Contents

INTRODUCTION.......................................................................................................................................3
1.1. Background of study..................................................................................................................3
1.2. Statement of the Problem..........................................................................................................4
1.3. Research Questions....................................................................................................................5
1.4. Aim and Objectives of the Study..............................................................................................5
1.5. Significance of the Study...........................................................................................................6
1.6. Scope of the Study......................................................................................................................7
1.7. Definition of terms.....................................................................................................................7
1.8. Overview of target organization...............................................................................................8
2. LITERATURE REVIEW.................................................................................................................9
2.1. Theoretical framework review..................................................................................................9
2.1.1. Concept of Service.............................................................................................................9
2.1.2. Service Quality...................................................................................................................9
2.1.3. Determinant factors of Service Quality..........................................................................10
2.1.4. Measurement Dimensions of Service Quality................................................................11
2.1.5. Customer Satisfaction......................................................................................................11
2.2. Empirical Studies on the impact of SQD on Customer Satisfaction in hotel industry.......12
2.2.1. The relationship between tangibility and customer satisfaction...................................12
2.2.2. The relationship between reliability and customer satisfaction...................................13
2.2.3. The relationship between responsiveness and customer satisfaction...........................14
2.2.4. The relationship between assurance and customer satisfaction...................................14
2.2.5. The relationship between empathy and customer satisfaction.....................................15
2.3. Conceptual Framework and operationalization of variables...............................................15
3. RESEARCH METHODOLOGY...................................................................................................16
3.1. Research Design.......................................................................................................................16
3.2. Research Approach.................................................................................................................17
3.3. Data Sources.............................................................................................................................17
3.4. Population and Sample............................................................................................................17
3.4.1. Study Population..............................................................................................................17
3.4.2. Sampling Design...............................................................................................................18
3.4.2.1. Sampling Frame...........................................................................................................18
3.4.2.2. Sampling Technique....................................................................................................19
 3.4.2.3. Sample size...................................................................................................................19
3.5. Data Gathering Tools..............................................................................................................20
3.5.1. Questionnaire...................................................................................................................20
3.6. Data Analysis Tools.................................................................................................................21
3.6.1. Descriptive Statistics........................................................................................................21
3.6.2. Inferential Statistics.........................................................................................................21
3.7. Reliability and Validity...........................................................................................................22
3.7.1. Reliability of the Instruments.........................................................................................22
3.7.2. Validity of tools................................................................................................................22
3.8. Ethical consideration...............................................................................................................23
INTRODUCTION
1.1. Background of study
The nature of service being essentially intangible, perishable, inseparable and highly variable
makes service marketing a challenging task (Sanjay & Gupta, 2004). Both marketing researchers
and service marketers should take into consideration the peculiar nature of service while
attempting to address service quality issues (Kotler & Armstrong, 2006).

Service quality as defined as a global judgment or attribute relating to the superiority of service‖.
Since customers are always looking for consistently of superior service the marketer should
fulfill their expectations regardless of the variability of its nature. The delivery of consistent
service quality creates brand differentiation, enhances brand image (Jing and Andrew, 2009),
adds to the competitive advantage of the firm (Riadh, 2009a), improves customer satisfaction
(Fiju, Frenie & Sid, 2004), positively contributes to customers‘value (Shahin and Reza, 2010),
and increases the likelihood of favorable behavioral intentions of customers towards the brand in
terms of revisit and positive word of mouth recommendations (Riadh, 2009a).

Customer satisfaction, on the other hand, has long been recognized, in marketing thought and
practice, as a central goal, realization of which is important for all business activities
(Chaniotakis and Lymperopoulos, 2009). It is described as customers ‘evaluation of the service
encounter based on their expectation and actual performance, and has been considered as the
extent to which a product/service experience meets customers ‘expectation from the same. When
the actual service experience meets customer‘s prior expectations, he/she will be satisfied and if
it fails to meet the expectations, he/she would be dissatisfied (Gilbert et al., 2004).

According to Ueltschy et al. (2007), different customers express different levels of satisfaction
for the same or similar service encounters due to the fact that customer satisfaction is evaluated
based on individual‘s perceptions (on service delivery/quality and past experience). Therefore,
measuring customer satisfaction/dissatisfaction is crucial because of its effect on the expectations
of one‘s next purchase decision (Gonzalez-Uribe & Coton, 2011).

This study focused on service quality and customer satisfaction: the case of 3-star hotels at
Adama City of Oromiya Region. Hotel services, by their very nature, demand contextualization
for perceived service quality construct (Osarenkhoe, 2014; Naderian and Baharun, 2015), and
within hospitality industry, hotels are experiencing an ever increasing demand for service
improvements from their customers (Gan and Ren, 2011). Moreover, hotel customers are
continuously looking for better value for their money in order to revisit and to recommend it to
others (Liana et al., 2005).

