{468x60.media}
Dr. Hudson

Guest Service / Customer Experience Mgmt

The Service Recovery Paradox. Does It Really Exist?

By Simon Hudson, Endowed Chair in Tourism and Hospitality, University of South Carolina

Service delivery failure is likely to occur at some point in time for organizations in the hospitality industry. Though it is unlikely that businesses can eliminate all service failures, they can learn to respond effectively to failures once they do occur, and this response is often referred to as service recovery, defined as the process by which a company attempts to rectify a service delivery failure. One study of hotel customers found that their level of satisfaction and lasting impression of a hotel is based first and foremost on what happens when something goes wrong. Mostly, customers accept that mistakes happen; the problem begins when there is no strategy in place to rectify the situation easily.

Some researchers have suggested that customers who are dissatisfied, but experience a high level of excellent service recovery, may ultimately be even more satisfied and more likely to repurchase than those who were satisfied in the first place. This idea has become known as the service recovery paradox (see Figure 1). There are somewhat mixed opinions on whether a recovery paradox exists, but customer complaints about defective services may represent an opportunity for the company to improve its image and perceived quality, since it permits the company to make a positive correction or to resolve the complaint.

alt text

Despite the significance of the tourism and hospitality sector both economically and as a source of customer complaints, there has been little research that explicitly addresses complaining behavior and service recovery. Research that does exist is relatively recent and still evolving. Research in the tour operating sector has found that even when a firm recovers effectively from a service failure, satisfaction is not guaranteed, which is at variance with results reported by other researchers. In a study that tested the recovery paradox for airline passengers, researchers found that customer satisfaction was lower after service failure and recovery than in the case of error-free service.

A study of service failure and recovery in the UK hotel industry found that guests who were satisfied with the hotel's response to their problems, were much more likely to return than those who were not satisfied with recovery efforts. And a study in Asia looking at the impact of critical incidents of service failures and recovery efforts in a hotel, found that only complete resolution results in repeat patronage, while partial resolution and unresolved service failures served as a deterrent to the guest's return patronage. And another survey of 613 hotel guests found that guests' overall satisfaction and intention to revisit were much higher when they believed that service failure was unstable and recovery was stable.

The hotel industry involves a high degree of interaction between employees and consumers and so provides many opportunities for service failures to occur. Customers' perceptions of their experience, the so-called "moments of truth", play a major role in determining customer satisfaction and future purchase decisions. The quality of service encounters is frequently determined by the actions of front-line staff, whose experience and commitment may be limited and whose attitudes may vary from one encounter to another. Therefore, the relationship between service recovery and the different dimensions of quality perceived by customers is a topic that needs more attention.

A few years ago I (in collaboration with researchers in Gran Canaria, Spain) explored service quality in the Spanish hotel sector and in particular, looked for evidence of the service recovery paradox. The sample represented customers of 11 four-star hotels (three independent and eight belonging to chains) located in the Gran Canaria resorts of San Agustín, Playa del Inglés and Maspalomas. The Canary Islands has the greatest number of four-star beds in Spain, with the highest annual occupancy. The study focused on the hotel reception and restaurant services of the selected hotels. Those departments were chosen because they see the most direct contact with customers in service encounters with departmental staff.

alt text
The African-themed Baobab Hotel in Gran Canaria

After the pertinent pre-tests, the questionnaires were written in eight different languages, Spanish, English, German, Dutch, French, Italian, Swedish and Finnish. Customers were questioned about service recovery encounters with operative staff. The first section of the questionnaire measured service quality at the reception and the restaurant using the SERVQUAL scale. SERVQUAL is an instrument that focuses on the notion of perceived quality and is based on the difference between consumers' expectations and perceptions of service. The scale is composed of 22 items designed to load on five dimensions reflecting service quality. The dimensions are: assurance, empathy, reliability, responsiveness, and tangibles. Each item is used twice: first, to determine customers' expectations about firms in general, within the service category being investigated; second, to measure perceptions of performance of a particular firm. These evaluations are collected using a seven-point Likert scale. SERVQUAL is a concise scale, easy to use by managers, and is now referred to as a standard by other service researchers.

Respondents were then asked if they had made a complaint, and then they were asked if an effective service recovery was made in response to this complaint. The final section asked customers whether or not they were repeat customers, along with relevant demographics. A sample for each hotel was taken.

A total of 3,607 questionnaires were handed out, of which 1,792 were completed and returned. What we found was that customers who had experienced a recovery encounter, perceived a higher level of service quality for intangible attributes, than non-complaining customers. These intangibles are assurance, empathy, reliability and responsiveness. This supports, to some extent, the service recovery paradox, whereby customers who complain, but experience a high level of service recovery, may be even more satisfied than those who were satisfied in the first place. However, there was no evidence in this study that those customers who did not complain were totally satisfied with their visit. Many customers are very passive about their dissatisfaction, simply saying or doing nothing. What the results do show though, is that resolving customer problems related to intangible aspects of the service in a hotel, has a strong impact on perceived service quality and thus customer satisfaction. The fact that many of the customers who experienced problems were loyal, also might support the contention that guests' overall satisfaction and intention to revisit is much higher when they believe that service recovery is stable.

For the tangible dimensions of service quality, recovery encounters had no influence on perceived service quality. The relative homogeneity of the tangible elements between the hotels analyzed is perhaps one element that influenced those results. Thus, tangible aspects are very likely to become commodities for the hotels competing in a particular destination, while the intangible elements are the ones that establish real differences in the quality perception of the customers.

