The Influence of Customer Service Quality towards Customer Satisfaction and its implication on Loyalty: A Survey on MICE Customers in Hotels

This research was conducted to determine the Influence of Customer Service Quality towards Customer Satisfaction and its implication on Loyalty among MICE Customers in Hotels surrounding Bekasi. For service quality, instead of applying the famous SERVQUAL, this study uses the newly developed service quality scale for the hotel industry, HOLSERV. Quantitative data analysis was applied to test the relationship among the variables. Before that, data were tested for validity and reliability. Around 351customers of hotels surrounding Bekasi were taken as the respondents with the help of hotel managers who participated in the study. Participants were taken not only those experiencing MICE but also from the employee category assuming the degree of exposure to MICE much higher than students. Structural equation modeling was applied to test the influencing factors among the variables since it has better details in results compared to the multiple regression techniques. The result shows all the variables in HOLSERV have a significant influence on Customer Satisfaction which leads to Customer loyalty. Tangibility factors such as up-to-date equipment and facilities, hotel physical features, and materials associated with the service are factors being considered by customers to follow MICE in hotels. Employee factors as the major contributor such as; appearance, effective communication, identification of customers’ needs are also in favor for customers to experience well following MICE in hotels. In addition, customer satisfaction itself has proven to be significant to loyalty. Being satisfied by the services given, customers will return to the hotels in the future whenever MICE is conducted.


Introduction
The MICE industry is one of the promising industries for the tourism sector. In 2018, MICE contributes USD 229 billion in the Asia Pacific with Chine takes the biggest portion (55%), followed by Singapore (22%), Thailand (8.1%), India (5%), and Hong Kong (2.1%) (Asia Pacific's MICE revenue, 2019). In 2015, MICE; meetings, incentives, conventions, and exhibition or events has contributed up to forty percent of international tourists arriving at Indonesia ("Mice put as the center stage of tourism outreach", 2015) especially to Jakarta, Bali, Bandung, Surabaya, and Special Region of Yogyakarta ("The rise of MICE Industry in Indonesia", 2017). It is expected in 2019 there are 2 million tourists from the MICE sector and contribute USD 2.5 billion (Fikri, 2019). Therefore, more hoteliers need to take this growth as opportunities to increase profitability by developing hotel services, such as venues for meetings, halls for conventions, and accommodations for delegates.
Service quality has been developed in the various industry not to mention in hotel industry with the variable of HOLSERV (Jeon, 2018;Rus et al., 2019;Mei et al., 1999;Subha, 2020;Chen et al., 2010). However, none of those studies focus on the respondents who experienced MICE, hence this study is expected to fill in the gap of using HOLSERV to MICE users. The purpose of this research is to find out the relationship between HOLSERV, satisfaction, and loyalty. This study is expected to enrich a broader knowledge about HOLSERV from the MICE users' view and at the same time, it is expected to give insights to hoteliers in retaining their customers by providing service in MICE. The rest of the study is discussed as follows: a review of the literature of HOLSERV concepts and their relations toward satisfaction Satisfaction may be related to an ongoing business relationship or with priceperformance, time or service delivery, or the service experience satisfaction, service context, and satisfaction with the entire reputation and an organization outlook. Providing services that those customers incline toward, is a beginning stage for giving consumer loyalty and by giving the best service quality, the company could increase profit through their customer satisfaction (Holjevac et al., 2009). Reflecting the statement of Luo and Homburg (2007), it states that customer satisfaction positively affects the business profitability which means customer satisfaction and service quality is the successor key to get customer loyalty or repurchase intentions. It may also be a good indicator of the willingness of the customer to recommend the hotel to other people (Juwaheer, 2004). Customer satisfaction has been specifically connected with the success of the hotel (Wu, 2009). To have satisfaction, hoteliers can develop their service quality since it is the prime factor according to Gebremichael and Sing (2019), Subha (2020), and Priyo et al. (2019 in the hotel industry.

