Profitability determinants of five-star hotels in Yogyakarta

https://doi.org/10.35912/amor.v2i1.670
Published: Aug 25, 2020

Abstract:

Purpose: This study aimed to investigate how customers' satisfaction, employee satisfaction, and service quality affect profitability.

Research methodology: A total of 450 questionnaires were distributed, 424 were returned and a Partial Least Square (PLS) modeling technique was used to test the hypotheses.

Results: The results of this study explain that customers' satisfaction and employee satisfaction play essential roles in enhancing profitability, service quality on customers' satisfaction, and employee satisfaction on customer satisfaction. Finally, there are no essential roles between service quality on profitability.

Limitations: This study only used customer satisfaction, service quality, and employee satisfaction as the determinant of profitability. There may be other factors that affect profitability, such as perceived value and customer loyalty, that can be considered to determine which marketing strategy should be used as a practical contribution.

Contribution: Therefore, based on the research, hotel management should build a favorable image on a long-term basis using identification and efficient management in terms of promise, positioning, personality, and people. This research implies that the hotel manager should continuously improve service quality and employee satisfaction, thus increasing customers' satisfaction, which will lead to profitability.

Keywords:
1. Employee satisfaction
2. Service quality
3. Customer satisfaction
4. Profitability
5. Partial Least Square
Authors:
Febriana Riestyaningrum Kusumawati
Faculty of Education, Education Leadership and Management, Southwest University, Chongqing, China
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How to Cite
Kusumawati, F. R. (2020). Profitability determinants of five-star hotels in Yogyakarta. Annals of Management and Organization Research, 2(1), 41–52. https://doi.org/10.35912/amor.v2i1.670
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Vol. 2 No. 1 (2020): August
Articles
References

    Anderson, E.W., Fornell, Claes, and Rust. R.T. (1997). Customer satisfaction, productivity, and profitability: Differences between goods and services. Marketing Science, 16(2), https://doi.org/10.1287/mksc.16.2.129

    Barsky J., and Nash L. (2003). Customer satisfaction: Applying concepts to industry-wide measures. The Cornell Hotel and Restaurant Administration Quarterly, 44 (4), 173-183. https://doi.org/10.1177/001088040304400523.

    Brady, M.K., and Robertson, C.J. (2001). Searching for a consensus on the antecedent role of service quality and satisfaction: an exploratory cross-national study. Journal of Business Research, 51(1), 53-60. https://doi.org/10.1016/S0148-2963(99)00041-7.

    Chung, K.H., Yu, J.E., Choi, M.G., and Shin, J.I. (2015). The effects of csr on customer satisfaction and loyalty in China: The moderating role of corporate image. Journal of Economics, Business, and Management, 3(5), 542-547. https://doi.org/10.7763/JOEBM.2015.V3.243.

    Devie., Tarigan, Josua., Widjaja, and Deborah ,C. (2011). The impact of employees satisfaction on profitability of restaurants and cafes: A research in Surabaya, Indonesia. Proceeedings of 2011 2nd ICME.

    DiPietro, R.B., Parsa, H.G., and Gregory, A. (2011). Restaurant QSC inspections and financial performance: an empirical investigation, International Journal of Contemporary Hospitality Management, 23(7), 982-999. https://doi.org/10.1108/09596111111167560.

    Dotchin, J.A. and Oakland, J.S. (1994). Total quality management in service part 2: Service quality. International Journal of Quality & Reliability Management, 11(3), 27-42.

    Dominici, G., and Guzo, R. (2010). Customer satisfaction in the hotel industry: A case study from sicily. International Journal of Marketing Studies, 2(2). https://doi.org/10.5539/ijms.v2n2p3.

    Endri, E., Lisdawati, Susanti, D., Hakim, L, and Sugianto, S. (2020). Determinants of profitability: evidence of the pharmaceutical industry in Indonesia. Systematic Review Pharmacy, 11(6), 587-597.

