An empirical investigation of Service encounter quality, Relationship quality and Perceived value on Customer loyalty in Hospitality industry

Abstract

This empirical study investigates the relationship between service encounter quality, relationship quality, perceived value, and customer loyalty in the hospitality industry. "Moments of truth," representing customer interactions with service personnel, are critical in shaping customer experiences. The objectives of the research are to explore the impact of service encounter quality on customer loyalty, examine its effect on perceived value, determine the influence of perceived value on customer loyalty, assess the mediating role of perceived value, evaluate the moderating effect of relationship quality, analyze the joint effect of service encounter quality, relationship quality, and perceived value on customer loyalty, and investigate the impact of customer loyalty on word-of-mouth communication. The cross-sectional survey design targeted both local and international tourists and guests in star-rated hotels in Beijing. A pilot study with 100 randomly selected tourists was conducted to minimize sensitization effects. Structured questionnaires were administered to 1000 travelers with a two-week interval. Reliability of the instruments was confirmed using Cronbach's alpha (a≥0.7), and content, convergent, and discriminant validities were established. Hypotheses were tested using Structural Equation Modeling with SPSS and Amos Graphics software. The findings supported the proposed nine hypotheses, highlighting the significant relationship between service encounter quality and customer loyalty. Moreover, the combined effect of service encounter quality, relationship quality, and perceived value had a greater impact on customer loyalty than when considered individually. This suggests that hotel managers and decision-makers should focus on improving all three constructs collectively to enhance customer loyalty. This study contributes to the existing literature on service encounter quality and customer loyalty, providing practical insights for policymakers, marketers, hotel management, and tourists.