Why Employee Engagement Equals Hotel Service Users' Loyalty - An Analytical Study Example

Background and Context

As the global economy recovers from the Coronavirus pandemic, the hospitality industry has been the most hit with high attrition levels across all sectors, especially in the hotel. The attrition rate has almost doubled in the hotel sector after the pandemic, with the significant challenge currently facing the sector being low levels of employee engagement due to a lack of motivation. Since the hospitality industry is highly dependent on customer satisfaction, this has greatly impacted customer loyalty, which most hotels rely on for sales revenue. The hotel users' loyalty index has drastically gone down due to low customer satisfaction as most hospitality experts point out low employee engagement as the main challenge. Therefore the correlation between employee engagement and hotel service users’ loyalty cannot be underestimated in the hospitality sector. Both of them hold equal importance in a business's success, especially in the hotel industry, which is customer-centric.

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Subject and Goal of the Research

The research paper will focus on the impact of employee engagement on hotel service users' loyalty. Employee engagement is a crucial determinant of customer loyalty, which is commonly assumed in the hotel sector. However, for customer loyalty to be achieved, employees must be continuously engaged through proper training and motivation to create experiences that create customer satisfaction, which is the primary aspect of customer loyalty. In the hotel sector, every staff in the organizational hierarchy is either directly or indirectly involved in the accumulation of customer experiences and, ultimately, customer perceptions that lead to customer loyalty. Thus, an enabling environment for employees holds so much power in fostering the business core values that get the customers to commit to a Brand. Every staff in the organizational hierarchy. The research's primary goal will be to correlate the importance of employee engagement with hotel service users' loyalty through an analytical approach. Most previous studies on this topic have often focused on the impact of employee satisfaction on employee loyalty and performance rather than customer loyalty. For a long, most researchers have ignored the fact that most hotels depend on customer loyalty and not employee loyalty for revenue and sales. However, with the prevailing harsh economic conditions, the current study on the topic is shifting towards what drives sales and sustainability in the sector- customer loyalty. Consequently, most studies are focusing on factors affecting customer retention in the hotel industry.

Basic and Auxiliary Hypotheses

The objective of this study will be to analyze the correlation between employee engagement and customer loyalty in the hotel industry. To this end, two hypotheses will be developed to guide this study.

H1 (Basic Hypothesis): employee engagement has a positive effect on hotel users’ customer loyalty.

H2 (Auxiliary hypothesis): A statistical theory called the Spillover Effect on the relationship between employee engagement and an organization’s bottom line states that when employees are actively engaged in their work, their positivity ultimately affects the effort put forth in customer satisfaction and other company objectives. In return, this increases customer loyalty and their willingness to promote the company. This therefore means;

L= E+C where L is Hotel service users’ loyalty, E is employee engagement and C is hotel service users’ satisfaction.

From this, it is predicted that hotel service users’ loyalty is directly linear to employee engagement and customer satisfaction.

Research Variables

The two key research variables in the research will be employee engagement (indirect variable) and the level of hotel users’ loyalty (dependent variable). Employee engagement refers to a workplace approach that results in favorable conditions for all workers to give their best with the commitment to organizational goals and values and motivation to contribute to the organization’s success with a strong sense of well-being. It is usually measured based on integrity, trust, two-way communication, and commitment between the organization and the employees.

On the other hand, customer loyalty is the level of a customer’s likeliness to reconnect with a company through repeat purchases. Often, it is the result of positive customer experiences, customer satisfaction, and the value of the services and goods a customer gets from a business. A customer’s loyalty is often determined by their willingness to pay more for the products or services they are familiar with and love.

Research Methodology

The study's research design will be a quantitative research design considering that the paper will aim to generate knowledge and understand a social world. Generally, the research design's primary goal is to understand the relationship between the two variables- employee engagement and hotel users' loyalty among a population of employees and customers in the hotel sector.

A focal firm approach will be key in accessing the population sample for the research which includes a network of employees and customers in the local hotel sector. This approach focuses on firms that rule the industry and often are in direct content with the consumers. Specific departments within the focal firms were selected. Customer service departments will be selected since it is where customer-employee interaction is frequent. Electronic and telephone surveys will be vital in obtaining relevant data for the study. Telephone surveys are recommended because of the geographical location of hotel service users. On the other hand, electronic surveys are considered due to their ease of collecting data in a general population.

Surveys will be conducted to collect essential data on employee engagement and customer loyalty from this predefined group of respondents. The surveys will be administered directly in the selected departments in the focal firms. The research instruments will include two questionnaires. The first questionnaire (Appendix 1) will target the focal firms’ employees for two months. The questionnaire will focus mainly on the three aspects of employee engagement, namely commitment, vigor, and interest. For the employees, the surveys will be administered directly to those involved in face-to-face and telephonic customer transactions and distributed through an online survey. The second questionnaire (Appendix 2) will target customers in the focal firms over the same period. It will include two sections focusing on customer experience construction and measure of hotel service users’ loyalty. The survey will be administered through a research firm and completed telephonically. The CATI (Computer Aided Telephone Interview) system will then be used to capture the participant’s responses since it is crucial to seek their consent before contributing to the study.

Data Analysis will include three stages that will be completed before hypotheses testing. These will include additional categorization of both hotel service users and employee data, descriptive statistics through the SPSS Statistics for Windows (IBM 27.0), and validity and reliability testing conducted through SmartPLS 3.0. The IBM SPPS Statistics for Windows (27.0) will establish skewness, kurtosis, mean, standard deviation, and data range. The skewed distribution will be highlighted by a number more than +1 or less than -1 while +1 or -1 will indicate the peaks and flat distributions respectively in kurtosis.