Thesis on "Customer Expectations in the Hospitality Industry"

Thesis 30 pages (8123 words) Sources: 20 Style: APA

[EXCERPT] . . . .

Customer Expectations in the Hospitality Industry

Customers' expectations are the future of any organization, and this is particularly relevant to the hospitality industry. To the extent an organization creates expectations and accurately fulfills them is to the extent they gain customer loyalty and market share.

The intent of this paper is to evaluate how expectations are created, and second, explain the dominant approaches used for measuring customer expectations. An analysis of how customer expectations are managed in the hospitably industry is next discussed with an assessment of how customer satisfaction measurement approaches are specifically applied to the hospitality industry.

How Expectations Are Formed

The development of expectations is formed from the interaction of social exchange and voluntary performance behaviors, with both sets of factors contributing to the formation and growth of trust. The intent of this analysis is defines what expectations are in general including their nature and characteristics, including an analysis of how expectations are formed. The interaction of customer satisfaction, trust, commitment as social exchange behaviors, and loyalty, cooperation and participation as voluntary performance behaviors serve as the foundations for how expectations are formed. All six of these combined factors contribute to the development of expectations (Hawes, Strong, Winick, 1996). Specifically the level of performance or quality of a product or service to be delivered is defined by the interaction of social exchange and voluntary performance behaviors. As a result, confirmation of expectations being met or not leads to expectations being reinforced and a new level of performance defined (Hawes, Mast, Swan, 1989). The continual increasing of expectations is entirely dependent on each of these specific sets of factors staying in equilibrium and balanced with each other. Social exchange and voluntary behaviors however require trust to be present, and strengthened in each interaction and product or service experience (Young, Wilkinson, 1989). In organizations that rely extensively on distribution channels the interaction of both social exchange and voluntary behaviors is inherently more difficult to manage given the specific coordination efforts between channel partners (Zaheer, McEvily, Perrone, 1998). Expectations of customers across each distribution channel they interact with vary significantly, and have been proven to be directly related to the level of electronic enablement within each given channel and its levels of personalization, perceived level of security and trustworthiness (Zaheer, McEvily, Perrone,1998). This has been shown to extend into the services sectors of the global economy as well, specifically in the hospitality industry as well (Lee, 1983).

Expectations are in fact solidified when the two sets of factors, social exchange and voluntary behaviors, are strengthened through greater consistent levels of trust (Chow, Holden, 1997). What emerges from this analysis is that the managing expectations over time need to be consistent, transparent and deliberate if trust is to be gained (Hawes, Mast, Swan, 1989). Expectations and trust are in fact interrelated, and from the standpoint of a consumer acquiring services, the interlinking of these two factors is even more integrated than that of consumers purchasing products. The reason is that implicit in the sale of any service is the implied expectation that their delivery will be to the satisfaction level agreed upon (Milliman, Fugate, 1988).

Nature and Characteristics of Expectations

The interchange between social exchange and voluntary performance behaviors that fuel and are also fueled by the validation and reinforcement of trust serve as the catalyst of expectations being created and sustained. Implicit in the defining of expectations is that they will align with and be congruent to the ethical norms from both an organizational and individual level (Larzelere, Huston,1980), and this is particularly relevant in the acquiring of services, where expectations are integral to the purchase process (Altinay, 2007).

The nature and characteristics of expectations, especially in service-related industries, can be defined through the model shown in Figure 1, Proposed Services Expectation Model, which is a graphical representation of how both social exchange and voluntary performance behaviors are influenced by organizational and individual ethical norms, all of which directly contribute to the validation and reinforcement of trust. The tight and loose coupling of the components of the model are meant to define its ability to quickly remain permeable and agile enough to support how expectations vary across the wide variety of company cultures, distribution channels used, and previous experiences with the specific company. This graphical representation is entirely predicated on trust being continually being strengthened through the interaction of ethical norms, social exchange, and voluntary performance behaviors, all contributing to a more recursive approach to expectations fueling trust over the long-term. Based on the studies cited and an analysis of how trust is achieved in service industries where the deliverable is often the experience, the need for a recursive model that takes into account expectations of individual and organizational norms is essential. Taking this a step further, the need for consistency and equilibrium indirectly between social exchange and voluntary performance behaviors, and directly via organizational and individual ethical norms, is crucial if expectations are to be initially met and continually sustained. Arguably keeping these aspects of expectations synchronized with each other is critical for trust to be achieved and loyalty eventually attained.

Figure 1: Proposed Services Expectation Model

This model is particularly relevant in the hospitality industry, where the social exchange and voluntary performance behaviors interact before, during, and after services are provided. The processes required to create, execute on, and fulfill expectations is also defined within the Proposed Services Expectation Model through the tight/lose coupling of organizational ethical norms and the validation and reinforcement of trust. Only by making this interrelationship agile enough to sustain cultural change can a service-based company hope to create enough sustained trust that leads to customer loyalty.

Consistently creating and fulfilling expectations as part of any services strategy also requires an intensive level of coordination across positioning strategies that appeal to customers' social exchange and voluntary performance behaviors as well, which is implied in the Proposed Services Expectation Model.

For any services organization to create sustainable value and differentiation that transcends specific services offerings and generations, inclusive of pricing strategies there needs to be a strategic focus on achieving balance throughout the Proposed Services Expectation Model illustrated in Figure 1. Just as Porter's Determinants of Competitive Advantage have proven their ability to predict international global competitiveness emanating from establishing local competitive uniqueness and core differentiated values first, the same holds true for the Proposed Services Expectation Model from a managing of expectations standpoint.

What is implicit in the design of the model is that and balance between organizational ethical norms and individual ethical norms, and like the Porter model of global competitive advantage, this proposed model becomes more relevant over time, as loyalty is achieved between companies and their customers as services expectations are consistently exceeded. This bond surpasses the transaction level, which has proven to be transient at best, but at the values and trust level. When a service company's performance reaches this level, it is called solution selling. Solution selling is a deliberate strategy to become a trusted advisor to customers, focusing on their unmet needs over merely fulfilling transactions over time. Solution selling will be discussed in detail later in this paper.

The biggest challenge for many organizations, both profit and non-profit focused, is the ability to generate and sustain trust through the continual meeting and exceeding of expectations. Given the skepticism brought on partially by the disillusionment of dotcom failures and the wanton disregard of ethics by Enron and others, trust has rapidly become the most precious commodity a company has to trade with their prospects and customers with. Trust first into the center of the Proposed Services Expectation Model as it is a critical component of expectations being set and consistently fulfilled. Trust is the catalyst of the Proposed Services Expectation Model and its effects. The higher the level of trust, the greater the congruence between Organizational ethical norms and Individual ethical norms, fueling greater congruence of Social Exchange and Voluntary Performance Behaviors. The lesser the level of trust, the greater the fragmentation of each component of the model, and the disintegration of relationships and processes flows that encompass it, and the eventual decline in customer activity in this framework. A significant proof point for this model can also be found in the work of (Hatch, Schultz, 2002) which also shows that aspiring to the role of a trusted advisor actually increases the coherence and consistency between organizational and individual ethical norms.

When the interactions in the proposed Services Expectation Model are taken into account it's no wonder that so many firms in hospitality services industry specifically focus on the position of trusted advisor for both business and pleasure travel. When the proposed Services Expectation Model is applied to a services business the role of trusted advisor is further strengthened by the consistency between Organizational and Individual Ethical norms. By being in alignment with both organizational and individual ethical norms, services companies become trusted advisors over time. Trusted advisors are created through consistency of ethical norms and consistency of… READ MORE

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