In addition, the applicability of service quality measurement tools is found to be subjective to

different research contexts (Raza 7et al., 2012). As a result, researchers like Lee and Joo (2015)
emphasized the importance of understanding the interrelationships of service quality dimensions
in sector specific context, and the way service quality determines customer satisfaction,
perceived-value and behavioral intentions in specific contexts (like hotel sector). Then, the
attempt of examining context specific relationships by understanding both theoretical and
contextual variables play crucial role in the development of hotel sector. This study attempts to
examine the impact of service quality on customer using 5 quality dimensions’ attributes as
derived from SERVIQUAL model.

1.2. Statement of the Problem

For the hotel industry to achieve its objective of delivering quality service for its customers, it is
imperative to study how the hotel can conceivably meet and even exceed customers’ service
delivery expectations (Watiki, 2014). Management of the hotel seeks to know the level at which
the customers are satisfied with their services and the kind of service quality levels their
customers would like in order to offer exactly what would be taken positively.

Prior studies in service sector have been acquiring attention by researchers in hospitality industry
( Shahin and Reza, 2010; Raza et al., 2012). Researchers have explored the context of service
quality and relationships between service quality and customer satisfaction (Basher and Simon,
2012) in different countries. However, limited is known about the sparkling city of Great Rift
Valley of Adama relating to hotels’ service quality and customer satisfaction.

Furthermore, while such significant work has been done in other sectors, empirical evidence on
the relationship among SERVQUAL attributes and perceived variables in the hotel at Adama is
limited. Beside this, the assumption of classical linear relationship between service qualities
attributes and customer satisfaction applied to hospitality industry is yet at threshold level at
testing/distinguishing attributes that contextually applicable at universal level.

As such, the contextual difference on judging quality depends on customers’ having different
socio-demographics (e.g., culture, nationality, age, gender etc.) demanding continues research
study on the side of service provider to help them develop suitable competitive strategy (Amin et
al., 2013; Jani & Han, 2013). Thus, in order to survive in such competitive business environment
the hotel operators will be forced to critically acknowledge the importance of service
improvement. Accordingly, this research study addresses the impact of service quality on
customer satisfaction of 3 star hotels in Adama city through developing broad/main and specific
research questions as follows:

1.3. Research Questions

1.3.1. Main Research Question
What is the impact of service quality on customer satisfaction in the case of six 3-star hotels at
Adama city where hotel guests’ expectation and perception rate are studied?

1.3.2. Specific Research Questions

i. What are the dominant factors that determine the service quality perceptions of
guests’ of 3-star hotel at Adama?
ii. What he relationship between each service quality dimension and perceived
value/ satisfaction level?
iii. What is the overall impact of service quality on customer satisfaction of 3 star
hotels at Adama city?
1.4. Aim and Objectives of the Study
1.4.1. The Aim of the Study
The main objective of this study is to examine the impact of service quality on customer
satisfaction of 3- star hotels in the city of Adama.

1.4.2. 1.5.2. Specific Objectives of the Study

i. To determine/prioritize the dominant factors of quality by analyzing guests’
perceptions of service quality in three star hotels in the city.
ii. To examine the relationship between of service quality dimensions and customers
perceptions/satisfaction.
 iii. To identify the overall impact of service quality on guests satisfaction by taking the
socio-demographic profile of guests into consideration.
1.5. Significance of the Study
1.5.1. The Practitioners
Directors/owners: The owners/managers of the hotels will be beneficiaries of this study as it
will serve as a source of information that will give clarity to the importance of having good
service quality and its effect on customer satisfaction in hotels for them to increase their
market share in the respective industry they are operating in.

Marketing Managers: The study will be of significance to the hotel marketing managers so that
they know the importance of the hotels offering quality services and how the quality services
play a big role in increasing customer satisfaction. This information will assist the marketing
managers in coming up with ways that will ensure the services they offer in the hotels will also
improve the brand of the hotel and sales as well.

Employees: The employees need to know that they are the most important asset of a hotel
and they determine whether the service being offered will be of high quality or not. This study
will enable them understand their importance in hotels as well as how to interact with their
customers to ensure there is high customer satisfaction achieved.

1.5.2. The academicians

Students The study will benefit students by increasing their knowledge on the relationship of
service quality and customer satisfaction in hotels and gain more knowledge on ways of
increasing service quality and improving customer satisfaction.

Librarian/scholars: the study may be used as additional source of material to either virtual or
physical shelf of universities

1.5.3. Researchers
They will be able to understand the effect of service quality and customer satisfaction for luxury
hotels and be able to do more research which will improve the findings of this study and also
improve the knowledge of the beneficiaries of this study.

1.6. Scope of the Study

Thematically, the scope of the study is limited to the impact of service quality on customer
satisfaction through designing a descriptive survey instrument. A survey using structured (self-
administered) questionnaire will be applied to gather primary data. This study is limited to local
and foreign guests of the all 3-star hotel operating in Adama city. Both type guests are users of
service rendered by these targeted hotels in the city. One more detail, this study will present
sketch profile of hotels‘ guests/customers by examining their age, gender, nationality, purpose of
visit etc., along with describing the characteristics of the corresponding hotels in terms of
locations, and other ratings to determine their influence on the study variables (service quality,
customer value, satisfaction and behavioral).