    Gee, R., Coates, G., and Nicholson, M. (2008). Understanding and profitably managing customer loyalty. Marketing Intelligence & Planning, 26(4), 359 - 374. DOI: 10.1108/02634500810879278

    Gursoy, D., McCleary, K.W., and Lepsito, L.R., (2007). Propensity to complain: effects of personality and behavioral factors. Journal of Hospitality and Tourism Research, 31(3):358-386. https://doi.org/10.1177/1096348007299923.

    Hair, J.F., Anderson, R. E., Tatham, R.L., and Black, W.C. (1998). Multivariate Data Analysis, 5th ed. Upper Saddle River.

    Hartono. (2005). Hubungan teori signalling dengan underpricing saham perdana di bursa efek Jakarta, Jurnal Bisnis dan Manajemen, 5(1), 35-50.

    Herdiyana, Sumarno, S, and Edri, E. (2021). The Effect of Financial Performance on the Profitability of Food and Beverage Companies in Indonesia. International Journal of Financial Research, 12(1). https://doi.org/10.5430/ijfr.v12n1p30

    Homburg, C., and Stock, R.M. (2004). The link between salespeople's job satisfaction and customer satisfaction business to business context: A dyadic analysis. Journal of Academy of Marketing Science, 32(2), 144-158. https://doi.org/10.1177/0092070303261415.

    Kaplan, R., and Norton, D. (2004). Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business School Press.

    Kevin, D. B, J. Michael, C., & Joan, M. P. (2009). How suppliers affect trust with their customers: the role of salesperson job satisfaction and perceived customer importance, Journal of Marketing Theory and Practice, 17(4), 383-394, DOI: 10.2753/MTP1069-6679170406.

    Kheng, L. L., Mahamad, O., Ramayah, & Mosahab, R. (2010). The impact of service quality on customer loyalty: A study of banks in Penang, Malaysia. International Journal of Marketing Studies, 2(2), 57-66. https://doi.org/10.5539/ijms.v2n2p57.

    Kotler, Phillip. (2005). Manjemen Pemasaran Edisi II. Jakarta: PT. Index.

    Kotler, P.T., Keller, K. L. (2006). Marketing Management. Pearson Prentice Hall, New Jersey.

    Kurniawan. (2013). Influence of employee satisfaction on profitability in three stars hotels in Surabaya. Business Accounting Review, 1(1).

    Lam, T.; Zhang, H.; and Baum, T. (2001). An investigation of employee's job satisfaction: the case of hotels in Hong Kong. Tourism Management, 22, 157-165. https://doi.org/10.1016/S0261-5177(00)00039-X.

    Lee, G., Lin, H., 2005. "Customer perceptions of e-service quality in online shopping. Int. J. Retail Distrib. Manag. 33 (2), 161–176.

    Lewis, B.R. & Mitchell, V.W. (1990). Defining and measuring the quality of customer service. Marketing Intelligence Planning, 8(6), 11-17.

    Munandar. (2006). Psikologi Industri dan Organisasi. Jakarta: UI Press.

    Michael, P.T. (2000). Economic Development, Seventh Edition, New York University, Addison Mesley.

    Min, H., and Min, H. (2011). Benchmarking the service quality of fast‐food restaurant franchises in the USA: A longitudinal study, benchmarking. An International Journal, 18(2), 282-300. https://doi.org/10.1108/14635771111121711.

    Parasuraman, A.; Zeithaml, Valarie A. & Berry, Leonard L. (1985). A conceptual model of service quality and its implications for future research, Journal of Marketing, 49(3), 41-50.

    Priyathanalai, Wimonphan & Moenjohn, Nuttawuth. (2012). Is there a link? employee satisfaction and service quality. World Journal of Management, 4(1), 82-92.

    Rita, P., Oliveira, T., and Farisa, A. (2019). The impact of e-service quality and customer satisfaction on customer behavior in online shopping. Heliyon, 5(10), https://doi.org/10.1016/j.heliyon.2019.e02690.

