interview and before 20 August 2020. This research does not inquire and record the identity and other sensitive information of the respondents, including name, contact, their guest houses, and commercial secrets. To avoid controversy, this research does not inquire any commercial secrets and plan to debrief its findings. The data and results are only accessible to the researcher and the University. The data is locked in the researcher’s work laptop and will be destroyed by 1st December 2020. More importantly, the questions of the interview are justified and designed on the foundation of the literature review. The interview avoids sensitive questions.
3.7 Research Validity and Reliability
Validity of data means the accuracy of research results and reliability means the similarity between results of a new research and those of old researches (Saunders et al., 2012). The results of the interview can achieve the research aim of helping guest houses to develop their competitiveness by identifying how to effectively manage service quality, customer orientation and price. By engaging the three factors, guest houses can improve their competitiveness in accordance with the research’s findings.
Furthermore, this research collected secondary data from multiple and reliable sources. To be specific, all sources of the citations in the Literature Review were reliable from academic journals.
This research avoids subjectivities and biases of the researcher. It focuses on objectivity to analyse qualitative data. More importantly, the researcher overcomes pre-consumptions and biases to analyse the data.
3.8 Research Limitations
This dissertation is constricted by its research methodologies. Firstly, the qualitative approach based on interpretivism may generate arguable findings. The advocators of positivism highlight that the results from interpretivism-based researches are likely to be controversial and arguable because of the differences in researchers’ perceptions (Gulati, 2009). Secondly, the research adopts interviews to collect qualitative data, which may be questioned by its validity in data collection and analysis. Thirdly, the research uses inductive approach which however cannot guarantee the validity of its findings. Inductive approach enables researchers to explore new insights but cannot prove any theories and knowledge (Gulati, 2009).
Moreover, the dissertation is constricted by sample size. It is hard for a qualitative research to use interview to collect a huge number of samples. More importantly, this research only has one month for data collection. Thus, its sample size is relatively small.
3.9 Chapter Summary
This chapter justifies the use of research methodologies. This research adopts qualitative research, collects data by interviews, follow deductive approach, and uses convenience sampling. The design of interview question is justified. The research strictly follows ethical codes of the university. It analyses primary data by thematical approach.
This research collected qualitative data from 10 respondents have been owners of Chinese guest houses. The purpose of this chapter is to analyse the qualitative data. The first section offers demographics of participants. The second section provides an overview of data analysis. The following three sections analyses the service quality, customer orientation and price. The latest section summarises the findings of this research.
Gender
This research interviewed 6 male respondents and 4 female respondents.
Figure 3: Gender distribution
Age Distribution
Half of respondents are over 50 years old who operate their guest house as a part of their retirement life. Two respondents are between 41 and 50 years old who are from Tier one cities of China and tried with busy and fast lifestyle in there. Other two respondents are 31-to-40 years old and one respondent is 28-year-old, who were born around tourism destinations.
Figure 4; Age distribution
Education Level
Five respondents accepted a tertiary level of education, three respondents graduated with Bachelor’s degree, and two respondents graduated with Master degree.
Figure 5: Education Distribution
Locations
All respondents’ guest houses are located in tourism destinations or attractions. Four guest houses are in Lijiang and Dali, Yunnan province where are famous for guest house business. Guest house is one of important destination attractions that provides unique and distinctive services. Two guest houses are in Tibet and one is in Qinghai. Above 9 guest houses are close to world-famous attractions and work in these places where guest houses are prevalent. Many tours consider living in a guest house as a necessary part of their travelling experience to perceive uniqueness. One house guest is built near destination attractions in Guangzhou.
|
Province |
Frequency |
|
Yunnan |
4 |
|
Tibet |
3 |
|
Guangzhou |
2 |
|
Qinghai |
1 |
Table 1
Figure 6: Distribution of locations
Operation History
One guest house has opened for business for less than 3 years. Four guest houses have 3-to-5-year operation history. Three guest houses have operated for 6 to 9 years. Two guest houses have over 9-year history.
Figure 7: Operation History
Customer Level
The scale of these guest house is small, most of them has 10 to 20 rooms and they normally accommodate families and couples. Their businesses are strongly affected by seasonal factors, whose peak business seasons include public holidays and summer. Two guest houses in Tibet and one guest house in Qinghai barely have guests between November and April because of extreme weather.
Figure 8: How many guests do you serve, annually
|
Respondents Number |
Age |
Gender |
Background |
Location |
Position |
|
1 |
28 |
Male |
Master degree |
Guangzhou |
Owner Staying at his guest house for long-term |
|
2 |
34 |
Female |
Master degree
|
Qinghai |
Owner Staying at her guest house everyday |
|
3 |
38 |
Male |
Bachelor |
Tibet |
Owner, long-term staying at his guest house |
|
4 |
45 |
Female |
Tertiary |
Tibet |
Owner, staying at there every day |
|
5 |
49 |
Male |
Tertiary |
Qinghai |
Owner, staying at there every day |
|
6 |
51 |
Male |
Bachelor |
Yunnan |
Owner, staying at there for long-term |
|
7 |
55 |
Female |
Tertiary |
Tibet |
Owner, staying at there for long-term |
|
8 |
57 |
Male |
Tertiary |
Tibet |
Owner Staying at her guest house everyday |
|
9 |
61 |
Male |
Tertiary |
Yunnan |
Owner Staying at her guest house everyday |
|
10 |
63 |
Female |
Tertiary |
Yunnan |
Owner Staying at her guest house everyday |
Table 2
The research finds that the important factor affecting customer satisfaction is customer relationship. These guest houses focus on maintain good relationship with guests to ensure high level of customer satisfaction.