In terms of geographic scope, the study will be carried out specifically on three star category
hotels located in different kebeles’ of the city as described in the table 3.1

Time scheduled for collection of data will be a tentative period between May 2020 and July
2020 in all specified category of hotels. This time is kept tentative due to sudden shutdown of all
hotels after formal proclamation at the result of unexpected occurrence of pandemic corona virus
which compelled all public gatherings to be closed everywhere in the world and no one even
knows the opening day.

1.7. Definition of terms

Service quality is defined as customer’s perception of how well a service meets or exceeds their
expectations. Service quality is often judged by customers and not by the organization itself

Customer satisfaction defined as the consumer’s fulfillment response. It is a judgment that

product or service feature, or the product or service itself, provided (or is providing) pleasurable
level of consumption-related fulfillment, including levels of under- or over- fulfillment.

Customer Expectation is included of numerous variables and factors that influence customer's
quality judgment such as past experiences, individual needs, word-of-mouth which will go to
word-of-trust and outside communication.

Customer Perception is the level in which the customer is transforming its explicit expectation
and satisfaction into its perception and judgment in relation to company’s performance. To what
extend the output of the service and its subsidiaries is expanded, believed to be important.
Hotel is a part of the hospitality industry which is an umbrella term for a broad variety of service
industries including, but not limited to, hotels, restaurants and casinos. Hotel is often referred as
a “Home away from home”. If we consider meaning of hotel in the dictionary (Cambridge
dictionary) or a hotel is an establishment that provides paid lodging on a short-term basis
(Wikipedia)

SERVQUAL is a dynamic tool, that we may measure service quality; it does present a
noticeable difference between customer expectation of a service and their perception of the
required services. The respondents are kindly requested to answer to related questions about both
expectations and perceptions.

1.8. Overview of target organization

Adama city is one of the most important tourist destinations in Ethiopia being located in the heart
of the beautiful Rift valley that crosses the country with different natural endowments and
cultural environments (Socio Economic Profile, 2017 P44). Currently, the city has more than 359
hotels where star level registered are 19 of which only 6 hotels fulfill the standard of 3 star level.
The city is known for the host of tourist attraction. This year alone, 2011 E C. the number of
tourist movement within inland individually counted 813,073 and abroad tour out flow 30,936 in
numbers. And the revenue generated from hospitality are respectively birr 225,017,984 and
116,011,342. (Adama cultural and Tourism office, march 2020).

Year in Local No Of Revenue from Revenue from in land average revenue revenoe
Eth Cal Guests/Tou Foreign Tour within Out side average daily from inland from abroad
r /inland/Flow flow/abroad/ tourist per Abroad tour daily flow
Revenue guests day flow estimate estimate per
day

2007 3,519,201 120,097 1,348,659,916 9,642 329 3,694,959 0

2008 770,300 34,345 225,179,092 105,179,092 2,110 94 616,929 288,162
2009 1,584,376 25,835 146,396,850 100,000,848 4,341 71 401,087 273,975
2010 779,036 28,534 199,625,196 116,978,849 2,134 78 546,918 320,490
2011 813,073 30,936 225,017,984 116,011,342 2,228 85 616,488 317,839
2012
total 7,465,986 239,747 2,144,879,038 438,170,1
31

Source: Adapted from Adama cultural & tourism office, March 2020
2. LITERATURE REVIEW
2.1. Theoretical framework review
2.1.1. Concept of Service

According to Lovelock and Wirtz, 2011 Services are economic activities offered by one party to
another; in exchange for money, time, and effort, service customers expect value from access to
goods, labor, professional skills, facilities, networks, and systems; but they do not normally take
ownership of the physical elements involved.. Service is very complex and about economic
activities which is giving benefits to both customer and the company. Customers purchase
service for the search of desired result and the companies sell their services for the customer‘s
benefit by proposing solutions to the problems (Sarmin Sultana and Shohel Rana, 2010).
2.1.2. Service Quality

Researchers proposed different views on the definitions of service quality In the hospitality
industry the delivery of quality of services is an element of strategic differentiation and this fact
is related to the evolution of consumer habits and the rise of competitiveness among service
provider companies (Grande and Colomina, 2012). The quality of service has been recognized
as being the key strategic value for organizations (Mohd, et al., 2013) and can impact in
satisfaction and retention of customers, opportunities for cross selling, reduction of cost and
increase profit margin and business performance, and also, the development of customer
relationship - life time value (Adil, 2012).

