Advances in Hospitality and Leisure

Customer Retention among Hotels in an Emerging Market: An Employee-Based

Perspective
Paulina Nillie Adzoyi, Robert Jan Blomme, Ben Quarshie Honyenuga,
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To cite this document: Paulina Nillie Adzoyi, Robert Jan Blomme, Ben Quarshie
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 CUSTOMER RETENTION AMONG
HOTELS IN AN EMERGING
MARKET: AN EMPLOYEE-BASED
PERSPECTIVE
Paulina Nillie Adzoyi, Robert Jan Blomme and
Ben Quarshie Honyenuga
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ABSTRACT
Increased competition amongst the hotel industry players has challenged
managers not to focus their attention exclusively on ways to attract and sat-
isfy their customers, but to invest in customer retention strategies with the
potential to ensure superior performance of their hotels. This study aims to
determine strategies to retain customers in hotels in Ghana, an emerging mar-
ket. A cross-sectional survey was employed to collect data from 677 hotel
employees in 56 Ghanaian licensed hotels. Based on SmartPLS, study find-
ings indicate that customer satisfaction, loyalty and retention embedded in
the tangibility and reliability dimensions of the lodging quality index are
important for customer retention among hotels in Ghana.
Keywords: Ghana; customer retention; service quality;
customer satisfaction; customer loyalty; hotel industry

INTRODUCTION
For most developing countries, tourism has become a major economic support
(Attallah, 2015). To illustrate: the hotel industry, a key component of tourism
development in Ghana, has experienced sustained growth over the past two dec-
ades (Mensah & Blankson, 2013). In addition to the increasing number of

Advances in Hospitality and Leisure, Volume 14, 57
73

Copyright r 2019 by Emerald Publishing Limited
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ISSN: 1745-3542/doi:10.1108/S1745-354220180000014004
57
 58 PAULINA NILLIE ADZOYI ET AL.

domestically established hotels in Ghana, multinational chains have also gradu-

ally drifted into the Ghanaian market and taken advantage of the prevailing
Ghanaian economic environment. The global nature of this sector, including
Internet and review sites, has provided much transparency with respect to the
service quality of hotels, a development which has directly impacted booking to
an unprecedented extent, in the sense that it has provided greater access to infor-
mation for customers to make choices from a selection of competing hotels (Yu,
Byun, & Lee, 2014). This changed competition in the hotel business environment
currently drives service providers to find ways to attract and keep customers
(Sim, Mak, & Jones, 2006).
Extant literature has emphasized the need for service providers to invest in
customer retention, because it is more profitable to invest in retention than in
customer acquisition (Min, Zhang, Kim, & Srivastava, 2016). Since the objective
of every business is to make profit, customer retention is key: a long-term relation-
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ship between a customer and an organization can result in a profitable relation-

ship and other benefits (Sim et al., 2006). Furthermore, the costs of attracting a
new customer are more than five times the costs of retaining a customer (Gera,
2011). A retained customer is also a source of free advertisement through positive
word of mouth (Raman, 1999, in Bowen & Chen, 2001). This saves the organiza-
tion the costs of advertisements needed to attract new customers. It is therefore
important for companies to invest in customer retention strategies, because the
ability of an organization to attract and retain customers is vital to its success.
Even though hotels use some loyalty programmes such as rewards with the
hope of retaining customers (Chen & Chen, 2014), a knowledge gap remains
regarding the way to retain hotel customers. A number of studies have theoreti-
cally and empirically investigated customer retention theory and have established
that companies can achieve their retention objectives through the provision of
service quality (Murali, Pugazhendhi, & Muralidharan, 2016). Customer experi-
ence after service delivery is a key factor determining customers’ satisfaction as
well as their future decisions to be loyal and either remain with the same organi-
zation or defect (Murali et al., 2016). Customer satisfaction and loyalty have
proven to be common antecedents of customer retention. This means that when
a customer is satisfied with service quality, he or she is likely to become loyal and
remain with the organization. However, since most of these findings were
reported in developed countries, it is necessary to confirm these relationships in
an emerging market such as Ghana. In addition, data for earlier studies were
mostly generated from the perspective of customers and excluded the perspectives
of employees. After all, employees are internal customers and very important in
hotel service delivery (Amin, Yahya, Ismayatim, Nasharuddin, & Kassim, 2013).
In fact, a study conducted by Atsutsey and Tandoh-Offin (2013) to assess service
delivery standards in hotels in Ghana blamed the poor service quality on the
untrained employees of the hotels investigated.
The current study is an attempt to fill the research gap in an emerging mar-
ket. Specifically, it sought to determine whether service quality, satisfaction and
loyalty result in customer retention. To this end, the study used tangibility and
reliability factors of service quality and also determined the nature of these
 Customer Retention Among Hotels in an Emerging Market 59

