Investigating the impact of resource capabilities on customer loyalty: a structural equation approach for the UK hotels using online ratings

Abstract

Purpose – In this paper, the authors aim to examine the impact of resource capabilities on customer loyalty of UK hotels. Understanding this impact will help organisations to improve customer satisfaction in order to obtain improved customer loyalty. Design/methodology/approach – The authors use a relatively innovative data source, namely online ratings. They measure resource capabilities of a firm using customer ratings in terms of various operational criteria. Similarly, customer loyalty is measured using guests' ratings on their intention to use the same service (stay again in the same hotel) and their intention to recommend the service to friends. The authors employ structural equation modelling to test research hypotheses. Findings – The authors' results indicate that there is a significant positive influence of resource capabilities on customer loyalty. They further find that the significant influence of resource capabilities on customer loyalty does not differ across hotels with various star ratings. Research limitations/implications – The authors looked at the online guest ratings available on a particular website, but it is only one of the many websites offering online hotel reservations, and not all customers that made hotel reservations using this e‐booking facility would be inclined to leave feedback after their stay in the hotel. This limitation can be partially overcome by pooling similar data from a number of online hotel booking sites. Practical implications – The most important managerial implication is that good resource capabilities of firms translate well into customer loyalty. Thus, managers should ensure good performance in terms of various hotel attributes – cleanliness, quality of room, facilities, and customer service – and also ensure that customers perceive good value for their money while staying in the hotel. Originality/value – The authors applied structural modelling framework to verify the resource capability – performance link in the context of hotels. They used a relatively novel data source – online guest ratings of hotels – to understand the relationships between resource capabilities and customer loyalty.