2.1.3. Determinant factors of Service Quality

When purchasing goods, the customer employs many tangible aspects to judge quality; style,
hardness, color, label, feel and package. However, when purchasing services fewer tangible
aspects exist. In the absence of tangible evidence on which to evaluate quality, customers must
depend on other aspects. Service quality dimensions are the aspects/characteristics which
customers use to evaluate service quality. A research by Parasuraman et al., (1985) identifies ten
determinants that influence customer’s perceptions of service quality as reliability,
responsiveness, tangibility, communication, credibility, security, competence, courtesy,
understanding and access.

 In a follow-up study, Berry et al., (1988) found a high degree of correlation between, on the one
hand, communication, competence, courtesy, credibility and security, and, on the other, between
access and understanding; and so they created the two broad dimensions of assurance and
empathy, that is, five consolidated dimensions:-reliability, responsiveness, tangibles, assurance
and empathy (Parasuraman et al., 1988). These dimensions were then used as a basis for the
development of a service quality measurement instrument; SERVQUAL model.

According to Eshetie, Seyoum, and Ali ( 2016 ) the five dimension were defined as follow:
Assurance as employees being able to have knowledge and courtesy, them being able to inspire
trust to the guests in the hotels; Empathy as consideration, individualized attention the hotel
provides to its guests; Reliability as being dependable and accurate when performing the
promised service; Responsiveness as providing guests with timely services with a sincere
willingness and Tangibles as the ambience and general appearance of the physical facilities,
rooms, restaurants, equipment, personnel, and communication materials (Pena, da Silva,
Tronchin, & Melleiro, 2013). Using this model, the average score of SERVQUAL dimensions
depicts that respondents are less satisfied with dimension empathy whereas with tangibles,
assurance, responsiveness and reliability are more satisfied ( Bharwana, Bashir, & Mohsin,
2013). For the purpose of this study, therefore, the researcher adopted this model to measure
service quality dimensions i.e. Reliability, Responsiveness, Access, Empathy and Tangibles;
where the five dimensions of service quality which are the most acknowledged and applied in
diversity of service industries (Nathan.D. and Saghier.N. (2013).

2.1.4. Measurement Dimensions of Service Quality

Measuring service quality is an important aspect in the quality improvement process because it
provides feedback about the type of service provided and the extent to which it meets customers’
needs (Mwangi et al., 2009). A number of scholars have carried out several studies with an aim
of developing models of measurement that would help service organizations determine the extent
to which their services are effective Models for specific service settings.
SERVQUAL is a standardized instrument that has been applied across a broad spectrum of
service industries. The SERVQUAL scale (Questionnaire) has two sections: one to measure
customer expectations in relation to a service segment and the other to measure perception
regarding the organization whose service is being assessed. SERVQUAL comprises a 22 items
(Likert-type) with five dimensions of reliability, responsiveness, assurance, empathy and
tangibles. From the 5 dimensions, 22 statements are derived, each measuring both the
expectations and perceptions of customers towards the quality of services of the organization
being assessed. The customers are required to rate, on a 5- point Likert scale, the degree to which
they feel the service provider should deliver for an excellent service. Another identical scale is
provided adjacent to the first one in which the respondents rate the actual quality of service
delivered to them by an organization based on their perceptions. For each statement, the
difference between perception and expectation is calculated; the averages of the obtained score
being the SERVQUAL score (Saghier, 2015).

2.1.5. Customer Satisfaction

Customer satisfaction is a business philosophy which tends to the creation of value for
customers, anticipating and managing their expectations, and demonstrating ability and
responsibility to satisfy their needs. Quality of service and customer satisfaction is critical factors
for success of any business (Gronoos, 1990). Customer satisfaction is the outcome of customer’s
perception of the value received in a transaction or relationship, where value equals perceived
service quality, compared to the value expected from transactions or relationships with
competing vendors (Blanchard & Galloway, 1994). In order to achieve customer satisfaction, it
is important to recognize and to anticipate customers' needs and to be able to satisfy them. In the
hospitality industry, many studies have been developed to identify the attributes that tourist
considered relevant regarding customer satisfaction (Agbor, 2011).

Performance Only Model (SERVPERF) SERVPERF was developed by Cronin and Taylor
(1992) in their empirical work which involved the modification of SERVQUAL with respect to
conceptualization and measurement of service quality. They developed a performance based
measure of service quality called SERVPERF illustrating that service quality is a form of
consumer attitude. SERVPERF measures service quality based solely on performance.
SERVPERF, therefore comprises a 22 items (Likert-type) with five dimensions of reliability,
responsiveness, assurance, empathy and tangibles. 22 statements are then derived to measure the
perceptions of customers towards the quality of services of the organization being assessed. This
research adapted the SERVPERF tool to measure service quality among three star hotels in
Adama city. So, based on the above understanding the researcher can develop hypothesis to be
guided by it during investigation hoping this thesis contribute to filing literature gaps.
Accordingly, this researcher argues that H1: Service quality positively influences customer
satisfaction in the case of 3 star hotels in Adama.

As this study focus on hotel industry and the empirical reviews of past studies are outlined on the
following sections based on the five dimension of SERVQUAL that also informs the objective of
the study. Based on which research sub hypothesis developed.

