Impact Of CRM On Customer Satisfaction In UAE's Hotel Industry (Essay)

Describe the Hypothesis Testing for Problem Statement

This section of the research paper deals with the background of the study so that a clear idea of the research area is received. The discussion of the problems and the purpose of the study will follow the background from which the research objectives and the research hypothesis will be framed.

The hotel industry in UAE has shown a significant growth in the past few years. There has been significant growth in the inventories of the rooms staring from the budget hotels to the luxury hotels as well as the hotels providing limited services. There have been significant continuous gains observed in the hotels from both domestic as well as international travellers. There has been demand for the hotels in both the sectors of business and leisure. Presently, in UAE, there are more than 100,000 hotel rooms. The type of the hotel rooms has a spread across the hotel rooms as well as guest houses. There has been 13 percent increase in the hotel rooms in the beginning of 2018 from 2017. It has been observed that the demand for hotels is increasing. There are various reasons for the increase. The reasons behind this increase has been assessed in this research paper.

From the discussions conducted so far, it is clear that customer relationship management has a huge impact on customer satisfaction. The hotel industry is one of the most important industry in UAE and has a huge impact in the country’s GDP. The more the people visit the hotels in UAE, the more will the industry be on profit and thus, the impact on GDP will be more.

Thus, the hotel industry has a huge impact in the economy of the country as well. This indicates the importance of customer satisfaction. There are various different factors that are responsible for the customer satisfaction in the hotel industry. The factors that are responsible for customer satisfaction and whether customer satisfaction affect the relationship management with the customers will be assessed in this paper.

The purpose of this research is to estimate whether there is any impact of customer satisfaction on the management of customer relationship. To study that, the following research questions can be designed:

• What is the significance of the hotel industry in the economy of UAE?
• What is the importance of CRM adoption on the hotel industry?
• How does the adoption of CRM concept help the hotel industry in reaching customer satisfaction?

Based on the research objectives, the following research hypothesis can be framed:

Null Hypothesis (H₀): There is no effect of Customer Relationship Management (CRM) concept on Customer Satisfaction

Alternate Hypothesis (H_A): There is significant effect of Customer Relationship Management (CRM) concept on Customer Satisfaction

Hotel Industry in UAE

This study will be based on analysing the questions stated in the objectives section. The study will be conducted using two different research methods. One method involves research using primary data which was collected with the help of the questionnaire prepared for the purpose of the study. Another method involves analysis of secondary data, where the data will be collected from secondary sources such as books, websites, journals, etc.

To frame of the background of the study on UAE, previous studies on the hotel industry in UAE has to be has been considered. The information has been collected from different secondary sources such as journals and websites that contain any published information of the industry. The statistics were obtained by researching from different websites and organizations. These information has been used to analyse and discuss the results.

The primary data was collected with the help of the questionnaire that has been designed for this study. The questionnaire was distributed to 150 customers and their responses were recorded. Out of the 150 distributed questionnaires, 100 valid questionnaires were obtained in the end and the data on these 100 valid responses have been considered for this study. With the help of the survey data, it can be understood how important is the hotel industry to people of Arabia as well as to people who are not UAE residents.

Starting from construction of the questionnaire, collection of the data from both primary and secondary sources and up to analysis of the data and preparing this report took a total time of two and a half months. Conducting the survey took almost a month of time and the analysis took three weeks of time to be ready.

There are various factors that affect customer satisfaction. Here, the factors have been limited to certain specific factors that are most important in affecting customer satisfaction.

The study is mainly conducted on the collection of primary and secondary data. The survey data contains valid responses from 100 respondents. Collecting data on more than 30 participants would have been accepted. Less than 30 participants cannot be accepted for any study design as the data on such a small sample will not be valid.

Another challenge that can be faced while conducting the surveys is that the reliability of the responses. The participants are always asked to provide the true information as much as possible but in some sensitive information such as monthly income, the participants might not be comfortable in sharing such information. Thus, in those cases, obtaining true information becomes a problem. This will affect the results of the study.

Importance of Customer Satisfaction in Hotel Industry

The objective of this research paper is investigate the role of Customer Relation Management (CRM) on consumer satisfaction in the hotel industry. The customer relation management has now become a key to success for most enterprises. Customers are the most precious asset for any enterprise. It is extremely important to manage a good relation with customers particularly focusing on need of each customer in order to maintain a broad customer base. This is especially important for service industry like hotel management where customer satisfaction plays an important role. The more successful is the enterprise in meeting expectation and preference of customers the more profit can be earned overtime (Armstrong et al. 2015). An enriched customer service involves clear conversation with customers, exploit more an d more information regarding preference of the customer and obtain insights from viewpoint of every customer. Good relation with customers is not only applied for marketing segment but it has implication for the organization as a whole. This is true for every business organization irrespective of their size, ownership type and other characteristics.