    Ryu, K., Lee, H. and Gon Kim, W. (2012). The influence of the quality of the physical environment, food, and service on restaurant image, customer perceived value, customer satisfaction, and behavioral intentions. International Journal of Contemporary Hospitality Management, 24(2), 200-223. https://doi.org/10.1108/09596111211206141.

    Schlesinger, L,A., and Heskett, J.L. (1991). The service-drivenservice company. Harvard Business Review, 69, 71-81.

    Schlesinger, L.A., and Zornitsky, J. (1991). Job satisfaction, service capability, and customer satisfaction: an examination of linkage and management implications. Human Resource Planning, 14(2), 141-149.

    Schmit, M., and Allscheid, S.P. (1995). Employee attitudes and customer satisfaction: making theoretical and empirical connection, Personnel Psychology, 48(3), 21-536.

    Shahnia, C., Purnamasari, E, D., Hakim, L., Edri, E. (2020). Determinant of profitability: Evidence from trading, service and investment companies in Indonesia. Accounting, 6, 787–794.

    Sugiyono. (2007). Statistika untuk Penelitian. Bandung: CV. Alfabeta.

    Tao, F. (2014). Customer relationship management based on increasing customer satisfaction. International Journal of Business and Social Science, 5(5), 256-263.

    Wang, I-Ming and Shieh, Chich-Jen. (2006). The relationship between service quality and customer satisfaction: the example of CJCU Library. Journal of Information and Optimization Science, 27(1). https://doi.org/10.1080/02522667.2006.1069968.

    Wansoo. K. (2009). Customer's responses to customer orientation of services employees in full-services restaurants: A relational benefits perspective. Journal of Quality Assurance in Hospitality & Tourism, 10(3), 153-174. https://doi.org/10.1080/15280080902988188.

    Wexley, K. N., & Yukl, G. A. (1977). Organizational behavior and personnel psychology. Homewood, Ill: R.D. Irwin.

    Wu, L.W. (2011). Beyond satisfaction: The relative importance of locational convenience, interpersonal relationships, and commitment across service types. Journal of Service Theory and Practice 21(3):240-263. https://doi.org/10.1108/09604521111127956.

    Yee, W. Y. Rachel., Yeung, Andy C. L. & Cheng, T. C. Edwin. (2008). The impact of employee satisfaction on quality and profitability in high-contact service industries. Journal of Operations Management, 26(1). https://doi.org/10.1016/j.jom.2008.01.001.

    Zeithal, V. A. & Bitner, M. J. (2003). Services marketing - integrating customers focus across the firm, Third Edition. Boston: McGraw-Hill.

