Customer retention correlation with customer satisfaction in a hotel industry



Retention analysis identifies customers with higher leaving company intentions. In a hotel industry, it can be implied for loyal customers, who tend to book the same hotel or the same chain hotel every time they travel. Losing loyal customers not necessary means that something went wrong during their stay, but it could be one of the factors. However, all the other factors can be less obvious. That is the reason why the retention analyses should be done. Knowing why customers want to change hotels can help managers to improve service, quality or other lacking elements. Moreover, it can also stop other customers from leaving (Ed Peelen, Rob Beltman, 2013).

Loyal guest’s decision to change hotel chain can be correlated with their satisfaction during their stay. Consequently, customer satisfaction is one of the most important factors that lead hotels to success. Customer satisfaction can be identified by many variables, for instance price and quality ratio, location, service, staff friendliness, food and beverage service or the hotel’s overall image. To reduce the number of dropped customers the hotel managers must understand the relationship between customer satisfaction and retention. Even 70% of identifiable reasons why customers left hotels and chose its competitor was poor service. The quality service provided face-to face could be the deciding factor to come back at the same hotel or choose another one.

It is important to analyze the situations when customers were satisfied with provided service. Based on the outcomes of the focus group, which was done by Petrillose and Brewer (Petrillose, M J &Brewer, P.B , 2000) customers were satisfied with service when employees were courteous, friendly, helpful and ready to respond. Moreover, positive first impression, satisfying service, extended interactions also plays a huge role in customer satisfaction.  Consequently, these reasons could be the main reasons for customers to return to the hotel.

However, positive and negative experiences during the customer’s stay at the hotel, not necessarily have to influence their decision to come back. Some of the travelers can be categorized in to the group that has the intention to switch the brand. This group of costumers tent to choose another hotel each time they travel at the same destination and they are not likely to come back to the same one, even though their previous stay was pleasant. Contrastingly, loyal customers have an attachment to the brand and once they are satisfied with the service, they become less sensitive to pricing and other little issues that can occur during their stay (Janet Sim , Brenda Mak & David Jones, 2006).

To sum it up, customer satisfaction can have a correlation with customer retention, but it does not necessarily mean that it can be applied for each case. There are many other factors that influence customer retention, such as consumers tension to switch brands and customer loyalty. These factors should be analyzed first before any conclusions are drawn.





Ed Peelen, Rob Beltman. (2013). Customer relationship management. In R. B. Ed Peelen. United Kingdom: Copyright, Designs and Patents.

Janet Sim , Brenda Mak & David Jones. (2006). A Model of Customer Satisfaction and Retention for Hotels. Quality Assurance in Hospitality & Tourism.

Petrillose, M J &Brewer, P.B . (2000). An exploration of customer retention factors in Las Vegas resort properties. Gaming Research & Review Journal, 1-14.



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