2.2. Empirical Studies on the impact of SQD on Customer Satisfaction in hotel industry
2.2.1. The relationship between tangibility and customer satisfaction

Panda and Das (2014) focused on the impact that tangibles have on external customer
satisfaction. The type of tangibles varies with industries for example the information technology
sector tends to use computers with sleek designs to improve the perceived quality of a service. In
the same way, the hospitality industry spends resources to train personnel with the aim of
improving empathy and the overall quality of service. Personnel are in direct contact with the
clients, which makes their conduct and appearance a significant determinant of perceived quality.
Panda and Das (2014) attempted to examine and measure the tangibles used in the hospitality
sector and their impact on external customer satisfaction. Validity and reliability tests confirm
that tangibility and reliability have a significant impact on external customer satisfaction in
hospitals. Assurance is an additional influencer of external customer satisfaction when it comes
to hotels. According to the study findings and the analysis, physical appearance, facilities and
presentation as significant influencers of external customer satisfaction: Equipment, tools, and
other customer usage materials provide an insignificant explanation of the tangibility of a
service, The relationship between tangibility and service quality was found to be significant in
hotels and hospitals (Panda & Das, 2014). Thus, based on the above arguments, this leads to the
development of the following hypothesis: H1a: Tangibility positively influences customer
satisfaction in 3 star hotels at Adama City
2.2.2. The relationship between reliability and customer satisfaction

Omar, Saadan, Bin and Seman (2015) conducted a study to investigate the influence of
reliability as a dimension of e-commerce on the satisfaction of Libyan customers. The basic
factor for measuring the quality of service is customer satisfaction because happy customers are
more likely to come back. The common knowledge is that the quality of service is the outcome
of the comparison between the expectations of a customer and the perceived quality of a service.
It is very subjective because it depends on personal preferences and expectations. It is the
baseline measurement of performance for any business because of the direct impact it has on
profitability and competitiveness. The findings show that there is a strong relationship between
reliability and the customer satisfaction. The reliability of the e-commerce model was
characterized by the ability of the website to fulfill orders, secure personal information and
deliver promptly. These aspects improve the confidence that the customer has on the website.
The prompt delivery of all ordered items at the right time and place makes the website a reliable
shopping place for many consumers. Therefore, a successful online business should find ways to
keep private information safe, deliver orders in a timely manner, and ensure the website is
optimized to handle large traffic. It helps avoid lagging, which might disappoint consumers.
Reliability as a dimension of service quality is not limited to e-commerce business models. It
applies to all businesses that deal with service delivery. For example, hotels can be considered
reliable if the pricing is standardized, bookings are managed well, and the expectations of
customers about amenities and personnel are met (Omar, Saadan, & Seman, 2015). Therefore,
based on the above arguments, the researcher propose the following hypothesis: H1b: Reliability
positively influences customer satisfaction in 3 star hotels at Adama City..

2.2.3. The relationship between responsiveness and customer satisfaction

A Study of Guest Satisfaction toward Service Quality of Hotel Industry in Yangon, Myanmar
sought to assess and describe the perception of service quality of the hotel. Using survey method,
total of 590 survey questionnaires were used in the study. Descriptive statistics (frequency,
means, and standard deviations) and ANOVA (Analysis of Variance) was used to gain an
understanding of the nature of responses. The results on assurance variable were: item 9 (Trust
them) received 25% of the respondent agree hotel staff were confident, and item 10 (Feel safe
during stay) got 87.2% that agree to feel safe and 9.6% of respondents did not feel safe. Item 11
(Consistently courteous) got 41.5% strongly agree, 88.4% agree and 2.1 were omits. In addition,
in item 12 (Knowledge about hotel), item 13 (Trained and experienced), item 14 (Answer
question completely), most of respondent tended to agree strongly that hotel staff were well
trained and had knowledge about hotel to answer their requests completely. This meant guests
thought that hotel service met their expectation, 82% were satisfied with staying at hotel and
81.8% were willing to stay at the hotel again. Hotel ranking did not do well on reliability,
responsiveness and empathy compared with attitude and assurance (Naung, Aung & Supinit
2016). Based on the above statements, therefore, we can state that the responsiveness dimension
of service quality will strongly influence customer satisfaction in 3 star hotels at Adama City,
and therefore, the research proposes the following hypothesis: H1c: Responsiveness positively
influences customer satisfaction in 3 star hotels at Adama City.