factors and their relationships in a Ghanaian context. The contribution of this

study lies in its focus on the employee perspective of customer retention strate-
gies in an emerging market context as well as its use of a two-factor structure of
service quality to test those relationships.

LITERATURE REVIEW
This study is based on social exchange theory, a social behaviour theory origi-
nally proposed by Emerson (1976). This theory proposes that social behaviour is
the result of mutual reward processes that develop between two or more parties
in which each of the parties provides benefits to the other depending on the
reward of the other (Emerson, 1981, in Nunkoo, 2016). The theory has been
applied successfully to explain factors influencing perceptions in the hospitality
and tourism industry (Priporas, Stylos, Rahimi, & Vedanthachari, 2017;
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Rasoolimanesh, Jaafar, Kock, & Ramayah, 2015). The theory was used as a
framework to explain interactivity between host and guests of an Airbnb accom-
modation (Priporas et al., 2017). Rasoolimanesh et al. (2015) also applied the
theory to explain perceptions in tourism development and found that residents’
perceptions of the benefits of tourism development influenced their support for
tourism development. In the context of social exchange, customer retention is
viewed as an exchange of rewards between customers and service providers.
Priporas et al. (2017) posit that customer satisfaction of service quality depends
on the outcome of their social interaction and that the host and the guests both
have a responsibility to ensure the success of the interaction. The success of cus-
tomer interaction with a service influences customer intentions to remain. When
the customer feels satisfied with service quality, customer retention becomes the
reward for the investment in customer satisfaction.

Service Quality and Retention

The relationship between service quality and retention has been well explored.
According to Radojevic, Stanisic, and Nenad Stanic (2015), service quality is
one of the key determinants of retention. Extant literature has promoted the
idea of a multidimensional nature of service quality (Dortyol, Varinli, &
Kitapci, 2014; Rauch, Collins, Nale, & Barr, 2015). Amidst several attempts to
conceptualize service quality, the works of Grönroos (1984) and Parasuraman,
Zeithaml, and Berry (1988) have been widely accepted. Gronroos proposed a
two-dimensional factor of service quality, namely what is received (technical
quality) and how the product is received (functional quality). Parasuraman,
Zeithaml, and Berry (1985) also proposed a SERVQUAL model; this model
consists of reliability, responsiveness, tangibles, assurance and empathy.
Even though the SERVQUAL model has been applied in several studies in
hospitality and tourism research (Chen & Chen, 2014; Dortyol et al., 2014; Lu,
Berchoux, Marek, & Chen, 2015; Luo & Qu, 2016; Wu & Ko, 2013; Wu, Liao,
Hung, & Ko, 2012), it has generated considerable criticism, including criticism
concerning its application in different contexts and the number of dimensions
 60 PAULINA NILLIE ADZOYI ET AL.