This research analyses three variables including service quality, customer orientation, and price. To begin with service quality, these guest houses focus on empathy and responsiveness in term of SERVQUAL model. Customer relationship and personalised service are two important factors affecting customer satisfaction. In term of customer orientation, it is important to make guests perceive that guest house value and concern them. A guest house needs to put customers into the first position in order to develop customer satisfaction. In term of price, guest houses take advantage of cost leadership (cheaper than 5-star hotels) to serve those guests with lower expectations and have proficiency to deliver services beyond their expectations. These services include personalised service, emotional resonance, customer relationship and great concern to guests. Also, lower prices and dynamic pricing are important factors determining customer satisfaction.
Furthermore, this research finds that customers in guest house market are sensitive to price and have great commitment when they make purchase decisions. They consider selecting a guest house as a process of exploring their travelling destination and gaining joy. They enjoy the process of finding a flavoured guest house. Also, they expect to experience local customs and habits by living a guest house and heart-warming services, so they choose guest house rather than economical hotel or five-star hotels. Some of customers experienced emotional trauma such as loss of family members, break-up with lovers or were under heavy pressure from their job and life, so they choose to travel to those attractions including Yunnan, Tibet and Qinghai to find peace in their mind and run away from their original life. Other customers could be family travellers and couples. Especially for young couples, their motive mainly is to experience romantic attractions. Generally, all guests do not expect to perceive luxury environment, but they desire to feel local customs and habits.
Additionally, the owners stay at their guest houses every day or in long term, which enables them to directly involve their business, directly order employees and make fast decisions without complicated management layers and organisational structure. This also allows them to offer personalised services, develop customer relationship, show concerns to customers, and arouse emotional resonance in an effective way.
How do you think that the improvements in service quality can facilitate customer satisfaction?
All respondents agree that the improvements in service quality can facilitate customer satisfaction and they recognise the importance of service quality.
Respondents mentioned customers’ demands when they were talking about customer satisfaction. Some of them tried to satisfy guests’ all requests, and for those requests that they are unable to meet, they help guests to meet their demands. For example, they offer guests advices and information that can help them to meet their demands. An alternative way is that they contact external service providers who can satisfy a guest’s demands. They also might use their social connections to help their guests.
‘…we constantly focus on service quality and try to meet guests’ all requests and demand or help them to meet their demands…’ – Respondent 3
‘…I contact my friends, try to help customers, if we cannot meet their demands…’ – Respondent 5
‘…using my social connections…’ – Respondent 9
Other respondents mentioned they constantly maintain proper hotel environment, clearness, and heart-warming services. They focus on both tangible and intangible environment.
‘…my (guest) hotel ensures the clearness of room, beddings…, also focusing on waiters’ services’, – Respondent 9
‘…we must make guests feel our warm heart…’ – Respondent 2
What services do you provide to facilitate customer satisfaction?
These guest houses are committed to develop a great relationship with all of guests. They focus on high level of service quality to improve customer satisfaction. To achieve good customer relationship and high service quality, their major meanings include offering highly personalised services, making guest feel like home, having personalised communication with them, giving guests’ travelling advises, answering their personalised request, and giving them a lift.
‘…personalised services…’, Respondent 5
How do you improve service quality in term of reliability, assurance, employees’ empathy, and responsiveness?
Reliability
In term of reliability in SERVQUAL, the research finds that customers have relatively low expectations and these guest houses are ambiguous about promised services. Customers have a low expectation because of several reasons including low prices, undeveloped regional, and weaker infrastructure around the guest house. More importantly, customers are attracted by beauty of nature around the guest houses. This can compensate a lower service quality. Moreover, those guests of guest houses expect to experience the folk custom and habits around their destination rather than luxury lifestyle. Due to these reasons, they tend to be still satisfied even if the reliability of service is not high. Overall, reliability is not an important factor affecting customer satisfaction.
‘…Guests generally are unlikely to complain even if we failed to offer basic services such as 24 hours hot water…’, Respondent 2
‘…Our guests desire to experience our custom and habits…’, Respondent 4
‘…I believe that guests understand our difficulties, after all we are running at low budget…and the infrastructures of our regional…’, Respondent 6
‘…we do not clarify our services… and most customers are attracted by the best viewpoints around our guest house…They are not come here for enjoying luxury lifestyle, but they do enjoy the beauty of nature…’, Respondent 5
‘…Guests normally have a relatively low requirements and expectations. They know we are just a guest house in undeveloped regional…’, Respondent 10
These guest houses have relatively good performance in delivering basic services including 24 hours hot water, the internet, wake-up call, breakfast, and room clean. Even though they fail to provide some of these basic services occasionally, they indicate that their guests tend to understand them because their guest houses are located in undeveloped regionals in the first place.
‘…we barely fail to perform basic services…’, Respondent 8
‘…It is very rare that we cannot offer basic services such as hot water…’, Respondent 9
Assurance
The research finds that assurance is an important factor affecting customer satisfaction. Respondents pay attention to employees’ capabilities to deliver trust and confidence. Most of them hire well-trained employees and employees with long work experience. Employees’ capabilities and work experience are critical for them to gain trust from guests.
‘…It is important for employees to show their confidence and gain customer trust…’, Respondent 2
‘…using well-trained employees…’, Respondent 4
‘…over 2-year work experience...’, Respondent 5
How do you develop tangibles of your guest house to make improvements?