2.2.4. The relationship between assurance and customer satisfaction

Research on Managing Service Quality: Dimensions of service quality conducted in Egypt

covered the effect of assurance on customer satisfaction. Questionnaire was used to collect data
from the sample group which is international tourists visiting Alexandria and staying at hotels as
tourists. The variable of interest presenting assurance was: Instilling confidence in guests,
Convenience of service availability, Occupational knowledge of employees, and provides a safe
and secure place for guests. The chi-square test between the assurance and customer satisfaction
was significant at X2 = 48.262 (DF=12, sig. =0.000). This shows a significant relation between
Assurance and Customer Satisfaction. However, on the step wise regression analysis model,
assurance was not statistically significant hence dropped from the regression equation. This
indicates if using the SERVQUAL model, assurance does not contribute to the five dimensions.
However, assurance as an independent variable affects customer satisfaction (Saghier, 2015).
Therefore, based on the above discussion, the researcher developed the following hypothesis:
H1d: Assurance positively influences customer satisfaction in 3 star hotels at Adama City.

2.2.5. The relationship between empathy and customer satisfaction

Research on impact of empathy on customer satisfaction has been done in many banks. A Field
Study of Arab Bank used a SERVQUAL model of service quality. Convenient sampling was
used to obtain 400 respondents that participated in the study. Empathy variable on the study were
ease of contact, effective communication, understanding the customers and location of the hotels.
The regression model depicted positive statistical significant at the level of (α ≤ 0.05) between
empathy and customer satisfaction with services provided by the Arab Bank. The research
concluded empathy as an important factor in determining customer satisfaction. On the other
variables based on the SERVQUAL model, the results indicate that the higher the service
quality, the more the costumer’s satisfaction; the five factors have positively affected the
customer satisfaction with higher loading on the empathy and assurance (Al-Azzam, 2015).
Therefore, according to the above reviews, this research study proposed the following
hypothesis: H1e: Empathy positively influences customer satisfaction in 3 star hotels at Adama
City.

2.3. Conceptual Framework and operationalization of variables

Based on the literature reviewed, a conceptual framework for this study is developed as shown
below in Figure 2.1; the major objective of this study will be to examine the impact of service
quality on customer satisfaction by analyzing the relationship between all dimensions. The
independent variables operationalized for analysis are: Tangibility, Reliability, Responsiveness,
Assurance, and Empathy factors. And the dependent variable is customer satisfaction which
occurs with the interaction between expectation and perception.

Figure 2.1: Service quality and customer satisfaction relationship framework.

TANGIBILITY

RELIABILITY

RESPONSIVENESS CUSTOMER SATISFACTION

ASSURANCE

EMPATHY

Source: Adapted from previous work & suited for own analysis, 2020.
3. RESEARCH METHODOLOGY
3.1. Research Design

According to Sekran and Bougie (2013), they noted that there are three types of research
design namely; descriptive, explanatory, and exploratory research designs. Descriptive type
study look at describing problems systematically, or provide information about a situation with
the aim of showing what is prevalent with respect to the issue. On the one hand, Kumar (2011)
says an explanatory study does not only look at descriptive observations but makes a
clarification of why and how there is a relationship between variables. On the other hand, in
the year 2013 Zikmund, Babin, Carr & Griffin noted that exploratory research is a study
undertaken to explore an area about which little is known for feasibility or pilot study in order
to assess if it is worth carrying out a full detailed investigation. This study uses descriptive
research design to examine the relationship between service quality and customer satisfaction
of star hotels in Adama. A descriptive study aims to discover or establish the existence of
relationships or independence between two or more aspects of situations (Kumar, 2011).
Leedy and Ormond (2015) added that descriptive design is fit for such type of study as it
establishes a relationship and association between several variables in the same population.
Therefore, descriptive design is chosen for this study.

3.2. Research Approach

In this research a quantitative research approach were employed. Both qualitative and
Quantitative methods involve the processes of collecting, analyzing, interpreting, and writing
the results of a study (Creswell, 2009). Quantitative approach helps researchers to test
relationships between variables. The researcher has chosen quantitative approach to present
data quantitatively and numerical data was collected and were analyzed quantitatively using
statistical tools.

3.3. Data Sources

In order to generate relevant data for this study, both primary and secondary data sources will
be utilized. Primary data are the original data which are collected from the customer respondents
through questionnaire and secondary data include data which are collected from different
written documents (past records and manuals of the company, books, internet etc.)

Accordingly, Even if obtaining them can be expensive and time consuming, the researcher will
use both primary data and secondary data from online publications as a source of information for
this study. The primary data for this research will be gathered by means of a self-administered
structured questionnaire that will be distributed to representatives of the targeted population
under study (i.e. hotel guests) in this case.

3.4. Population and Sample

3.4.1. Study Population

According to Saunders, Lewis and Thornhill (2016) defined target population as a larger group
from which the sample is taken and which the researcher wants to generalize results from.
Similarly, in the year 2013, Zikmund, Babin, Carr, and Griffin define target population as all
elements or people that a researcher would like to study. Cooper and Schindler (2014) on the
other hand said that a target population comprises of all individuals, events or objects that have
common characteristics and from which the researcher wants to generalize results. This study
focused on guests of 3 star rated hotels in Adama City. According to the data obtained from
culture and tourism office of Adama town on 18 th March, 2020( see appendix 1) Adama has
seven 3-star hotels, three 2-star hotels and two 1-star hotels with a total bed capacity of 1079
beds as indicated on See appendix 1. However, as the objective of this research is to study the
case of 3 star hotels guests the population of study is estimated based on number of beds or
capacity of all 3 star hotels in Adama city which is equals to 640. However, not all available
beds occupied each day that standard set for all at 60% of total bed available was considered
following past studies recommendation. Therefore, sample for this study will be drawn from
60% of 640 which is equals to 384 as indicated in table.