(Ladhari, 2009a; Ladhari, 2009b). Following these criticisms, a number of mea-

sures have emerged with varied dimensions to measure service quality in the hospi-
tality industry. Knutson, Stevens, Wullaert, Patton, and Yokoyama (1990)
developed a five-dimensional LODGSERV measure (reliability, responsiveness,
tangibles, assurance and empathy) to measure customers’ expectations of hotel
experiences. Getty and Getty (2003) also reported a five-dimensional lodging qual-
ity index (LQI) including tangibility, reliability, responsiveness, confidence and
communication. The LODGQUAL measure developed by Getty and Thomson
(1994) has three dimensions (tangibles, contact and reliability). HOLSERV, devel-
oped by Mei et al. (in Ladhari, 2009a; Ladhari, 2009b), also reported three dimen-
sions: employees, tangibles and reliability. Finally, Ekinci and Riley, (1998)
proposed a two-factor dimension consisting of tangibility and reliability.
Clearly, there is no consensus on the number of dimensions (Albacete-Sáez,
Fuentes-Fuentes, & Lloréns-Montes, 2007, in Bastic & Gogcic, 2012). However,
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tangibility and reliability quality dimensions appear to dominate these measures,

which suggests their importance in service quality evaluations. In support of
that view, a number of studies have emphasized the role of tangibility and reli-
ability in their findings. Ladhari (2012) validated the LQI measure and reported
tangibility to be an important point of focus as cited by Canadian tourists and
business travellers. Grobelna and Marciszewska (2013) also found that tangibil-
ity attributes explained the greatest part of the gap in service quality evaluations
in Polish hotels. Additionally, Brady and Cronin (2001) found in their qualita-
tive study that tangibles represent almost half of the factors cited by their
respondents; this is supported by Parasuraman et al. (1985), who found that cus-
tomers consider tangible evidence when forming quality perceptions (Brady &
Cronin, 2001). Reliability has also been consistently cited as the most important
factor in service quality evaluation (Knutson et al., 1990; Jiung-Bin & Chih-
Hsin, 2013). Finally, Brady and Cronin (2001) suggested that service providers
must ensure the reliability of service quality.
In view of the above and for measuring hotel service quality in Ghana, an
emerging market, we propose a two-factor structure. We believe that hotel
service quality can be measured adequately on the basis of tangibility and reli-
ability. The term ‘tangibles’ captures the cleanliness of the hotel and its environ-
ment, the neat appearance of staff and an inviting and appealing front office
and restaurant (Getty & Getty, 2003). The term ‘reliability’ not only refers to
the reliability of individuals and services, but also represents the functioning of
equipment such as televisions and air conditioners (Getty & Getty, 2003). In an
emerging market like Ghana, where entry into the hotel business is weak and
regulations appear to be poorly enforced, customers are more likely to be more
interested in tangibles such as the neat appearance of hotel staff and the environ-
ment and the reliable functioning of equipment, all of which can influence their
service quality evaluation and their intentions.
Customers often make judgements after their service experiences, something
which influences their future behaviours and decisions to return (Olorunniwo,
Hsu, & Udo, 2006). To explain the concept of retention, actions have been used,
such as making favourable comments about the firm, recommending the firm,
 Customer Retention Among Hotels in an Emerging Market 61

paying a higher price or remaining loyal to the company (González, Comesaña,

& Brea, 2007). This implies the need for service quality to ensure favourable
comments and retention. Alexandris, Dimitriadis, and Markata (2002) explored
the degree to which behavioural intentions could be explained by service quality
dimensions and found that service quality explained a high proportion of word
of mouth (WOM) communication and purchase intentions. Other studies have
also established the relationship between service quality and retention (Ladhari,
2009a; Ladhari, 2009b; Olorunniwo et al., 2006; Vijayadurai, 2008). We there-
fore propose the following:
H1. Tangible quality has a positive relationship with customer retention.

H2. Reliability quality has a positive relationship with customer retention.