Tangibles
The significant tangibles of a guest house affecting customer satisfaction include suitable room, cleanness, comfortable beds, stable internet, and the scenery outside the window.
It is important for guest houses to have a clean room and sound in-room equipment including beds, shower, toilet, and internet.
‘…Guests need a clean and comfortable place to enjoy their trip, which means that we need to provide proper rooms, beds, shower equipment, toilet, and internet…’, Respondent 1
Respondents illustrate that the guests do not have high expectations and requirements on physical environment and tangibles of a guest house because they perceive low price and are more interest in landscape outside their window.
‘…our guests tend to have low expectations on physical facilities and equipment…’, Respondent 6
Many respondents mention the importance of creating the sense of romance especially those who own guest house in Yunnan, because there are many tourism destinations which are famous for romance and attractive to young couples.
‘…a romantic physical environment is important…’ Respondent 9
‘…we are dedicated to create a romantic environment…’ Respondent 10
Empathy
The research finds that empathy of employees is an important factor affecting customer satisfaction. Respondents hire those employees who are heat-warming and suitable personality for offering services. Some of respondents only hire trained employees with appreciate personality. Most of employees are kind and plain folks who have willingness to help other and less pressure from life and money and tend to show great empathy.
‘…My employees are heat warming and have great empathy…I only hire such employees…I always tell them that our customers are guests and we should act as a kind host who properly accommodates guests who come from a long way …’, Respondent 2
‘…I only hire trained employees who have the personality which are suitable to offer services…’, Respondent 4
Respondents believe that their employees must show empathy to guests especially for those who have experienced emotional trauma recently. Employees better are able to bring happiness and joy to guests. Making guests perceive human touch and kindness is a critical factor making guests perceive high quality and satisfied. Some respondents believe that showing empathy and concerns to guests is the key to leave their an unique travelling experience.
‘…some guests just divorced…come here to relieve boredom…’, Respondent 3
‘…a large proportion of guests travel to here for curing their emotional trauma…’, Respondent 9
‘…some young guests stay here because they just broke up with their spouse…’, Respondent 10
Responsiveness
Responsiveness is an important way to demonstrate that a guest house cares a guest. They mentioned that they cannot make guests keep waiting because it certainly causes customer dissatisfaction. They use the training and close communication to make employees put guests in the first position. Some of them conduct employee meeting every morning to ensure high level of service quality and employees’ positive work attitude. The owners almost train employees every day to ensure them to offer prompt services.
‘…concluding employees’ mistake, and requiring them to make improvement, every morning…’, Respondent 5
…firing those lazy employees…’, Respondent 9
These owners sometimes provide prompt customer service in person when their guest house is short of employees. They also may apology to guests in person when guests are unsatisfied with slow responsiveness.
‘…showing my regret in person…’, Respondent 3
‘…offering services by myself if we are short of hands…’, Respondent 6
How do you develop customer orientation?
Respondents make guests feel that they are priority of a guest house and treated as friends in order to develop customer orientation. These owners usually build personal connections and emotional connections with guests if guests are also willing to do. Owners start with asking guests their experience and whether they are satisfied to show owners’ concern.
‘…trying to talk with every customer and make friend with them…’, Respondent 2
‘…sharing my stories and experience…’, Respondent 3
‘…emotional connections…’, Respondent 4
Why do you think making customers feel themselves at home is important?
Owners believe that the feeling at home is one of important factors motivating their guests to choose guest houses rather than economical hotels. In guest houses, travellers are treated as friends who are closer than guests and they feel more comfortable as well as relax and experience more heart warming
‘…our guests demand the feeling of living at their home…’, Respondent 8
How do you make them feel like home?
These owners provide personalised services, treat guests as friends, try to meet all of their demands, and help them to find other service providers if the owners cannot meet their demands.
‘…Answering their personal requests…’, Respondent 6
‘…Trying to offer more helps and convenience…’, Respondent 7
Moreover, most of owners directly communicate with guests in the same way of communicating friends to show their concerns to guests. They try to build emotional connections with guests and cultivate a sort of friendship with guests.
‘…using personal communication…’, Respondent 5
‘…making friends with guests…’, Respondent 7
How do you manage your employees to make them put customers in the first place?
Developing employees’ working attitude and capabilities is another important task for the owners to implement customer orientation.
‘…training employees every morning…’ Respondent 3
‘…Training employees for 20 minutes on every day…’, Respondent 4
‘…Ensuring that all employees have sufficient skills and positive work attitude…’, Respondent 9
Some owners evaluate employees’ performance in their mind daily or weekly and require employees to improve their services. They reflect daily and weekly performance in term of customer orientation and then communicate with employees to achieve improvements.
‘…reflecting employees’ performance and shortages every day…’, Respondent 5
What do you do to build good relationship with your guests?
The approaches of building customer relationship include personalised services, close communication, showing concerns, and efforts to meet customers’ demands.
‘…Personalised services…’, Respondent 5
‘…communicating with guests by myself…’, Respondent 10
Also, they pay attention to employee training to ensure that they have the capabilities and willingness to build good customer relationship.
‘…My employees are well-trained by myself…’, Respondent 1
‘…I constantly tell my employees that customers are our friends…and I also act in this way to influence my employees…’, Respondent 4
What are your personalized services?