From a practical point of view, the results show the importance of having an effective service recovery program in place. The Lopesan Group, whose hotels were surveyed in this study (the African-themed Baobab Hotel pictured is one of them), has special personnel responsible for service recovery when problems arise, trained to calm customers and negotiate compensation within already decreed limits. The group also uses the results of audits and surveys to enhance customer service. Based on customer feedback, they create a top ten problem list across the chain and then provide a fund to help solve these problems. A good solution in one hotel can then be applied across other hotels in the chain, making it more cost-effective if they have to invest in the solution.

The beneficial effects of effective service recovery suggest that there are significant potential benefits from encouraging complaints. As some researchers have commented, the benefits of creating an environment that encourages dissatisfied customers to complain may be considerable. Hotel managers should consider both the potential for effective service recovery to increase retention rates, and the risk that customers who experience service failure may simply defect (as well as the revenue implications of that defection). Finally, the fact that service recovery and loyalty had little impact on perceived service quality for tangible elements does not mean hotel managers should ignore tangibles. Firms that don't pay enough attention to the tangibles dimension of service quality can confuse and even destroy an otherwise good strategy. Customers often rely on tangible cues, or physical evidence, to evaluate the service before its purchase and to assess their satisfaction with the service during and after consumption.

In conclusion, although we found evidence that the service recovery paradox does exist, 'doing it right the first time' is still the best and safest strategy in the long run.

Simon Hudson is a tourism aficionado, exploring the world, spreading his passion for travel, and enlightening audiences on every kind of travel research from winter sports to film tourism. He has written eight books, and over 60 research articles, many of them focused on tourism marketing. He is the Endowed Chair for the SmartState Center of Economic Excellence in Tourism and Economic Development at the University of South Carolina. Dr. Hudson can be contacted at 803-777-2705 or shudson@hrsm.sc.edu Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

OCTOBER: Revenue Management: Technology and Big Data

Steve  Van

Do you have a catering assistant whose first question each morning is Did we sell out? or What was our occupancy and ADR last night? What about a front office associate who is so hungry to earn the perfect sell incentive that every time she works the 3:00 to 11:00 shift and the hotel has just a few rooms left to sell, you can count on the fact that you are going to end up with a perfect sell? If so, you may have just found your next revenue manager! READ MORE

Will Song

Airbnb is less than a decade old, but it has already begun to make waves in the travel industry. The online marketplace where individuals can list their apartments or rooms for guests to book has been able to secure a surprisingly stable foothold for itself. This has caused some hoteliers to worry that there’s a new competitor in the market with the potential to not only take away market share but drive prices down lower than ever. Let’s take a closer look at how Airbnb fits into the industry right now and then walk through the steps of the ways your hotel revenue management strategy can be adapted to the age of Airbnb. READ MORE

Brian Bolf

Revenue management tends to be one of the most challenging hospitality disciplines to define, particularly due to the constant evolution of technology. Advancements in data processing, information technology, and artificial intelligence provide our industry with expanded opportunities to reach, connect, and learn from our guests. Ultimately, the primary goals of revenue management remain constant as the ever-evolving hospitality industry matures. We must keep these fundamentals top of mind, while proactively planning for the tighter targets that lay ahead. That said, how can we embrace these innovations, operate under constricted parameters, and learn from the practices used today to achieve our same goals moving forward? READ MORE

Sanjay  Nagalia

Every year, it seems as though the hospitality industry faces more competition, new opportunities to leverage their data, and difficult organizational challenges to overcome to remain competitive in a hypercompetitive marketplace. The popularity of the sharing economy, dominating OTAs and a growing generation of often-puzzling consumers all give pause to hotels as they strategize for a more profitable future. Hotels have been feeling the heat from OTA competition for several years, causing many organizations to double down on their efforts to drive more direct bookings. Revamped loyalty programs, refined marketing campaigns and improvements to brand websites have all become primary focuses for hotel brands looking to turn the tables on their online competition. READ MORE

Coming Up In The November Online Hotel Business Review




{300x250.media}
Feature Focus
Architecture & Design: Authentic, Interactive and Immersive
If there is one dominant trend in the field of hotel architecture and design, it’s that travelers are demanding authentic, immersive and interactive experiences. This is especially true for Millennials but Baby Boomers are seeking out meaningful experiences as well. As a result, the development of immersive travel experiences - winery resorts, culinary resorts, resorts geared toward specific sports enthusiasts - will continue to expand. Another kind of immersive experience is an urban resort – one that provides all the elements you'd expect in a luxury resort, but urbanized. The urban resort hotel is designed as a staging area where the city itself provides all the amenities, and the hotel functions as a kind of sophisticated concierge service. Another trend is a re-thinking of the hotel lobby, which has evolved into an active social hub with flexible spaces for work and play, featuring cafe?s, bars, libraries, computer stations, game rooms, and more. The goal is to make this area as interactive as possible and to bring people together, making the space less of a traditional hotel lobby and more of a contemporary gathering place. This emphasis on the lobby has also had an associated effect on the size of hotel rooms – they are getting smaller. Since most activities are designed to take place in the lobby, there is less time spent in rooms which justifies their smaller design. Finally, the wellness and ecology movements are also having a major impact on design. The industry is actively adopting standards so that new structures are not only environmentally sustainable, but also promote optimum health and well- being for the travelers who will inhabit them. These are a few of the current trends in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.