THE IMPACT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF FIVE STAR HOTELS IN ADDIS ABABA, ETHIOPIA

With more intense rivalry in the global market without quality and special skills in its obtaining, assessing and continuous improvement, companies cannot fill the increasing needs of consumers. This study attempts to assess service quality and customer satisfaction of five star hotels in Ethiopia and its impact on overall customer satisfaction. A 26-items Lodging Quality Index scale measuring of five basic dimensions, i.e., tangibility, reliability, responsiveness, confidence and communication of service quality were used to understand the service quality of five star hotels in Ethiopia. Consistent with the above objective, data were collected through questionnaire from a sample of 330 international and local customers. Respondents were selected using simple random sampling technique and hotels were selected purposively. Data collected through questionnaire were analyzed using statistical tools such as standard deviation, one and two paired sample statistics (T-test), correlation and regression analysis by applying a modified version of the LODGING QUALITY INDEX model. The major finding of the study indicates that on average, the performance gaps of the hotels with regard to tangibility, reliability, responsiveness, confidence and communication features are 0.25, 0.26, 0.47, 0.22, and 0.20 respectively . The overall satisfaction of customers in the hotel’s service is found to be above a moderate level ( 3.85 ) of satisfaction. The gaps in each dimension are negatively correlated with overall satisfaction. This inverse relationship indicates that customers’ overall satisfaction tends to increase as the gaps they experience falls, and vice-versa. Simply, the higher the gaps, the lesser the satisfaction will be. The customer overall satisfaction can be influenced by several factors. Among other factors a considerable portion, about 46.5% of their satisfaction are influenced by the five service quality dimensions .  Based on the findings of the study, the researchers recommended that the top management needs to improve quality services so as to meet customer’s expectations, and should hire self-motivated, enthusiastic employees who will like to deal with customer and would try to solve customer complaints and other issues in an effective manner, should provide continuous training to the employees on issues like responsiveness, confidence and communication skills while dealing with customers is of immense importance. All stakeholders (government body, customers, employee, hotel owners, suppliers and others) should work together for better service quality and customer satisfaction. Conclusively, the study proves that all five star hotels in Ethiopia under the present study found are providing their services below their customer expectations. And service quality of five star hotels is significantly correlated with customer satisfaction.