They provide many personalised services which are not available or allowed in economical hotels and even 5-star hotels. Because these owners stay at guest house almost every day or in long-term and their guest houses have very flat management structure, they can offer highly flexible services. Guests normally can directly communicate with guest house owners to express their demands, and these owners with the purpose of facilitating good relationship with customers tend to try to meet these demands. Thus, these guest hotels have the advantage of simple management in developing customer satisfaction. Their high level of flexibility enables them to effectively meet customers’ demands as much as possible. For example, some house guests make local cuisines in accordance with a guest’s personalised requests and deliver the service at middle of night. If owners plan to go outside, they are more than willing to give their customers a lift. Some owners drink alcohol with their guests and invite their guests to their party or take invitations to guests’ party. Some guests who travel to Yunnan, Qinghai or Tibet have the intention to avoid crowd cities and run away from their original life perhaps because they have experienced emotional trauma.
‘…we offer customers the services based their request…’ – Respondent 1
‘…we treat customers as our friends who help each other…offering them free lift, occasionally…, giving them personalised travelling advises…’ – Respondent 2
‘…providing foods at night, cooking local food especially for them, considering their preferences…’, Respondent 3
‘…helping their usual request such as accompanying, drinking alcohol, joining guests’ party, etc.…’, Respondent 4
How do you offer personalized services of customers or meet their personalized demands?
Some owners proactively communicate with guests to identify their demands. To be specific, they euphemistically inquire guests’ travelling purposes, motives, and their occupation and obverse their status to predict their demands and desires, and the provide personalised travelling advises or help.
‘…I try to know travellers’ purposes and motivations…I just need to ask some simple questions…and then I can predict their needs based on my decades’ experience…’, Respondent 9
For example, an owner recognises that two guests are young lovers in the middle class from their wearing and then the owner can recommend them to those romantic places which also fit their consumption capabilities.
‘…I am always glad to offer young couples my suggestions based on their consumption capabilities…and I can predict their consumption capabilities based on my experience and their wearing…’, Respondent 10
For those demands that a guest house is unable to meet, owners tend to use their social networks to help their guests. They connect other service providers who are capable to meet those guests’ demands.
‘…using my business network…’, Respondent 5
‘…asking my friends who can do…’, Respondent 6
What is your opinion about your customers’ attitude to prices?
These respondents highlight that price sometime is important. Consumers are relatively price sensitive especially for those who expect to stay over two weeks. They tend to spend days to make comparison of economical hotels and many guest hotels in term of prices, locations, and online comments when they make purchase decisions. More importantly, the competition among guest houses is intensive. Firstly, there are a large number of guest houses and many options around a travelling destination. Secondly, each guest house has its own different attractiveness. The prices of guest house are basically at the same level. The research finds that guest houses are highly homogeneous. Even though these owners claim that they have own different attractiveness, the differences perceived by guests are relatively small and moderate. These differences are concentrated on
‘…consumers are very sensitive to prices…’, Respondent 1
‘…they spend days in discussing with their friends about the choice of a guest house…’, Respondent 3
‘…competition is intensive…there are many guest houses around mine…’, Respondent 5
Short-term travellers who plan to stay 3 to 7 days also are sensitive to price. They can easily make comparisons of prices and performance by using the internet or asking their friends. Most travellers view the process of choosing guest house as a joy in the part of their travelling and enjoy the process to explore pleasure.
‘…short-term travellers basically are same with long-term travellers…’, Respondent 2
‘…many travellers enjoy the process of choosing guest house…off course, they compare price in the process…’, Respondent 7
What is your pricing strategy?
These owners generally compare their competitors’ prices, especially their neighbours. Some owners also consider their costs and investment, whereas the market is the most important factor affecting their price decisions.
‘…I have to consider the market…’, Respondent 1
‘…My neighbours are also guest houses, so I must consider their offer (prices)…’, Respondent 3
Season is a strong and significant factor affecting these guest houses’ pricing strategy. Almost of all guest houses and hotels are full of customers during the peak seasons when they can charge much higher prices. The peaks seasons include public holidays and summer times. However, they have to cut their price to their cost level during off seasons such as winner times.
‘…we consider season…during peak season, we always are full of customers…’, Respondent 4
What pricing strategy do you use to attract customers?
These owners’ pricing strategy is to reduce pricing during the off seasons to attract customers by offering price discount. The prices in hospitality industry are highly dynamic and these guest houses almost change their prices every day according to the market and their statues.
‘…usually, price discount…’, Respondent 3
‘…dynamic prices…changing prices every day…based on the market and our own situation…’, Respondent 6
Because the owners stay at their guest houses, they can directly change prices without complicated management. Also, they use the internet to acquire competitors’ prices and set prices based on their own experience.
‘…I directly determine price every day….’, Respondent 1
‘…using the internet to acquire others’ price…’, Respondent 4
How do you use pricing strategy to improve customer satisfaction?
These owners indicate that price is an important factor affecting customer satisfaction. Chinese consumers are sensitive to price but tend to have lower expectations and requirements when the price is low. This means that perceived quality of customers is strongly related with prices. They view online comments to understand service quality and then evaluate cost performance. They consider price and other guest houses’ service quality when they measure service quality. This means that they are reasonable and rational. With lower expectation, they are more likely to be satisfied.
‘…We are cheaper than 5-start hotels…comes to lower customer expectation…’, Respondent 2
Moreover, these owners take advantage of a lower price than 5-start hotels to develop customer satisfaction. They use cost leadership to gain competitive advantages, make guests have lower expectations and achieve high level of customer satisfaction.
‘…cheaper…’, Respondent 4
‘…economical for young people…’, Respondent 5
Furthermore, these owners have proficiency to offer the services beyond guest expectations thus improving customer satisfaction. They have strong capability to ensure that perceived service exceeds expected service so as to enhance customer satisfaction. They ensure that customers have an unexpected experience mainly by developing good customer relationship, offering unexpected personalised services and trying to have emotional resonance with guests, and showing great concern to them.
