The Impact of Service Guarantees on Consumer Responses in the Hotel Industry

ABSTRACT Using equity and perceived justice theories, an experiment was designed to investigate consumer responses (customer satisfaction and word-of-mouth behavior) that may result after a service guarantee is invoked in a hotel setting. The impact of three factors concerning the effectiveness of a service guarantee response made by a hotel employee included: (1) the level of compensation collected by the consumer; (2) the promptness of the response on the part of the service employee; (3) the lack of a complaint as a prerequisite to invoking the guarantee. Lessons for designing an effective guarantee for the hotel industry are discussed.