Interrelationships among Satisfaction, Loyalty and Retention

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A number of studies have linked customer satisfaction and retention and sug-
gested that it is important for managers to understand the relationship between
customer satisfaction and retention in order to retain their customers (Sim et al.,
2006). Studies have reported that retention is an outcome of service quality, sat-
isfaction and loyalty. Berezina, Cobanoglu, Miller, and Kwansa (2012) found
that the quality of information security has a significant impact on customer sat-
isfaction, the likelihood of recommendation and revisit intentions. A large body
of knowledge indicates that satisfaction directly influences loyalty in different
settings. In healthcare, Meesala and Paul (2018) found that patients’ satisfaction
is directly linked to loyalty. Loyalty is influenced by satisfaction and perceived
service quality. Customer satisfaction and customer loyalty have a significant
direct impact on customer intentions (Danesh et al., 2012; Elgaraily, 2013; Han
et al., 2015). This led us to formulate the following hypotheses:
H3. Customer satisfaction has a positive relationship with customer
retention.

H4. Customer loyalty has a positive relationship with customer retention.

The Mediating Roles of Customer Loyalty and Satisfaction

Over the years, customer satisfaction has raised the interest of both service pro-
viders and researchers because of its associated benefits, including customer loy-
alty and retention (Choi & Chu, 2001; Kandampulley & Suhartanto, 2000;
Walsh & Bartikowsk, 2013). In several studies and in several contexts, customer
satisfaction as well as loyalty have been found in mediating roles, particularly
between service quality and customer retention. This is particularly the case in
the mobile phone market (Díaz, 2017), in the restaurant sector (Al-Tit, 2015)
and in air transport (Jiang & Zhang, 2016). Studies indicate that customer satis-
faction is an outcome of service quality (Cronin, Brady, & Hult, 2000) and also
an antecedent to customer loyalty. Scholars have found that the relationship
 62 PAULINA NILLIE ADZOYI ET AL.

between service quality, satisfaction, loyalty and intentions is mediated by satis-

faction (Ladhari, 2009a; Ladhari, 2009b; Olorunniwo et al., 2006). Other scho-
lars have also found a relationship between service quality and satisfaction
(Amin et al., 2013; Dortyol et al., 2014; Markovic & Jankovic, 2013). The rela-
tionship between satisfaction and intentions is also moderated by loyalty.
Furthermore, there is a relationship between service quality and loyalty
(Kandampully, Juwaheer, & Hu, 2011) which is also influenced by satisfaction
(Nimako & Mensah, 2013). Service quality acts on customer loyalty via cus-
tomer satisfaction (Amin et al., 2013; Caruana, 2002). Customer satisfaction
acts as a mediator between service quality and behavioural intentions
(Olorunniwo et al., 2006). Service quality and customer behavioural intentions
are mediated by satisfaction (Namkung & Jang, 2007). Wilkins, Merrilees, and
Herington (2009) found that service quality mediated by customer satisfaction is
the largest determinant of behavioural loyalty. Caruana (2002) found that ser-
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vice quality acts on customer loyalty via customer satisfaction. According to

Cronin et al. (2000), indirect effects of the service quality construct enhanced the
impact on behavioural intentions. Finally, Nyadzayo and Khajehzadeh (2016)
found the indirect role of customer satisfaction in the relationship between cus-
tomer relationship management (CRM) quality and customer loyalty. We there-
fore propose the following hypotheses:
H5. Customer satisfaction has a mediating role in the relationship between
tangible quality and customer retention.

H6. Customer loyalty has a mediating role in the relationship between tan-
gible quality and customer retention.

H7. Customer satisfaction has a mediating role in the relationship between

reliability quality and customer retention.

H8. Customer loyalty has a mediating role in the relationship between reli-
ability quality and customer retention
In Fig. 1 the conceptual model is illustrated.

