Hrm Roles

1.0 INTRODUCTION AND REVIEW OF LETERATURE 1.1 INTRODUCTION
During the past few decades, customer satisfaction and service quality have become a major area of attention to practitioners and researchers. Both concepts have strong impact on business performance and customer behaviour. Service quality leads to higher profitability (Gundersen et al., 1996) and customer satisfaction (Oliver, 1997). Furthermore, a number of empirical studies indicate a positive relationship between customer satisfaction and customer loyalty (Kandampully and Suhartanto, 2000; Dimitriades, 2006; Chi and Qu, 2008; Faullant et al., 2008), as well as between customer satisfaction and positive word-of-mouth (WOM) (Söderlund, 1998). Therefore, one of the key strategies for customer-focused firms is to measure and monitor service quality and customer satisfaction. Customer satisfaction is the outcome of customer’s perception of the value received in a transaction or relationship, where value equals perceived service quality, compared to the value expected from transactions or relationships with competing vendors (Blanchard & Galloway, 1994; Heskett et al.,
1990; Zeithaml et al., 1990). Since the cost of attracting new customers is higher than the cost of retaining the existing ones, in order to be successful, managers must concentrate on retaining existing customers and implementing effective policies of customer satisfaction and loyalty. This is especially true in the hotel industry.

Nowadays one of the biggest challenges for managers in the hotel industry is to provide and sustain customer satisfaction. Customer requirements for quality products and service in the tourism industry have become increasingly evident to professionals (Lam & Zhang, 1999; Yen & Su, 2004). Guest relationships are a strategic asset of the organization (Gruen et al., 2000) and customer satisfaction is the starting point to define business objectives. In this context, positive relationships can

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