Service Recovery Deployment and Outcomes: Applying a Service Recovery Model to the Lodging Industry

Article excerpt

The concept of service recovery has been a topic of interest to the service industry for the primary reason that consumer satisfaction has a direct link to loyalty and enhanced organisational profits (Buttle & Burton, 2002; Hart, Heskett, & Sasser, 1990; Tax & Brown, 1998). However, there is a paucity of research in the hospitality and tourism literature that discusses the perceived impact of service recovery strategies deployed by hotel operators as they relate to service and financial objectives. When applying Gilly and Hansen's service approach model it appears that an equity approach leads to a higher perceived impact on organisational profits; an underbenefiting approach has the greatest link to an organisation's service philosophy; and overbenefiting tactics were predominately associated with immediate or long-term revenue impacts. This implies that consumer satisfaction and organisational revenue objectives might not be adequately satisfied if recovery strategies are deployed with the wrong objective in mind.

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Elevated consumer sensitivities concerning the provision of services, a challenged economy, as well as an increase in competition within the lodging sector has resulted in a heightened state of awareness by lodging operators relative to employing a multitiered approach to resolving guest complaints. The net result of this heightened state of alert is that lodging operators are reevaluating their recovery strategies as focused on minimising guest dissatisfaction while maintaining their operation's profit potential. In essence, the viewpoint is that small gains in customer satisfaction and therefore customer retention lead to significant gains in profitability (Reichheld, 1996). At the other end of the spectrum is that notion that failure to address service failure issues has been noted to lead to a decline in consumer confidence and loyalty, customer defection (exit), negative word of mouth, and perhaps negative publicity (Berry & Parasuraman, 1992). Once the consumer reaches this point in their level of dissatisfaction with the organisation's service it is often too late to recover them (Stewart, 1998).

The belief that customer satisfaction is a major antecedent of consumer loyalty and influences future purchase behaviour has been noted by various researchers (Boshoff, 1996; Matilla, 2001; Swanson & Kelley, 2001; Zeithaml, Berry, & Parasuraman, 1996). Moreover, researchers have noted that adequately responding to service failures with an appropriate strategy and within a satisfactory timeline can lead to consumer satisfaction and enhanced organisational profits (Szymanski & Henard, 2001). This is an important assertion because the deployment of an appropriate recovery strategy often is of greater importance than the original service failure because the act of attending to the service failure yields consumer loyalty and repurchase behaviour (Spreng, Harrell, & Mackoy, 1995).

Relative to the lodging industry, operators obviously believe that there is a relationship between the provision of quality services to consumers and repurchase behaviour and the resultant impact upon profits. For instance, Tax and Brown (1998) noted that Hampton Inn hotels realised an additional US$11 million in additional revenue as a direct result of their service guarantee program implementation and commanded the highest customer retention rate in the lodging industry.

At a fundamental level the process of addressing a given service failure appears to be fairly simple, but given the intangible and perishable nature of the typical business to consumer service interaction, it is inevitable that service failures occur (Hart et al., 1990). Once a service failure has occurred the service operator has the option to resolve the perceived problem in an effort to retain or enhance the consumer's satisfaction (Spreng et al., 1995; Kandampully, Mok, & Sparks, 2001). …