METHOD
Sample
Data for this study were collected from hotels located in four regional capitals
of Ghana, namely Ho in the Volta Region, Koforidua in the Eastern Region,
Cape Coast in the Central Region and Accra, the capital city of Ghana in the
Greater Accra region. All licensed hotels ranging from budget to five-star hotels
were sampled. Only licensed hotels were targeted because they provide basic
standards of service quality according to the standards prescribed by the Ghana
Tourism Authority. For our data collection, we used convenience sampling tech-
niques and a cross-sectional survey method, since only hotels that agreed to be
 Customer Retention Among Hotels in an Emerging Market 63
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Fig. 1. Conceptual Model.

sampled were included in the study. Self-administered questionnaires were adminis-

tered to 56 licensed Ghanaian hotels that agreed to be sampled. Six hundred and
seventy-eight (678) filled out questionnaires returned, which were used for the anal-
yses. A majority of women (412) filled in the questionnaires. Most of the respon-
dents were below 31 years old (410). In Table 1 a descriptive analysis is listed.

Measures
Questionnaires measured tangibility and reliability qualities on the basis of the
questionnaires used by Getty and Getty (2003). A seven-point scale ranging
from strongly agrees to strongly disagree was used to measure these two scales.
An example for tangibility quality is the statement ‘Employees have clean, neat
uniforms’. An example for reliability quality is the statement ‘Reservation was
handled effectively’.
The items for customer satisfaction and customer retention were adapted from
the questionnaires from Olorunniwo et al. (2006) and were measured using a seven-
point scale ranging from strongly agrees to strongly disagree. An example statement
for customer satisfaction is ‘Customers are satisfied with their decision to visit this
hotel’. An example statement for customer retention is ‘They will be willing to pay
a higher price than competitors charge for the same benefit from this hotel’.
Customer loyalty was measured using an adapted version of the items used
by Han, Kwortnik, & Wang, (2008) and was measured using a seven-point scale
ranging from strongly agrees to strongly disagree. An example statement for
 64 PAULINA NILLIE ADZOYI ET AL.

Table 1. Socio-demographic Characteristics.

Customer Retention

N % Mean SD

Gender
Male 266 39.2 6.048 0.709
Female 412 60.8 5.978 0.735
Age groups
Less than 30 years 410 60.5 5.959 0.697
31
40 years 207 30.5 6.157 0.638
41
50 years 52 7.7 5.779 1.071
51
60 years 8 1.2 5.920 0.389
Above 60 years 1 0.1


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Education
PhD 12 1.8 5.750 1.120
MSc 24 3.5 6.004 0.978
BSc 117 17.3 6.091 0.451
Higher national diploma 306 45.1 6.041 0.711
Other educations 219 32.3 5.925 0.783
Job positions
Employee 399 58.8 5.995 0.710
Direct supervisor 161 23.8 5.966 0.817
Higher management 86 12.7 6.189 0.577
Unknown 32 4.7 5.848 0.600
Hotel star rate
Budget 90 13.3 5.886 0.852
1 Star 45 6.6 5.974 0.545
2 Star 143 21.1 5.924 0.730
3 Star 133 19.6 6.011 0.666
4 Star 145 21.4 5.998 0.731
5 Star 122 18 6.196 0.705

customer loyalty is ‘They will stay in this hotel again if they have a chance to
visit the same area’.

Procedure
We used SmartPLS version 3.2.3 (Ringle, Wende, & Becker, 2015) for our anal-
yses. For the partial least square algorithm, we used the path-weighting scheme,
and we set the maximum number of iterations at 300. We used 10
5 as our stop
criterion and a uniform value of 1 as the initial value for each of the outer
weights (Henseler, 2010). All items were based on a Likert scale (1
7) and
 Customer Retention Among Hotels in an Emerging Market 65

interpreted as continuous variables. As a first step in our analysis, we investi-

gated reliability, convergent validity and discriminant validity. Finally, we tested
our hypotheses.