‘…our service beyond expectations…, Respondent 7
‘…we always ensure guests are satisfied…’, Respondent 8
This research collected qualitative data from 10 respondents (6 male and 4 female) have been owners of Chinese guest houses which are located in Yunnan (4), Tibet (3), Qinghai (2) and Guangzhou (1). Half of respondents are over 50 years old who operate their guest house as a part of their retirement life. The education level of these respondents is not very high (5 tertiary education, 3 Bachelors and 2 Masters). They have enough operation experience. The scale of these guest house is small (basically 10 to 20 rooms). Customer relationship and personalised service are two important factors affecting customer satisfaction. These guest houses focus on empathy and responsiveness in term of SERVQUAL model. In term of customer orientation, it is important to make guests perceive that guest house value and concern them. In term of price, guest houses take advantage of cost leadership (cheaper than 5-star hotels) to serve those guests with lower expectations and have proficiency to deliver services beyond their expectations. Moreover, customers in guest house market are sensitive to price and have great commitment when they make purchase decisions. Meanwhile, the owners stay at their guest houses every day or in long term, which enables them to directly involve their business, directly order employees and make fast decisions without complicated management layers and organisational structure.
Chapter 5 – Discussions
5.1 Introduction
This chapter critically discusses the findings from the Chapter Four with the Literature Review in term of the variables (service quality, customer orientation, price and customer satisfaction).
5.2 Service quality
This research finds that service quality is an important factor affecting customer satisfaction in Chinese guest house market. This finding is consistent with the arguments of a positive relationship between service quality and customer satisfaction in hotel industry (Chia and Muiz, 2020; Foster et al., 2016; and Muresan et al., 2013).
Guest houses are aware of the importance of service quality. They try to meet all customers’ requests and demand. When they are unable to meet customer demands, they use their social connections to help customers. The way that they use their social connections is related with their empathy in SERVQUAL model in accordance with (Parasuraman et al., 1998). They care customers and pay individual attention to their guests. More evidences that show the importance of empathy include offering personalised service, building emotional resonance, developing personal customer relationship, and showing concerns to customers. Also, responsiveness is an important way to demonstrate that a guest house cares a guest. Guest houses train employees every day to ensure high level of responsiveness. These owners sometimes provide prompt customer service in person when their guest house is short of employees in order to ensure high level of responsiveness.
Meanwhile, tangibles, assurance and reliability also have positive relationship with customer satisfaction. The necessary tangibles for customer satisfaction include cleanness, comfortable beds, showing, toilet and stable internet. The beautiful scenery outside the window can strongly improve customer satisfaction. Customers generally have lower expectations on tangibles of a guest house. Assurance also is an important factor affecting customer satisfaction. Guest houses ensure that their employees have strong capabilities to deliver trust and confidence. Additionally, reliability is not a strong factor. Customers have low expectations and are attracted by beauty of nature around the guest houses, which can compensate a lower service quality. They tend to be still satisfied even if the reliability of service is not high.
5.3 Customer Orientation
This research finds that customer orientation is a strong factor affecting customer satisfaction. Guest house pays attention to employee training and development to ensure that them to put customer into the first place. This finding is consistent with Hennig-Thurau (2004)’s argument that customer orientation of employees has positive relationship with customer satisfaction. This research finds that developing relationship with customer is important, which aligns with Hofstede et al. (2010)’s argument that Chinese people pay heavy attention to relationship, face and Guanxi (social connections). Owners of guest houses directly communicate with guests to their concerns, provide personalised services, and have personalised communication. They have great social skills and experience and use it to predict guests’ demands and preference. This accords with Hennig-Thurau (2004)’s argument that technical and social skills are important to develop customer orientation. Also, these owners stay at their guest house every day, so they can directly make decisions on whether or not meet customer demands. These guest houses have high level of flexibility to meet customers’ personalised demands. Owners believe that the feeling at home is one of important factors motivating their guests to choose guest houses rather than economical hotels. This means that they use customer orientation to develop distinctive competitive advantages. To make guests feel like home, these owners provide personalised services, treat guests as friends, try to meet all of their demands, and help them to find other service providers if the owners cannot meet their demands.
To develop good relationship with guests, guest houses have the following meanings: personalised services, close communication, showing concerns, and efforts to meet customers’ demands. Guest houses focus on personalised services including offering personalised travelling advises, cooking local food especially for a guest’ individual requests, free lift, accompanying, party and so on. These owners stay at guest house almost every day or in long-term and their guest houses have very flat management structure, so they can offer highly flexible services. These owners directly communicate with guests to identify their demands.
Additionally, guest houses develop employees’ working attitude and capabilities to execute customer orientation. Some guest houses evaluate employees’ performance in their mind daily or weekly and require employees to improve their services. This is consistent with Hennig-Thurau (2004)’s argument that employee act important role in the implementation of customer orientation.
5.4 Price
This research finds that price is a strong factor affecting customer satisfaction. This finding is supported by many previous researches (Chen et al., 2015 and Foster et al., 2016). Chinese consumers are relatively price sensitive especially for those long-term customers. They have great commitment and involvement in the process of making buying decisions and enjoy the process to obtain joy. They can easily make comparisons of prices and performance by using the internet or asking their friends. This means that they are aware of prices and service quality of competitors. They generate rational expectations about service quality. This finding is consistent with Wang and Hung (2015)’s argument that cost performance is an important factor affecting customer experience. This means that Chinese customers evaluate price and service quality when they assess their experience. This is consistent with Liu et al. (2011)’s argument that Chinese people are highly concern with prices.