The implementation of CRM though beneficial for every business but there are some industries that gain more than other gains from CRM and associated focus on customer The satisfaction. Hotel industry is one such industry where different aspects of CRM play an important role. The paper particularly considers the dimension of customer satisfaction (Tsou and Huang 2018). This section discussion some key concepts relating to CRM with brief discussion of existing literature in the field.

In the term CRM, ‘R’ represents relationship. Relationship in general refers to the relationship between two parties over time. Each episode in the relationship consists of a range of interaction between the involved parties. In every meeting, one participate acts and interact with the second. Each episode contains series of commutative behaviors such as verbal communication, body language and action of the parties. The two parties in the relationship though have different views and objective to participate in such transaction but each aim to maximize own satisfaction (Khodakarami and Chan 2014). Customers for example willing to maximize its satisfaction at least possible price. While business aims to maximize its gain.

Since early 1990s, the most significant development has been made in evaluating marketing relationship. The relationship management first emerged as a new paradigm in marketing since 1980. This in turn happened because of a gradual shift toward customer retention from customer acquisition. The relationship marketing is considered as an effective strategy for attracting customers and maintaining customer relationship. The transactional marketing focuses on boosting sales and attracting new customers as compared to retaining old customers (Rodriguez, Peterson and Ajjan 2015). The relationship marketing is defined as method of marketing in order to establish and maintain a good connection with customers and other business partners in such a way that objective of all the involved parties can be accomplished.  The only way to achieve this is to involve in mutual exchange with fulfillment of business commitments.  The other way to define relationship marketing is to look it at as a way to build a long sustained association with stakeholders and customers.

Research Objectives and Hypothesis

The implementation of relation marketing in practical world requires business to first identify their targeted customers with whom they want to establish and sustain relationship. The relation managers need to segregate the customer in accordance with taste and preferences. Then proper interaction need to be done with each group to customize product and services for them (Choudhury and Harrigan 2014).  The process of relationship management thus involves extensive communication skill, maintenance and analysis of obtained information in favor of the business. The more sophisticated is the communication and analysis the better is the relation.

The CRM is defined as a strategic view to tackle customer relation from perspective of the business organization. The objective is to use customer relationship in order to maximize profit as much as possible by establishing a broad base of customers. It particularly focuses at satisfying need of different type of customers (Hair Jr et al. 2015). The underlying objective is to establish a mutually beneficial relationship with partners and customer to become more profitable and successful in the concerned business field.

CRM is the integration of customer attention with different aspect of organization structure and operation including marketing, logistics, sales and accounting. All these are activities performed by a business to identify, acquire, qualify, develop and retain customer loyalty and profitability with delivery of appropriate product and service to suitable customers (Tsou and Huang 2018). In addition to customer need, CRM also looks after cost and price of the product or service. In other words, CRM indicates a shift in marketing strategy from brand or product management to customer management.

CRM has now become one of valuable practice for any business organization. The proper utilization of CRM has a positive influence on number of customers and their loyalty on product or service providers. CRM is a useful strategy for building customer franchise and raising brand value than most companies would have realized. Studies found that several motivating factors for business to adapt CRM strategy. These factor include improvement of customer satisfaction level, retaining old and existing customers, improvement in value of customer lifetime and attract new consumers by providing strategic information through the system of CRM (Rodriguez, Peterson and Ajjan 2015).

The actual importance of CRM to business lies in creation of customers’ base and return that concerned company get from a range of customers and their reliability on the business. The success of CRM does not depend on advanced technology or more information rather it is determined from knowledge of customers and utilization of this knowledge for managing the relation. However, many companies fail to properly utilize this information and hence, cannot value their customers’ knowledge (Armstrong et al. 2015). The right application of CRM contributes to company’s profitability by creating satisfaction, loyalty, acquisition and retention among the customers.