Table 3.1. Three Star Standard Hotels in Adama City (2020)

Hotel Category Total Number of Number of Guests with Average

Beds/Target Occupancy of 60% is the standard
population set for all 3 star hotels (Cult
 &Tourism, 2015)
1 Executive Hotel 106 64
2 AyuInt’l Hotel 95 57
3 Dire Int’l Hotel 124 75
4 Kuriftu Resort & SPA 92 55
5 Riftvalley/Caneth/ Hotel 108 65
6 Kereyu Hill resort 85 51
7 La residence Hotel 30 18
Total 640 384
Source: Adama Cultural & Tourism Office, March 2020

3.4.2. Sampling Design

Cooper and Schindler (2014) noted that sampling design is a procedure used by researchers
when selecting items for study sample and a method used in identifying a sample from a
specific population.

3.4.2.1. Sampling Frame

Sampling frame is defined as a whole list of individuals or entities in the population whereby a
probability sample is drawn and to which study findings are to be generalized (Saunders, Lewis
and Thornhill, 2016). This study focused on guests from 3 star rated hotels in Adama City as
provided officially by culture and tourism office. The 3 star rated hotels are as listed in Table 3.1
below.

3.4.2.2. Sampling Technique

In the year 2016, Saunders, Lewis and Thornhill noted that sampling technique provides a way
in which a researcher scientifically selects the elements to be studied. They said it is a process
where you generalize results by selecting representative elements from the total population.
Sampling techniques can be probability or non-probability sampling (Creswell, 2014).
Probability sampling is a sampling technique where every member of the population has
known, non-zero probability selection, whereas in non-probability sampling, units of the sample
are selected on the basis of personal judgment or convenience (Zikmund, Babin, Carr & Griffin,
2013). This study used non probability - convenience sampling technique for several reasons.

Firstly, the fundamental requirement of probability sampling is that all samples must have an
equal probability of being selected as a target population in the hotel industry was unable to be
identified (Zikmund et al., 2012). This approach also enables the researcher to obtain a large
number of completed questionnaires quickly and economically .

Secondly, non-probability sampling is considered as an acceptable sampling technique if the

objectives of the research are to: test the theoretical premises, test the hypotheses regarding
how variables are related to behavior, and provide evidence in supporting or rejecting the
theory test, regardless of the nature of the sample ( Suhartanto et al., 2013).

3.4.2.3. Sample size

The sample size is a smaller group or number of items to be selected from the target population
(Creswell, 2014). The sample size of a study is of major concern to the researcher as it aims to
remove bias in the selection of the sample (Kumar, 2011). According to Zikmund, Babin, Carr
and Griffin (2013), you may not achieve the study objectives from a small sample size and you
may incur huge costs, waste resources and errors from a large sample size. While choosing the
sample size, scientific methods need to be used. Saunders, Lewis and Thornhill (2016) argue
that when the sample size is large, then there is a lower likelihood of error in generalizing the
population. Using Yamane’s formula =

n = N/ [1 + N (e) ²], Where n = sample size; N = population

P = 0.05; CI = 95%

Calculating the sample size:

n = 384/ [1+384*.052] = 196.

Therefore the sample size for this study was 196.

Table 3.2. Distribution of Sample size and each hotels relative quota

Hotel Category Target Population Sampled size

1 Executive Hotel 64 33

2 AyuInt’l Hotel 57 29

3 Dire Int’l Hotel 75 38

4 Kuriftu Resort & SPA 55 28

5 Riftvalley/Caneth/ Hotel 65 33

6 Kereyu Hill resort 51 26

7 La residence Hotel 18 9

Total 384 196

Source: derived from the data of Adama Cult & Tour Office, March 2020

3.5. Data Gathering Tools

3.5.1. Questionnaire

The study uses a questionnaire which will be conducted to collect data from the 196 sample
size of total population. Christensen and Turner (2014) argued that questionnaires are
commonly used by researchers when collecting data because it saves time since it is possible to
collect large amount of information when there is a large population. However, the authors
cautions and emphasizes that questionnaires must be kept short and that they are subject to
non-response to selective items as well as reactive effects. The data will be collected using a
standardized questionnaire comprising of 22 statements derived from the works of Cronin and
Taylor (1992) which involved the modification of SERVQUAL. The questionnaire will be modified
to include a section that was used to measure factors influencing customer satisfaction. The
questionnaire is divided into various sections and aim to first capture general information about
the respondents, and then to solicit specific information arising from the research
objectives/questions. The questionnaire will be self-administered to the respective respondents
who will be asked to indicate their response on a five level likert scale ranging from 1 to 5
where 1 is Strongly Disagree, 2 being Disagree, 3 is Neutral, 4 reflecting Agree, and 5 being
Strongly Agree.