Customer Loyalty
Customer loyalty is described as a customers' repeat visitation, repetitive purchase behavior with an emotional commitment or expression of a favorable attitude toward the service provider (Yoo & Bai, 2012). According to Cheng et al. (2018), customer loyalty can be characterized as a strongly included duty to reliably re-purchase or re-belittle merchandise from a similar specialist co-op in the future and it can cause the redundant acquisition of a similar brand, or brand-set buying. Moreover, loyal customer visit frequency is higher and make more purchase than none-loyal customers do and less likely to switch to a competitor brand with the cause of discounts of price and other superior advertisements and bring in new customers through positive word-of-mouth which can sometimes save a huge amount of the expense for advertising (Rahman et al., 2012). Patrick argues that repeat customers are more than just a secure source economically, but they can also be information channels that casually create a linkage to their friends, relatives, college, and other probable consumers and thus enable businesses to uphold a clientele base (Yoo & Bai, 2012). One of the most essential theories of loyalty marketing is that a small increase in loyal customers can bring a significant increase in profitability to a business (Keiningham, 2007). Cheng et al. (2018) found that there is a dominant relationship between satisfaction and loyalty in the hotel industry. Similar findings were also stated by Yao et al. (2019), that satisfaction is the strongest determinant to loyalty as well as El-Adly (2018) in the hotel industry.
To examine the influence of hotel service quality towards customer satisfaction and loyalty of MICE demands in Hospitality Industry, a model shown in Fig. 1 is presented in empirically tested. As shown in the figure, service quality is based on the three factors of HOLSERV namely tangibility, reliability, and employee as independent variables, while customer satisfaction and loyalty are mediating and dependent variables respectively. To analyze the influences between each variable, four hypotheses are developed in the theoretical framework as follows: H1: Tangibility has a direct influence on Customer Satisfaction H2: Reliability has a direct influence on Customer Satisfaction H3: Employee has a direct influence on Customer Satisfaction H4: Customer Satisfaction has a direct influence on Customer Loyalty

Research Methods
The research questions which are stated in this research imposed a need for further learning about the concept of influences on customer loyalty. Hence, a quantitative research approach based on document studies and questionnaires taken from respondents; those who organize MICE in hotels and participants, are used to meet research objectives. To have a limited yet accurate data result, the sample size was people who used hotels for MICE purposes in surrounding Bekasi. To overcome problems related to SERVQUAL in accessing service quality and customer satisfaction, HOLSERV uses the seven-point scale (1 = very poor and 7 = excellent) rating. One column questionnaire combined with a seven-point scale rating makes HOLSERV easy to be applied for actual research as it gives accurate results of the customers' perception. This questionnaire research was spread from October 5 th, 2019 until the end of January 2020 in the form of a hard copy as well as a soft copy (online) to 351 respondents to ease the survey process. Table 1 shows the percentage of respondent profile.  (Hair et al., 2011). Reliability refers to the consistency of the measurement while construct validity is used to ensure that questionnaire items are measuring the right construct using Cronbach's Alpha as the measurement with a cut-off value of greater than 0.7. tangibility, and employee respectively. As for the construct validity, all item statements load one for each respective construct and have a high correlation (factor loading > 0.7) on each construct except for two items loaded on reliability (RB1 and RB 4) and one item loaded on employee (EP1). But since the factor loading is greater than 5, and the reliability of the constructs is high, hence the decision is to keep all the item statements. The construct validity results are calculated using factor analysis with Principle component analysis and varimax rotation of Eigenvalues more than 1. The KMO-MSA value is 0.955 and the Bartlett test shows significance with all communality values are greater than 0.5 (ranging between 0.699 till 0.790) and the total variance explained shows 82.97% for all five constructs.

