Customer retention: A theoretical perspective of service failure and service recovery in the hotel industry

Abstract

Purpose: The purpose of this paper is to provide a theoretical perspective on customer retention activities associated with service failure management and service recovery as a means to retain customers in the hotel industry - and to improve the competitiveness of a hotel. The research is pursued with the following objectives in mind: To determine the customer retention activities involved in the service failure management needed by hotels to retain customers. To determine the customer retention activities associated with the service recovery that hotels might perform in order to retain customers. Design/methodology/approach: Secondary sources such as textbooks, scientific journals, and previous studies on the subject were used to obtain relevant background information. A literature search of secondary sources was conducted to elucidate questions and areas of enquiry that relate to the research. Findings: The theoretical perspectives on service failure management and service recovery provided in this paper suggest several customer retention activities that might be used by hotels in order to manage service failure and service recovery - and thus become more competitive. Implications: This paper suggests a number of approaches that hotel managers might take to improve service failure management and service recovery. Such activities could assist a hotel in determining where it is lacking and where to improve its performance in these areas. These activities could provide guidance to managers who are dealing with the day-to-day operations of a hotel. They might help to avoid service failures in the first place, and, secondly, to give ideas about service recovery if failures do occur. On a more strategic level, these activities could also assist managers to develop a general customer retention strategy that incorporates service failure management and service recovery. Originality/value: Service failure management and service recovery are viewed as ways to retain customers and to improve the competitiveness of hotels. Service failure and service recovery activities are proposed; these might form part of a framework for customer retention management for the hotel industry in Gauteng, South Africa. Such a framework has not been attempted before. The paper discusses the environment in which hotels find themselves, provides a theoretical background to service failure and service recovery, and suggests strategies that could be put in place by hotels in order to retain customers. Managers of private or owner-managed - or of group or branded hotels - could perform these activities and thus improve their effectiveness.