3.6. Data Analysis Tools

3.6.1. Descriptive Statistics

According to Cooper and Schindler (2014) and Peck and Devore (2012), descriptive statistics are
measurements that show the center, spread, and shape of distributions and are helpful as
preliminary tools for data description. They help to describe the basic features of the data, to
organize and summarize it in a simple way. Descriptive statistics make it possible to discern
patterns that are not clearly apparent in the raw data through use of graphs, pie charts, and
tables for ease of visual explanation. Saunders Lewis and Thornhill (2016) say that descriptive
statistics include measurement of central tendency and dispersion. There are various measures
of central tendency and the choice of which to use is based on certain criteria. According to
Agarwal (2013), a measure of central tendency is good or satisfactory if it possess the following
characteristics: It should be based on all observations; it should not be affected by extreme
values; it should be close to the maximum number observed values as possible; it should have a
definite value; it should be subjected to complicated calculations; it should be capable of
further algebraic formulation; and it should be stable with regard to sampling. Therefore, the
researcher uses descriptive statistics, like Frequency, percentage, mean, standard deviation and
cross tabular presentation to analysis the demographic profile of the respondents.

3.6.2. Inferential Statistics

In the year 2013, Zikmund, Babin, Carr and Griffin stated that inferential statistics refer to
statistical methods used to make inferences or to project from a sample to an entire
population. Statistical analysis can be univariate when testing objective involving only one
variable, bivariate when involving two variables, or multivariate when testing objectives and
models involving three or more variables. There are several inferential tests including; Factor
Analysis, Correlation, Analysis of Variance, Regression, Anova, and Structural Equation
Modeling.

3.7. Reliability and Validity

3.7.1. Reliability of the Instruments

In the year 2014, Warren posits that Cronbach’s alpha is the most commonly used coefficient
for approximation of reliability of test scores for structured questionnaires and for calculating
internal consistency. According to Saunder, Lewis and Thornhill (2016), internal consistency
involves correlating the responses to each question to other questions in the questionnaire and
measuring the consistency of responses. Cronbach’s alpha values range between 0 and 1 where
a value of 0 indicates reliability, while 1 indicates high reliability (Warren, 2014). However, the
threshold for interpretation of reliability of the research instrument is Cronbach’s alpha value of
0.7. Thus Cronbach’s alpha values less than 0.7 indicate that the research instrument is reliable
(Tavakol & Dennick, 2011). According to Cooper and Schindler (2014) research validity is where
results reflect the differences among the participants gotten from the population in a correct
and truthful manner. Christensen, Burke and Turner (2014) say there are four major types of
validity: Construct Validity is the extent to which a construct is adequately represented by the
measures used; internal Validity is the correctness of inferences made about cause and effect in
connection with independent and dependent variables; and external validity, which is the
degree to which results can be generalized to other people, settings, and time.

3.7.2. Validity of tools

According to Creswell (2013), the validity of a research instrument is improved by use of a pilot
study. This study made use of self-administered questionnaires. According to Bryman and Bell
(2011), with a self-administered questionnaire, respondents answer questions by completing
the questionnaire themselves. As there is no interviewer in the administration of the self-
completion questionnaire, the research instrument has to be especially easy to follow and its
questions have to be particularly easy to answer (Saunders, Lewis &Thornhill, 2016). In the year
2011, Bryman and Bell describe several advantages to using self-administered questionnaires
over structured interviews: They are quicker to administer, there is absence of interviewer
effects; no interviewer variability; and convenience for respondents. However, self-
administered questionnaires have some shortcomings as well and these include: no one
present to prompt if needed; cannot probe; have to ensure questions are silent to respondents;
difficulties of asking questions in a different way; respondents can read all the questions before
they start answering and this means they are not independent of each other; cannot ask a lot of
questions; there is a risk of missing data and also poor response rates (Bryman and Bell, 2011;
Cooper & Schindler, 2014).

3.8. Ethical consideration

In the context of research, according to Saunders, Lewis and Thorn hill, (2001:130), ethics refers
to the appropriateness of your behavior in relation to the rights of those who become the
subject of your work, or are affected by it”. The following ethics will be remarked in the
research field:

 Informed consent: Participants should be given the choice to participate or not to

participate, and furthermore be informed in advance about the nature of the study.
 Right to privacy: The nature and quality of participants‟ performance must be kept
strictly confidential.
 Honesty with professional colleagues: Findings must be reported with a complete and
honest fashion, without misrepresenting what has been done or intentionally
misleading others as to the nature of it. Data may not be fabricated to support a
particular conclusion.
 Confidentiality/Anonymity: It is good research practice to offer confidentiality or
anonymity, as this will lead to participants giving more open and honest responses.
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