  1. Anderson, E.W., Fornell, Claes, and Rust. R.T. (1997). Customer satisfaction, productivity, and profitability: Differences between goods and services. Marketing Science, 16(2), https://doi.org/10.1287/mksc.16.2.129
  2. Barsky J., and Nash L. (2003). Customer satisfaction: Applying concepts to industry-wide measures. The Cornell Hotel and Restaurant Administration Quarterly, 44 (4), 173-183. https://doi.org/10.1177/001088040304400523.
  3. Brady, M.K., and Robertson, C.J. (2001). Searching for a consensus on the antecedent role of service quality and satisfaction: an exploratory cross-national study. Journal of Business Research, 51(1), 53-60. https://doi.org/10.1016/S0148-2963(99)00041-7.
  4. Chung, K.H., Yu, J.E., Choi, M.G., and Shin, J.I. (2015). The effects of csr on customer satisfaction and loyalty in China: The moderating role of corporate image. Journal of Economics, Business, and Management, 3(5), 542-547. https://doi.org/10.7763/JOEBM.2015.V3.243.
  5. Devie., Tarigan, Josua., Widjaja, and Deborah ,C. (2011). The impact of employees satisfaction on profitability of restaurants and cafes: A research in Surabaya, Indonesia. Proceeedings of 2011 2nd ICME.
  6. DiPietro, R.B., Parsa, H.G., and Gregory, A. (2011). Restaurant QSC inspections and financial performance: an empirical investigation, International Journal of Contemporary Hospitality Management, 23(7), 982-999. https://doi.org/10.1108/09596111111167560.
  7. Dotchin, J.A. and Oakland, J.S. (1994). Total quality management in service part 2: Service quality. International Journal of Quality & Reliability Management, 11(3), 27-42.
  8. Dominici, G., and Guzo, R. (2010). Customer satisfaction in the hotel industry: A case study from sicily. International Journal of Marketing Studies, 2(2). https://doi.org/10.5539/ijms.v2n2p3.
  9. Endri, E., Lisdawati, Susanti, D., Hakim, L, and Sugianto, S. (2020). Determinants of profitability: evidence of the pharmaceutical industry in Indonesia. Systematic Review Pharmacy, 11(6), 587-597.
  10. Gee, R., Coates, G., and Nicholson, M. (2008). Understanding and profitably managing customer loyalty. Marketing Intelligence & Planning, 26(4), 359 - 374. DOI: 10.1108/02634500810879278
  11. Gursoy, D., McCleary, K.W., and Lepsito, L.R., (2007). Propensity to complain: effects of personality and behavioral factors. Journal of Hospitality and Tourism Research, 31(3):358-386. https://doi.org/10.1177/1096348007299923.
  12. Hair, J.F., Anderson, R. E., Tatham, R.L., and Black, W.C. (1998). Multivariate Data Analysis, 5th ed. Upper Saddle River.
  13. Hartono. (2005). Hubungan teori signalling dengan underpricing saham perdana di bursa efek Jakarta, Jurnal Bisnis dan Manajemen, 5(1), 35-50.
  14. Herdiyana, Sumarno, S, and Edri, E. (2021). The Effect of Financial Performance on the Profitability of Food and Beverage Companies in Indonesia. International Journal of Financial Research, 12(1). https://doi.org/10.5430/ijfr.v12n1p30
  15. Homburg, C., and Stock, R.M. (2004). The link between salespeople's job satisfaction and customer satisfaction business to business context: A dyadic analysis. Journal of Academy of Marketing Science, 32(2), 144-158. https://doi.org/10.1177/0092070303261415.
  16. Kaplan, R., and Norton, D. (2004). Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business School Press.
  17. Kevin, D. B, J. Michael, C., & Joan, M. P. (2009). How suppliers affect trust with their customers: the role of salesperson job satisfaction and perceived customer importance, Journal of Marketing Theory and Practice, 17(4), 383-394, DOI: 10.2753/MTP1069-6679170406.
  18. Kheng, L. L., Mahamad, O., Ramayah, & Mosahab, R. (2010). The impact of service quality on customer loyalty: A study of banks in Penang, Malaysia. International Journal of Marketing Studies, 2(2), 57-66. https://doi.org/10.5539/ijms.v2n2p57.
  19. Kotler, Phillip. (2005). Manjemen Pemasaran Edisi II. Jakarta: PT. Index.
  20. Kotler, P.T., Keller, K. L. (2006). Marketing Management. Pearson Prentice Hall, New Jersey.
  21. Kurniawan. (2013). Influence of employee satisfaction on profitability in three stars hotels in Surabaya. Business Accounting Review, 1(1).
