The New Zealand Hotel Industry: the Role of Image As a Medium Influencing Company’S Competitiveness and Customer Loyalty Towards Brand
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THE NEW ZEALAND HOTEL INDUSTRY: THE ROLE OF IMAGE AS A MEDIUM INFLUENCING COMPANY’S COMPETITIVENESS AND CUSTOMER LOYALTY TOWARDS BRAND by Barbara Binkowska A thesis submitted to Auckland University of Technology in fulfilment of the degree of Master of Business Auckland University of Technology 2005 CONTENTS CHAPTER ONE: INTRODUCTION ……………………………………………9 1 Introduction …………………………………………………………………… ..9 2 Global and national trends in hospitality industry…………………………..10 2.1 Global trends………………………………………………………………. ..10 2.1.1 Socio-cultural trends…………………………………………………. ..11 2.1.2 Lifestyle trends…………………………………………………………..11 2.1.3 Marketing trends………………………………………………………...12 2.1.4 Trends referring to the nature of ownership……………………….....13 2.1.5 Globalisation of the industry……………………………………………15 2.1.6 Trends pertaining to new products and ideas……………………… .15 2.2 National trends………………………………………………………………. 17 2.2.1 Tourism’s impact on New Zealand hotel industry…………………...17 2.2.2 The industry’s current situation………………………………………..26 2.3 New Zealand trends………………………………………………………….28 2.4 Trends within the Auckland hotel industry………………………………....34 3 Thesis objectives………………………………………………………………..37 4 Structure of the thesis…………………………………………………………..38 CHAPTER TWO: LITERATURE REVIEW…………………………………… .39 1 Hospitality and its definition…………………………………………………… 39 2 Hospitality and its origin………………………………………………………...41 3 Globalisation of the industry……………………………………………………44 4 Changing contemporary consumer……………………………………………48 5 Loyalty: why it matters? ………………………………………………………..52 5.1 Loyalty vs. satisfaction………………………………………………………. 54 5.2 Loyalty antecedents…………………………………………………………..56 5.2.1 Image……………………………………………………………………..56 5.2.2 Satisfaction……………………………………………………………….58 5.2.3 Switching costs…………………………………………………………..59 5.2.4 Service quality…………………………………………………………...60 5.3 Loyalty dimensions…………………………………………………………...62 2 6 Corporate image vs. brand image……………………………………………….64 7 Brand strategies……………………………………………………………………69 8 Brand loyalty………………………………………………………………………..74 CHAPTER THREE: METHODOLOGY……………………………………………79 1 Introduction…………………………………………………………………………79 1.1 Theoretical background…………………………………………………………79 2 Research techniques………………………………………………………………84 2.1 Case study………………………………………………………………………..84 2.2 In-depth interview………………………………………………………………..87 3 Analysis……………………………………………………………………………..90 CHAPTER FOUR: RESEARCH FINDINGS………………………………………94 1 Introduction………………………………………………………………………....94 2 Participating hotels and research findings………………………………………95 2.1 Hotel X…………………………………………………………………………….95 2.2 Hotel Y…………………………………………………………………………….99 2.3 Hotel Z…………………………………………………………………………...104 3 Reflections…………………………………………………………………………108 4 Conclusions and recommendations…………………………………………….127 CHAPTER FIVE: DISCUSSION AND CONCLUSIONS………………………..132 1 Research’s background…………………………………………………………..132 1.1 Conclusions……………………………………………………………………...133 2 Discussion………………………………………………………………………….136 2.1 Managerial implications………………………………………………………...136 2.2 Limitations and future research………………………………………………..138 3 Summary…………………………………………………………………………...139 REFERENCES………………………………………………………………………141 LIST OF FIGURES………………………………………………………………….154 LIST OF TABLES…………………………………………………………………...154 3 Attestation of Authorship “I hereby declare that this submission is my own work and that, to the best of my knowledge and belief, it contains no material previously published or written by another person nor material which to a substantial extent has been accepted for the award of any other degree or diploma of a university or other institution of higher learning, except where due acknowledgement is made in the acknowledgements”. 4 ACKNOWLEDGEMENTS First of all, I want to thank Hamish Bremner, my supervisor, whose support and good advices helped me go through the writing of my thesis. He has contributed greatly to my thesis by showing me various subjects from different perspectives so I could obtain a better insight into the problem and analyse it in-depth. His experience, feedback and general optimistic approach towards life helped me grow not only as a person but also as a future social scientist. Secondly, I want to say a big thank you to Elizabeth Roberts, my second supervisor, who embarked on as consultancy role and who helped me a lot with my research. It was her ongoing assistance as well as providing additional information that I could include in my thesis. However, my thesis would not have been written if it was not for Irena Ateljevic, my former supervisor who led me through the arcana of knowledge and showed me how I can benefit from it. Although she is not here today, I want to express my gratitude for her time