RESULTS
Reliability and Validity Test
For the outer model evaluation, we first examined reliability. All the scales
appeared to be reliable as all scores were above the threshold of 0.7 (Nunnally,
1978). Second, we investigated convergent validity using Fornell and Larcker’s
criterion of an average variance extracted (AVE) for each construct above the
0.5 benchmark (Fornell & Larcker, 1981). The scales proved to have sufficient
convergent validity without removing any of the items with the exception of cus-
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tomer satisfaction (1 item) (see Table 2 for more specific results).

Third, we tested discriminant validity by comparing the square roots of the
AVEs of the constructs with the inter-construct correlations to determine
whether each latent variable shared greater variance with its own measurement
variables or with other constructs (Chin, 1998; Fornell & Larcker, 1981). Details
can be found in Table 3. A correlation between constructs exceeding the square
roots of their AVEs indicated that they may not be sufficiently discriminable
(see Table 3). For each construct, we found that the absolute correlations did
not exceed the square roots of the AVEs. This means that the discriminant valid-
ity of all constructs was sufficient.

Table 2. Descriptive Statistics of Constructs.

Theoretical Range Actual Range Mean SD Reliability AVE

Customer loyalty 1
7 1
7 5.717 0.859 0.915 0.798

Customer retention 1
7 1
7 6.006 0.720 0.892 0.822
Customer satisfaction 1
7 1
7 5.966 0.699 0.870 0.724
Reliability quality 1
7 1
7 5.877 0.957 0.869 0.656
Tangibility quality 1
7 1
7 5.905 0.829 0.882 0.553

Table 3. Correlation Table.

CL CR CS RQ TQ

Customer loyalty (CL) 0.893

Customer retention (CR) 0.784** 0.907
Customer satisfaction (CS) 0.818** 0.766** 0.851
Reliability quality (RQ) 0.526** 0.466** 0.574** 0.810
Tangibility quality (TQ) 0.421** 0.418** 0.494** 0.734** 0.744

Notes: Significance correlations: ***p < 0.000, **p < 0.01, *p < 0.05.
 66 PAULINA NILLIE ADZOYI ET AL.

Hypotheses Test
For the inner model evaluation and estimates, we analysed the path coefficients
by using bootstrap t-statistics based on 5,000 subsamples with a bias-corrected
bootstrap and testing for a two-tailed significance of 95% (Anderson & Gerbing,
1988). The model showed a good fit with our data as the standardized root
mean square residual (SRMR) was 0.06, which is in line with Hu and Bentler’s
criterion of a threshold of 0.08 (1998). To test our hypotheses, we used a three-
step approach. First, we calculated the direct effects for the differentiated paths
in the model (see Table 4). As a second step, we tested predictive power by using
Cohen’s f2 effect size (Cohen, 1988) to indicate whether each construct had a
weak, average or strong effect on customer retention (see Table 4).
Furthermore, to test the mediation hypotheses, we calculated the indirect effects
(see Table 5).
H1 was not supported as the relationship between tangible quality and
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customer retention did not prove to be significant (γ ¼ 0.077, p ¼ 0.167).

H2 was not supported as the relationship between reliability quality and

customer retention did not prove to be significant (γ ¼
0.049, p ¼ 0.375).

H3 was supported as the relationship between customer satisfaction and

customer Retention proved to be significant (γ ¼ 0.361, p ¼ 0.000,
R2 ¼ 0.664) with strong predictive power (f2 ¼ 0.120).

H4 was supported as the relationship between customer loyalty and cus-

tomer retention proved to be significant (γ ¼ 0.479, p ¼ 0.000, R2 ¼ 0.664)
with strong predictive power (f2 ¼ 0.222).

H5 was supported as the relationship between tangible quality and cus-

tomer satisfaction proved to be significant (γ ¼ 0.144, p ¼ 0.014,
R2 ¼ 0.341) with average predictive power (f2 ¼ 0.017). In addition, the
indirect effects of tangible quality on customer retention via customer sat-
isfaction were found to be significant (γ ¼ 0.052, p ¼ 0.033). As H1 was
not supported, this points towards full mediation.