These consumers are sensitive to price but tend to have lower expectations and requirements when the price is low. To develop customer satisfaction, guest houses set their prices lower than 5-start hotels. They use cost leadership to gain competitive advantages, make guests have lower expectations and achieve high level of customer satisfaction. More importantly, these owners have proficiency to offer the services beyond guest expectations thus improving customer satisfaction. This mechanism is consistent with Oliver (1980)’s argument that customer satisfaction is viewed as a status which perceived quality meets expected quality.
Chapter Six Conclusions
6.1 Summary
What are the characteristics of consumers who choose guest house?
The research finds that customers in guest house market consider selecting a guest house as a process of exploring their travelling destination and gaining joy. They enjoy the process of finding a flavoured guest house. Also, they expect to experience local customs and habits by living a guest house and heart-warming services, so they choose guest house rather than economical hotel or five-star hotels. Some of customers experienced emotional trauma such as loss of family members, break-up with lovers or were under heavy pressure from their job and life, so they choose to travel to those attractions including Yunnan, Tibet and Qinghai to find peace in their mind and run away from their original life. Other customers could be family travellers and couples. Especially for young couples, their motive mainly is to experience romantic attractions. Generally, all guests do not expect to perceive luxury environment, but they desire to feel local customs and habits.
How does service quality affect customer satisfaction?
The research finds that the important factor affecting customer satisfaction is customer relationship. These guest houses focus on maintain good relationship with guests to ensure high level of customer satisfaction. This research analyses three variables including service quality, customer orientation, and price. Guest houses focus on empathy and responsiveness in term of SERVQUAL model. Customer relationship and personalised service are two important factors affecting customer satisfaction.
How does customer orientation affect customer satisfaction?
It is important to make guests perceive that guest house value and concern them. A guest house needs to put customers into the first position in order to develop customer satisfaction.
How does price affect customer satisfaction?
Customers in guest house market are sensitive to price and have great commitment when they make purchase decisions. However, a lower price is important for guest houses to achieve high level of customer satisfaction. With lower prices, customer tend to have lower expectations.
What are the recommendations to Chinese guest houses?
The owners should stay at their guest houses every day or in long term, which enables them to directly involve their business, directly order employees and make fast decisions without complicated management layers and organisational structure. This also allows them to offer personalised services, develop customer relationship, show concerns to customers, and arouse emotional resonance in an effective way.
Guest houses should take advantage of cost leadership (cheaper than 5-star hotels) to serve those guests with lower expectations and have proficiency to deliver services beyond their expectations. These services include personalised service, emotional resonance, customer relationship and great concern to guests. Also, lower prices and dynamic pricing are important factors determining customer satisfaction.
Guest houses must pay heavy attention to empathy and responsiveness in term of service quality. Showing their great concern to guests and developing personalised relationship are important for guest houses to gain high level of customer satisfaction.
6.2 Recommendations for further research
This research is constricted by its research methodologies, time and sample size, whereas it digs out many insights. Further research can test these insights by collecting a large number of samples via survey in positivism philosophy. By positivism and strict research framework, further research can generate law-like findings and some evidences proving the positive relationship between customer orientation, service quality, price, and customer satisfaction alone. Also, this research finds that guest houses are flexible that allows them to effectively adapt to guests’ personalised demands because their owners make direct decisions. It also finds that these owners directly communicate with guests and develop personal relationship with them. Further research may study the important role of owners on their guest houses’ performance. Moreover, further researches should explore other factors that could affect customer experience, expectation, and satisfaction. For example, they can identify the most effective pricing strategy that can improve customer satisfaction. Also, brand image and reputation could affect customer satisfaction. This researcher finds that Chinese consumers have deep involvement in buying decisions process, collect sufficient purchase information from the internet and consider word of mouth. Thus, further research can study the impact of word of mouth on consumer buying decision and identify the factors affecting consumer buying in the industry.
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Appendix-Interview Questions
Participant Information and Informed Consent Form
For Project ‘The Competitiveness of Chinese Guest Houses’
The study is being conducted by Miss Wang at Coventry University London. The aim of this study is to facilitate development of the chain of guesthouse in China, to find out approaches that can help them and to make recommendations to them. You have been selected to take part in this study because you are owner of a guesthouse. Your answers will help me to explore how guesthouse to improve competitiveness in China.
Your participation in the interview is entirely voluntary, and you can opt out at any stage by directly telling me. If you are happy to take part, please answer the following questions relating to my project. The interview should take approximately 30 minutes to complete. Your answers will be treated confidentially and the information you provide will be kept anonymous in any research outputs/publications. Your data will be held securely in my laptop. All data will be deleted by 1st December 2020.
This project has been reviewed and approved through the formal Research Ethics procedure at Coventry University London. For further information, or if you have any queries, please contact the lead researcher:
Miss Wang
YOUR EMAIL ADDRESS
YOUR PHONE NUMBER
If you have any concerns that cannot be resolved through the lead researcher, please contact [NAME AND EMAIL ADDRESS OF YOUR SUPERVISOR]. Thank you for taking the time to participate in this survey. Your help is very much appreciated.
Please answer the questions below:
1. I have read and understood the above information. I agree to take part in this interview and I consent for my answers to be used as described
YES NO
2. I am happy for the interview to be audio recorded.
YES NO
Dear Respondents
Pre-questions
How long have you been operating your guest house?