  22. Lam, T.; Zhang, H.; and Baum, T. (2001). An investigation of employee's job satisfaction: the case of hotels in Hong Kong. Tourism Management, 22, 157-165. https://doi.org/10.1016/S0261-5177(00)00039-X.
  23. Lee, G., Lin, H., 2005. "Customer perceptions of e-service quality in online shopping. Int. J. Retail Distrib. Manag. 33 (2), 161–176.
  24. Lewis, B.R. & Mitchell, V.W. (1990). Defining and measuring the quality of customer service. Marketing Intelligence Planning, 8(6), 11-17.
  25. Munandar. (2006). Psikologi Industri dan Organisasi. Jakarta: UI Press.
  26. Michael, P.T. (2000). Economic Development, Seventh Edition, New York University, Addison Mesley.
  27. Min, H., and Min, H. (2011). Benchmarking the service quality of fast?food restaurant franchises in the USA: A longitudinal study, benchmarking. An International Journal, 18(2), 282-300. https://doi.org/10.1108/14635771111121711.
  28. Parasuraman, A.; Zeithaml, Valarie A. & Berry, Leonard L. (1985). A conceptual model of service quality and its implications for future research, Journal of Marketing, 49(3), 41-50.
  29. Priyathanalai, Wimonphan & Moenjohn, Nuttawuth. (2012). Is there a link? employee satisfaction and service quality. World Journal of Management, 4(1), 82-92.
  30. Rita, P., Oliveira, T., and Farisa, A. (2019). The impact of e-service quality and customer satisfaction on customer behavior in online shopping. Heliyon, 5(10), https://doi.org/10.1016/j.heliyon.2019.e02690.
  31. Ryu, K., Lee, H. and Gon Kim, W. (2012). The influence of the quality of the physical environment, food, and service on restaurant image, customer perceived value, customer satisfaction, and behavioral intentions. International Journal of Contemporary Hospitality Management, 24(2), 200-223. https://doi.org/10.1108/09596111211206141.
  32. Schlesinger, L,A., and Heskett, J.L. (1991). The service-drivenservice company. Harvard Business Review, 69, 71-81.
  33. Schlesinger, L.A., and Zornitsky, J. (1991). Job satisfaction, service capability, and customer satisfaction: an examination of linkage and management implications. Human Resource Planning, 14(2), 141-149.
  34. Schmit, M., and Allscheid, S.P. (1995). Employee attitudes and customer satisfaction: making theoretical and empirical connection, Personnel Psychology, 48(3), 21-536.
  35. Shahnia, C., Purnamasari, E, D., Hakim, L., Edri, E. (2020). Determinant of profitability: Evidence from trading, service and investment companies in Indonesia. Accounting, 6, 787–794.
  36. Sugiyono. (2007). Statistika untuk Penelitian. Bandung: CV. Alfabeta.
  37. Tao, F. (2014). Customer relationship management based on increasing customer satisfaction. International Journal of Business and Social Science, 5(5), 256-263.
  38. Wang, I-Ming and Shieh, Chich-Jen. (2006). The relationship between service quality and customer satisfaction: the example of CJCU Library. Journal of Information and Optimization Science, 27(1). https://doi.org/10.1080/02522667.2006.1069968.
  39. Wansoo. K. (2009). Customer's responses to customer orientation of services employees in full-services restaurants: A relational benefits perspective. Journal of Quality Assurance in Hospitality & Tourism, 10(3), 153-174. https://doi.org/10.1080/15280080902988188.
  40. Wexley, K. N., & Yukl, G. A. (1977). Organizational behavior and personnel psychology. Homewood, Ill: R.D. Irwin.
  41. Wu, L.W. (2011). Beyond satisfaction: The relative importance of locational convenience, interpersonal relationships, and commitment across service types. Journal of Service Theory and Practice 21(3):240-263. https://doi.org/10.1108/09604521111127956.
  42. Yee, W. Y. Rachel., Yeung, Andy C. L. & Cheng, T. C. Edwin. (2008). The impact of employee satisfaction on quality and profitability in high-contact service industries. Journal of Operations Management, 26(1). https://doi.org/10.1016/j.jom.2008.01.001.
  43. Zeithal, V. A. & Bitner, M. J. (2003). Services marketing - integrating customers focus across the firm, Third Edition. Boston: McGraw-Hill.