H6 was not supported as the relationship between tangible quality and

customer loyalty proved to be not significant (γ ¼ 0.077, p ¼ 0.273). In
addition, also the indirect effect of tangible quality on customer retention
via customer loyalty was found not to be significant (γ ¼ 0.037, p ¼ 0.313).

H7 was supported as the relationship between reliability quality and cus-

tomer satisfaction proved to be significant (γ ¼ 0.465, p ¼ 0.000,
R2 ¼ 0.341) with strong predictive power (f2 ¼ 0.147). In addition, the indi-
rect effect of reliability quality on customer retention via customer satis-
faction was found to be significant (γ ¼ 0.168, p ¼ 0.000). As H2 was not
supported, this indicates full mediation.
 Table 4. Direct Effects between Constructs.

Customer Retention Among Hotels in an Emerging Market

Coefficient (γ) f2 Values T Statistics p Values Hypothesis Tested

Customer loyalty -> customer retention 0.479 0.222 6.253 0.000 H4

Customer satisfaction -> customer retention 0.361 0.120 4.556 0.000 H3

Reliability quality -> customer loyalty 0.469 0.141 7.285 0.000 H8

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Reliability quality -> customer retention
0.049 0.003 0.888 0.375 H2

Reliability quality -> customer satisfaction 0.465 0.147 9.015 0.000 H7

Tangibility quality -> customer loyalty 0.077 0.004 1.097 0.273 H6

Tangibility quality -> customer retention 0.077 0.007 1.383 0.167 H1

Tangibility quality -> customer satisfaction 0.144 0.017 2.455 0.014 H5

Table 5. Indirect Effects.

Coefficient (γ) T Statistics p Values Hypothesis Tested

Reliability quality -> customer loyalty -> customer retention 0.225 5.774 0.000 H8
Tangibility quality -> customer loyalty -> customer retention 0.037 1.008 0.313 H6

Reliability quality -> customer satisfaction -> customer retention 0.168 4.003 0.000 H7

Tangibility quality -> customer satisfaction -> customer retention 0.052 2.133 0.033 H5

67
 68 PAULINA NILLIE ADZOYI ET AL.

H8 was supported as the relationship between reliability quality and cus-

tomer loyalty proved to be significant (γ ¼ 0.469, p ¼ 0.000, R2 ¼ 0.279)
with strong predictive power (f2 ¼ 0.141). In addition, the indirect effect of
reliability quality on customer retention via customer loyalty was found to
be significant (γ ¼ 0.225, p ¼ 0.000). As H2 was not supported, this points
towards full mediation.

DISCUSSION
Customer retention is key to a hotel’s business profits and competitiveness: it
provides the motivation to invest in efforts aimed at retaining customers. As the
wider hotel business environment offers an abundance of information regard-
ing alternatives on the Internet and social media, all of which can influence
consumer choices, growing competition requires careful strategies to ensure
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customer retention. After all, customers are the key players in the growth and
success of a business. This means that in order to retain customers, service pro-
viders must ensure service quality, customer satisfaction and loyalty. This
study examined the relationship between service quality, customer satisfaction,
loyalty and retention by using data obtained from hotel employees in Ghana,
an emerging market. Results support earlier findings that there is a significant
relationship between customer satisfaction and retention with strong predictive
power. The relationship between tangible quality and customer satisfaction
proved to be significant with strong predictive power, thus supporting findings
reported by Zafar (Zafar, 2012, in Al-Tit, 2015). Additionally, the indirect
effects of tangible quality on customer retention via customer satisfaction were
found to be significant. As H1 was not supported, this indicates full mediation.
This finding is supported by those reported by Al-Tit (2015), which shows that
the correlation between service quality and customer retention increased
through the effect of customer satisfaction. However, findings don’t indicate a
relationship between tangible quality and customer loyalty, which doesn’t sup-
port a significant role for customer loyalty. Apparently, instead of customer
loyalty, customer satisfaction is a key element as mediator between tangible
quality and customer retention, which indicates that customer loyalty is of
minor importance in comparison with the satisfying consequences of tangibil-
ity quality in the retention of customers.
The indirect effect of reliability quality on customer retention via customer
satisfaction was found to be significant. As H2 was not supported, this points
towards full mediation. Han and Hyun (2015) also found that service quality
has a significant and positive indirect impact on customer intention in the medi-
cal tourism industry. Finally, the indirect effect of reliability quality on customer
retention via customer loyalty was found to be significant. As H2 was not sup-
ported, this also suggests full mediation.
If we compare tangibility quality with reliability quality in terms of the way
in which these affect customer retention directly and indirectly, our results point
towards a greater importance of reliability quality. As such, for Ghanaian
 Customer Retention Among Hotels in an Emerging Market 69