How many customers do you serve roughly?
Service quality
How do you think that the improvements in service quality can facilitate customer satisfaction?
What services do you provide to facilitate customer satisfaction?
How do you improve service quality in term of reliability, assurance, employees’ empathy, and responsiveness?
Customer orientation
How do you develop customer orientation?
How do you make customers feel themselves at home is important?
How do you make them feel like home?
How do you manage your employees to make them put customers in the first place?
What do you do to build good relationship with your guests?
What are your personalized services?
How do you offer personalized services of customers or meet their personalized demands?
Price
What is your opinion about your customers’ attitude to prices?
What is your pricing strategy?
What pricing strategy do you use to attract customers?
How do you use pricing strategy to improve customer satisfaction?
Appendix II – Transcript of Interview
The Researcher:
Hi, I am Wang. Thank you for your participation and such kindness. I would like to talk about how factors influencing on consumers satisfaction could be used to improve guest houses’ competitiveness in China. I am going to identify the impacts of service quality, customer orientation and prices on customer satisfaction so as to make recommendations to Chinese guest houses.
Respondents:
‘Okay’
‘Fine’
‘No problem’
….
The Researcher
Firstly, would you mind me to ask some questions about your operation?
The Respondent
‘Okay’
‘Off course’
The Researcher
How long have you been operating your guest house?
The Respondent
‘I have been doing this for over nine years…’
‘…Well... about 3 to 4 years…’
‘…5 years…’
‘…3 years…’
‘…more than one year…’
‘…8 years…
‘…2 year and a half…’
‘…. about 9 years…’
‘since 2009, over a decade…’
‘…11 years….’
The Researcher
And, I want to know How do you describe your customer level? And how much rooms do you have?
The Respondent
‘…15 rooms…over 300 customers annually’
‘I have 20 rooms that can serve over 1,200 customers, most guests come during public holidays’
‘1000 guests, no problem, holiday time my place always is full’
‘I got 1100 customers last year’
‘over 900 guests lived in my guest house’
‘800 people chosen my place last year’
‘About 700 people, now I have 18 rooms’
‘I can serve 600 guests’
‘About 550 guests per year’
‘Over 300 customers. Guests are very few during the winner’
‘with 10 rooms, I served 289 guests based on my recording. I take a break during the winter because the weather’
The Researcher
I would like to check where is your guest house?
The Respondent
‘Guangzhou’
‘Qinghai’
‘Xiang Ge Li La, Tibet’
‘Lasa, Tibet’
‘Qinghai’
‘Dali, Yunnan’
‘Tibet’
‘Lasa, Tibet’
‘Dali, Yunnan’
‘Dali, Yunnan’
The Researcher
Would you mind I ask your age? Because this could be important for my research.
The Respondent
‘28’
‘34’
’38 years old’
‘I am 45’
‘I am about 49’
‘51’
‘I am 55’
‘I just had my 57th birthday’
‘61’
‘I am 63’
The Researcher
Do you stay your guest house for lone-term or everyday or your just occasionally come to your guest house?
The Respondent
‘long-term, I lived around and born in there’
‘everyday, my home is around…’
‘off course every day’
‘long-term’
‘almost every day’
‘long-term, It’s my retirement plan’
‘long-term, this is my life’
‘everyday, I love my work’
‘everyday, this all I got after my retirement’
‘everyday, have nothing else to do’
The Researcher
How do you think that the improvements in service quality can facilitate customer satisfaction?
The Respondent
‘…we constantly focus on service quality and try to meet guests’ all requests and demand or help them to meet their demands…’ – Respondent 3
‘…I contact my friends, try to help customers, if we cannot meet their demands…’ – Respondent 5
‘…using my social connections…’ – Respondent 9
Other respondents mentioned they constantly maintain proper hotel environment, clearness, and heart-warming services. They focus on both tangible and intangible environment.
‘…my (guest) hotel ensures the clearness of room, beddings…, also focusing on waiters’ services’, – Respondent 9
‘…we must make guests feel our warm heart…’ – Respondent 2
The Researcher
What services do you provide to facilitate customer satisfaction?
The Respondent
‘…my (guest) hotel ensures the clearness of room, beddings…, also focusing on waiters’ services’, – Respondent 9
‘…we must make guests feel our warm heart…’ – Respondent 2
‘…personalised services…’, Respondent 5
The Researcher
How do you improve service quality in term of reliability, assurance, employees’ empathy, and responsiveness?
Firstly, let talk about reliability. reliability means the capability to provide the promised service in a dependable and accurate way.
The Respondent
‘…Guests generally are unlikely to complain even if we failed to offer basic services such as 24 hours hot water…’, Respondent 2
‘…Our guests desire to experience our custom and habits…’, Respondent 4
‘…I believe that guests understand our difficulties, after all we are running at low budget…and the infrastructures of our regional…’, Respondent 6
‘…we do not clarify our services… and most customers are attracted by the best viewpoints around our guest house…They are not come here for enjoying luxury lifestyle, but they do enjoy the beauty of nature…’, Respondent 5
‘…Guests normally have a relatively low requirements and expectations. They know we are just a guest house in undeveloped regional…’, Respondent 10
‘…we barely fail to perform basic services…’, Respondent 8
‘…It is very rare that we cannot offer basic services such as hot water…’, Respondent 9
The Researcher
Let talk about assurance. Assurance refers to employees’ knowledge and courtesy to gain customers’ trust.