Results and Discussions
The SEM (Structural Equation Model) is used for this research using AMOS 18. It is used to evaluate the relationship between the Dependent and Independent variables which influences a customer's decision-making process in choosing a hotel for MICE purposes. The first step is conducting goodness of fit before going to the hypothesis testing. According to Hair et al. (2011), due to the difficulties to achieve goodness of fit, they recommend fulfilling 5 out 7 criteria (Table 3) before a model is good for further analysis. Based on the statistic results, the model is in good fit where 5 out of 7 criteria has been fulfilled (CMIN/DF = 4.417, IFI= 0.938, TLI= 0.922, CFI= 0.938) with RMSEA is in mediocre (Figure 2     As stated from the results (Table 4.; Figure 3.), it is concluded that hypothesis, whether tangible factors, reliability factors, and employee factors influence satisfaction are all accepted with employee factor, becomes the greatest contributors. As previous studies express that satisfaction is the major contributor of loyalty has also been proven in this study. Tangibility factors such as up-to-date equipment and facilities, hotel physical features, and materials associated with the service are factors being considered by customers to follow MICE in hotels. It means that the better the tangible aspects being provider the more eager the customers will follow MICE being conducted in the hotels. This result is in line with previous research such as Akbaba (2006) Employee factors as the major contributor such as; appearance, effective communication, identification of customers' needs are also in favor for customers to experience well following MICE in hotels. Since the hotel industry is not a self-service industry, capable and knowledgeable employees are needed by customers to fulfill their needs. Not to mention each customer might have a different need. Hence, this result is also in line with the study by Rao and Sahu (2013) and Kattara et al. (2015), Gebremichael and Sing (2019), Subha (2020), and Priyo et al. (2019). Being satisfied by the services given, customers will return to the hotels in the future whenever MICE is conducted. This finding is in line with the findings from previous studies in the hotel industry (Cheng et al., 2018;Yao, Qiu, and Wei, 2019;El-Adly, 2018) What is interesting in this study is that the significance of Reliability shows the negative sign and the average of answers are in around 5 which means they agree upon the reliability factors. In conclusion, even though customers agree on the reliability factors, it seems that all three factors need to be conducted or exist before they can satisfy the hotels. does not have any direct influence on Customer Loyalty.
Further, it is estimated that the predictors of Loyalty explain 80.2 percent of its variance which means the error variance of Loyalty is approximately 19.8 percent of the variance of Loyalty itself. As for the Satisfaction, it is estimated that the predictors of Satisfaction explain 93.2 percent of its variance which means the error variance of Satisfaction is approximately 6.8 percent of the variance of Satisfaction itself.

Conclusions and Recommendations
The result shows all the variables in HOLSERV have a significant influence on Customer Satisfaction which leads to Customer loyalty. Tangibility factors such as up-to-date equipment and facilities, hotel physical features, and materials associated with the service are factors being considered by customers to follow MICE in hotels. Employee factors as the major contributor such as; appearance, effective communication, identification of customers' needs are also in favor for customers to experience well following MICE in hotels. In addition, customer satisfaction itself has proven to be significant to loyalty. Being satisfied by the services given, customers will return to the hotels in the future whenever MICE is conducted.
The first implication is that the hoteliers surrounding Bekasi that HOLSERV has a direct influence on Customer Satisfaction which leads to Customer Loyalty. This study shows the connection between HOLSERV and Customer Satisfaction for MICE purposes, can only be interconnected by variables which are Tangibility, Reliability, and Employee Behavioral. Therefore, the findings highlight that evolving customer loyalty, does not only depend on customer satisfaction but also on the service performance of the employee and the ability to establish a focus on the hotel design and amenities. The reason these variables become the influential factors is that, when a customer holds an event, the design becomes a major factor that will highlight their decoration during the event. Another reason is that when the customers are working there for the event, they expect employees who they can talk to regarding their event and needs. In this research, it is quite intriguing that reliability does have a major impact on Customer Loyalty even though it is a negative sign. When, in this case, reliability is the Standard Operating Procedure of the hotel. It still has to be in consideration that this research does not focus upon a wide range of points of view, however on the MICE customers in surrounding Bekasi.
A few limitations are concluded from the present study. First of all, is the time. While the original target for this study was 385 participants, the process of collecting data to fill in the questionnaires from each participant was found to be more time-consuming than expected. Therefore, only data from 351 respondents could be achieved. A minority of the respondents were not serious while filling in, it's known from the pattern of the answers.
This study is conducted to know which factors are to be considered or developed to maximize MICE facilities as a recommendation or as an initial opinion. This research is focused on hotels in Bekasi, which is an industrial area that has multiple development prospects which can consider MICE as a sector for major income, other than hotel room usage. The research took feedback from 351 respondents. From the result, it can be seen that most respondents are users of MICE with few from managers. Since they have experienced MICE, they can relate their experiences to the questions posed. Hence, they will have the insights that affect Customer Loyalty for MICE. It can also possibly be deepened about factors that affect MICE loyal customers at the hotel with a focus on the mere target students. Or even be able to test the same thing, with different regions or different backgrounds. Related to the results, this study needs to duplicate to various places in Indonesia since Indonesia currently has thousands of hotels in competition.