Long-run causality between customer satisfaction and financial performance: the case of Marriott

Abstract

ABSTRACTPrior research that examines the relationship between customer satisfaction and financial performance (FP) in the hotel sector assumes that changes in customer satisfaction lead to changes in the FP of hotels. This research note aims to bridge the gap by looking into the possibility that FP of hotels may lead to increase in customer satisfaction with the annual data of Marriott from 1995 to 2016. To study the existence of long-run interactions between customer satisfaction and FP with firm size that is proxied by number of employees as the control variable under small sample size condition, the presence of cointegration among these variables with different appropriate dependent variable is investigated with the bounds testing approach. The obtained results suggest that there is a positive long-run causality from FP to customer satisfaction, and customer satisfaction has no effect on FP in the long-run. This study also finds that firm size has no impact on customer satisfaction. Explanation on each of these findings is provided in the conclusion. The selected sample and availability of data limit the generalisability of the findings of this study. Different hotel brands, measurements and analysis techniques will further the understanding in this field.