The Respondent
‘…It is important for employees to show their confidence and gain customer trust…’, Respondent 2
‘…using well-trained employees…’, Respondent 4
‘…over 2-year work experience...’, Respondent 5
The Researcher
Let discuss tangibles. Tangibles mean the appearance of physical facilities, equipment, personal, and communication materials.
The Respondent
‘…Guests need a clean and comfortable place to enjoy their trip, which means that we need to provide proper rooms, beds, shower equipment, toilet, and internet…’, Respondent 1
‘…our guests tend to have low expectations on physical facilities and equipment…’, Respondent 6
‘…a romantic physical environment is important…’ Respondent 9
‘…we are dedicated to create a romantic environment…’ Respondent 10
The Researcher
Let discuss empathy. Empathy means the attention to care customers and individualised attention to them.
The Respondent
‘…My employees are heat warming and have great empathy…I only hire such employees…I always tell them that our customers are guests and we should act as a kind host who properly accommodates guests who come from a long way …’, Respondent 2
‘…I only hire trained employees who have the personality which are suitable to offer services…’, Respondent 4
‘…some guests just divorced…come here to relieve boredom…’, Respondent 3
‘…a large proportion of guests travel to here for curing their emotional trauma…’, Respondent 9
‘…some young guests stay here because they just broke up with their spouse…’, Respondent 10
The Researcher
Let discuss responsiveness. Responsiveness refers to the willingness to assist customers and offer fast service.
The Respondent
‘…concluding employees’ mistake, and requiring them to make improvement, every morning…’, Respondent 5
…firing those lazy employees…’, Respondent 9
‘…showing my regret in person…’, Respondent 3
‘…offering services by myself if we are short of hands…’, Respondent 6
The Researcher
How do you develop tangibles of your guest hotels to make improvements?
The Respondent
The Researcher
How do you develop customer orientation?
The Respondent
‘…trying to talk with every customer and make friend with them…’, Respondent 2
‘…sharing my stories and experience…’, Respondent 3
‘…emotional connections…’, Respondent 4
The Researcher
How do you make customers feel themselves at home is important?
The Respondent
‘…our guests demand the feeling of living at their home…’, Respondent 8
The Researcher
How do you make them feel like home?
The Respondent
‘…Answering their personal requests…’, Respondent 6
‘…Trying to offer more helps and convenience…’, Respondent 7
‘…using personal communication…’, Respondent 5
‘…making friends with guests…’, Respondent 7
The Researcher
How do you manage your employees to make them put customers in the first place?
The Respondent
‘…training employees every morning…’ Respondent 3
‘…Training employees for 20 minutes on every day…’, Respondent 4
‘…Ensuring that all employees have sufficient skills and positive work attitude…’, Respondent 9
‘…reflecting employees’ performance and shortages every day…’, Respondent 5
The Researcher
What do you do to build good relationship with your guests?
The Respondent
‘…Personalised services…’, Respondent 5
‘…communicating with guests by myself…’, Respondent 10
‘…My employees are well-trained by myself…’, Respondent 1
‘…I constantly tell my employees that customers are our friends…and I also act in this way to influence my employees…’, Respondent 4
The Researcher
What are your personalized services?
The Respondent
‘…we offer customers the services based their request…’ – Respondent 1
‘…we treat customers as our friends who help each other…offering them free lift, occasionally…, giving them personalised travelling advises…’ – Respondent 2
‘…providing foods at night, cooking local food especially for them, considering their preferences…’, Respondent 3
‘…helping their usual request such as accompanying, drinking alcohol, joining guests’ party, etc.…’, Respondent 4
The Researcher
How do you offer personalized services of customers or meet their personalized demands?
The Respondent
‘…I try to know travellers’ purposes and motivations…I just need to ask some simple questions…and then I can predict their needs based on my decades’ experience…’, Respondent 9
‘…I am always glad to offer young couples my suggestions based on their consumption capabilities…and I can predict their consumption capabilities based on my experience and their wearing…’, Respondent 10
‘…using my business network…’, Respondent 5
‘…asking my friends who can do…’, Respondent 6
The Researcher
What is your opinion about your customers’ attitude to prices?
The Respondent
‘…consumers are very sensitive to prices…’, Respondent 1
‘…they spend days in discussing with their friends about the choice of a guest house…’, Respondent 3
‘…competition is intensive…there are many guest houses around mine…’, Respondent 5
‘…short-term travellers basically are same with long-term travellers…’, Respondent 2
‘…many travellers enjoy the process of choosing guest house…off course, they compare price in the process…’, Respondent 7
The Researcher
What is your pricing strategy?
The Respondent
‘…I have to consider the market…’, Respondent 1
‘…My neighbours are also guest houses, so I must consider their offer (prices)…’, Respondent 3
‘…we consider season…during peak season, we always are full of customers…’, Respondent 4
The Researcher
What pricing strategy do you use to attract customers?
The Respondent
‘…usually, price discount…’, Respondent 3
‘…dynamic prices…changing prices every day…based on the market and our own situation…’, Respondent 6
‘…I directly determine price every day….’, Respondent 1
‘…using the internet to acquire others’ price…’, Respondent 4
The Researcher
Okay, my last question how do you use pricing strategy to improve customer satisfaction?
The Respondent
‘…We are cheaper than 5-start hotels…comes to lower customer expectation…’, Respondent 2
‘…cheaper…’, Respondent 4
‘…economical for young people…’, Respondent 5
‘…our service beyond expectations…, Respondent 7
‘…we always ensure guests are satisfied…’, Respondent 8
The Researcher
Thank you for your information. You really provide many meaningful information. I appreciate it.