hotels, the aspect of reliability is of greater importance than the visible and tan-
gible aspects of quality when it comes to retaining customers. Scholars (see, for
example, Fombrun, 1996; and Weigelt & Camerer, 1988) support these findings
in their arguments that reliability is an important hallmark of reputation which
is important for retaining customers. Also, Martínez and del Bosque (2013)
argue that the accumulation of trust underpins perceived reliability and its
impact on customer satisfaction, customer loyalty and as such customer reten-
tion, and that trust is at the same time fuelling reputation (see, for example
Keh & Xie, 2009). As such, this may support the findings of the greater impor-
tance of reliability quality in this study.

Contributions, Limitations and Further Research

Our study set out to investigate retention strategies among hotels in Ghana, an
emerging market. On the basis of social exchange theory and from the perspec-
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tive of hotel employees, our findings reveal that tangibility and reliability dimen-
sions of service quality are highly important for customer retention although
this study supports the importance of reliability quality over tangible quality.
This study contributes to existing service quality and customer retention theo-
ries, and it is also important for the development of the hotel industry in Ghana,
an emerging market. Nevertheless, it is limited by the quantitative inductive
approach adopted. Furthermore, the data for the study were collected from
employees, and the perspective of employees on customer retention may limit
generalization. In this regard, future research should focus on the perspective of
customers and compare outcomes with the perspective of employees reported in
this study.
We also suggest that future research into the above dimensions should use a
qualitative inductive approach: this has the potential to bring out further under-
lying issues. Still, despite its limitations, the current study provides a useful refer-
ence for managers of hotels in Ghana’s emerging market with respect to
approaches aimed at retaining customers. The implications for hotel managers
revolve around the focus on tangibility and reliability elements in their opera-
tions to enhance service quality. Furthermore, the results of this study may help
managers to know where to allocate their resources when considering invest-
ments in customer attraction and retention strategies.
The implication for managers regarding tangibility attributes is that custo-
mers expect to see well-dressed employees in neat and clean uniforms, a clean
front office, a clean restaurant and tidy service areas: first impressions are impor-
tant for hotel customers. Hence, it is vital for managers to pay attention to
cleanliness, with respect to hotel rooms as well as the environment.
While reliability indicators may be taken for granted in western environ-
ments, the same cannot be said in the Ghanaian environment, where the supply
of electricity, for example, may not always be reliable. Managers therefore need
to provide reliability attributes by investing in machinery and other equipment
or services that are needed to enhance the comfort of guests. After all, when a
customer feels satisfied with hotel services, he or she will be loyal to the
 70 PAULINA NILLIE ADZOYI ET AL.

organization. Furthermore, reliability will contribute to reputation and as such

to customer retention. In conclusion, our study has a number of different impli-
cations for managers which, when harnessed, may improve their operations
through increased customer retention.

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