and enthusiasm that helped me so much. But most and foremost I’d like to thank my parents and especially my Dad, who as an academic showed me how important the education is and always encouraged me to go a step further and learn new skills. This had a considerable bearing on me, helping me to grow, to see the world and finally, to learn who I am. I would not achieve all my goals if my parents did not stand by me and guided me through the fascinating journey of life. A warm thank you for you Mum and Dad! Thirdly, I want to thank all my friends and neighbours who supported me even from a great distance and never stopped believing in me. I also want to thank them for their patience and understanding in moments when I was engrossed in my work and could not share my time with them. My special thanks for patience and a big heart go to my New Zealand neighbours Ann and Peter, Tony and Mavis, as well as to my best friends: Malgosia and Henia who never let me 5 down, twin sisters Aldona and Ola, Bozena, Asia, Ania and Ewa and many, many others whose names I keep in my memory. Thanks to all of you! Among those who could not physically be with me but who supported me mentally is my sister and her family who has always been interested in my progress and wished me the best. Their good wishes and open hearts meant a lot for me. I also owe a special debt of gratitude to my respondents for their willingness to help. It was their good will to spend time with me that my thesis could take the final shape and offer valuable insight into the topic under investigation. I dedicate this thesis to my wonderful uncle Joe whose upbeat attitude and respect for my work helped in the moments when things did not go right. It was him who has always been my ‘guardian angel’ and has never had any doubts if I succeed. Without him nothing would be possible. He is simply the light of my world. Thank you Joe! 6 ABSTRACT The New Zealand hotel industry: the role of image as a medium influencing company’s competitiveness and customer loyalty towards brand. This thesis evolves around image and its significance while developing customers’ loyalty and increasing company’s competitiveness in a highly competitive market. The topic is studied in-depth from the organisational perspective and delves into the differing motivations of hotel operators towards shaping favourable image as well as examining how the hotel’s image affects customer loyalty and helps the company to increase its competitiveness. Finally, it analyses and compares which public relations tools are the most effective in the process of image creation and developing customer loyalty. From this perspective image becomes a central issue impacting company’s future growth, performance and finally success. The research was conducted on the Auckland international hotel chains. Auckland hosts numerous conferences and events that drives demand for accommodation and in a way, creates a conducive environment to hotel operators for future expansion. Thus, hotels compete strongly with one another constantly looking for a competitive advantage by growing their customer base. My thesis outlines the hotels’ management efforts and analyses their strategies in the context of changing customers’ demands and market trends. With respect to methodological issues, my thesis is based on a qualitative approach and follows an interpretivist paradigm. The research background has been delineated as have been my respondents’ profile to provide additional information about the organisation they represent. The research findings described at the end of this thesis document how important image is for a modern hotel and what initiatives should be followed to ensure success. Image and loyalty are closely interrelated as positive image affects customers’ loyalty. In order to achieve a balance between sustaining a competitive 7 advantage and increasing loyal customer base a number of managerial implications have been discovered. Detailed analysis of these findings may help the companies to establish a more favourable position in the global market and create mutually beneficial relationships which further help the organisation to grow. Having aimed at exploring the importance of image as a medium that affects company’s competitiveness and customers’ loyalty towards brand, this study has provided some useful indications for hotel companies as to what should be undertaken to gain loyal customers and improve company’s performance on the market. Keywords: image, loyalty, brand, Auckland hotels, competitiveness. 8 CHAPTER ONE: INTRODUCTION 1 INTRODUCTION The term image can be interpreted differently, depending on the perspective a person takes. No matter what the perspective is, the significance of image cannot be underestimated. Image is a potent tool and has the ability to influence customer perception on goods and services