Methodology

Several studies have already been conducted to analyze the importance of CRM in hotel industry. In a paper developed by Abdul Alem et al (2013), the relationship between performance of an organization and various dimension of CRM is evaluated for hotels recognized as three and five star hotels. The performances were examined on ground of financial, internal, customer, learning and business growth. The study was based on hotels in Malaysia. The qualitative study collected responses from 152 managers. The result of this study supported the claim that different dimensions of CRM have significantly positive influence on performance of the hotels as measured from different indicators. However, no significant relation was found between CRM and growth and learning prospects of these hotels (Abdul Alem Mohammad, bin Rashid and bin Tahir 2013). An analytical and descriptive study was conducted by Amin-Reza et al. (2013). The study included small and medium sized enterprises in the industrial city of Zahedan. The study was built upon perspective of professionals and industrialists. The paper found that factors such as strategy, human resources, culture, management, knowledge, structure and changing dimension of management determines the success of CRM implementation for these enterprises (Kamalian, Ya'ghoubi and Baharvand 2013). The research paper designed by Amirreza et al. (2013) examined the relationship between service quality, perceived value to customers, expectation of the customer and customers’ satisfaction for different five star hotels located in Kuala Lumpur. In the paper, five hotels are taken as a sample estimate. In their study perceived value, customer expectation and service quality were found to have appositive relation with satisfaction level of customers (Amirreza, Mohammad and Gilani 2013). The factor service quality turned out as the most significant determinant of customer satisfaction. A descriptive research was designed by Priya et al. (2013).  Primary objective of the research was to between CRM concept and different public, private and foreign sectors banks in exploring need of the customers and associated business opportunity. The study on various banks concluded that a significant difference exists towards application of CRM as a tool of measuring customers’ satisfaction. The result found presence of significant difference among the three different group of banks (Priya, G., Jyoti et al. 2013). Like the status if owners the banks also differ in measuring time of their customer satisfaction along with components capturing satisfaction of the customers such as loyalty and customer retention. A positive association however is found between practice of CRM, Customer retention and satisfaction. Switch cost is also another important factor influencing this association among different branches of banks (Baksi and Parida 2013.). A study was undertaken to evaluate influence of CRM on big malls such as Big Bazar, Value Mart, Marks & Spencer, Pantaloons, Shoppers stop, Adidas and Reebok factories of South Delhi. The study aimed to find out effect of CRM on attracting customers and gaining loyalty and satisfaction. The components of CRM for this study were discounts, varieties offered, personalized services, free offers, gifts, loyalty points, contests among customers and services after sales. The authors finally concluded that a good relationship between firm and individual customers benefit both groups in maintaining a good quality service and loyalty (Gauri et al. 2012). Khaligh et al (2012) presented a paper on impact of CRM in telecommunication industry of Iran. The analysis revealed that flexible and explicit pricing policies have an important role in influencing customer loyalty. Further, the findings indicate that a long term vision and commitment from the management end is highly required for the telecom industry to successfully apply CRM (Khaligh, Miremadi and Aminilari 2012).

Challenges in Conducting the Study

The word satisfaction is derived from two Latin word ‘satis’ meaning enough and ‘facere’ meaning to do or make. Therefore, the word implies a satisfactory product or service should have the capacity to offer the product or service up to the point considered as enough or sufficient. In other words, the term actually represents a feeling of fulfillment (Kim, Vogt and Knutson 2015).

A clear understanding of customer satisfaction helps a company to find out opportunities for its product or service innovation. It also acts as a solid basis for evaluating performance and designing the reward system. So far as the most accepted definition of customer satisfaction is that based on theory of expectancy disconfirmation. Oliver in 1980 had developed this concept. The theory states that satisfaction level is the resulted difference between perceived performance and the expected performance (Radojevic, Stanisic and Stanic 2015). The satisfaction is achieved when the offered product or service goes above the expectation. When the same was below the expected level then there is a feeling of dissatisfaction.

Studies found that there are direct and indirect effect of customer satisfaction on performance of the business. The customer satisfaction is likely to have a positive impact on business profitability. A number of studies try to find out relationship p between business performance and behavior pattern of customers. These studies found that customer satisfaction comes along with an increase in customer loyalty, purchase intention and spread of the business through positive words from existing customers.

Researchers have been devoted considerable times to investigate the major determinants of satisfaction level. Both subjective and objective factors can determine satisfaction level of the customers. Subjective factors include need of the customers, their emotions while features of the product and services are considered as the objective factors. In the hospitality industry, there are different attributes that seem to be important for travelers in determining their satisfaction level (Rahimi and Kozak 2017).  For the hotel sector cleanliness of room, security structure and behavior of the staffs are some important factors related to satisfaction of customers. Several studies have also given stress on attributes such as comfort, locational convenience, quick service, customer friendly behavior of hotel staff and safety and security. The three most important factor influencing customer satisfaction are location, availability of room and attitude of the employees. Some studies concluded that cleanliness, employees and timeliness are important factor contributing to satisfaction of guests (Bowen and Chen McCain 2015). Another study found that the top three determinants of customer satisfaction are quality of rooms, staff quality and values (Albayrak and Caber 2015).

CRM and Its Impact on Customer Satisfaction

The starting point of customer satisfaction is to provide preferable services to the guests. The simplest way to do this is to ask them about their preferences. A closely reacted aspect of customer satisfaction is the quality of services. Quality can be measured in three dimension such as physical quality, corporate quality and interactive quality (Saleem and Raja 2014). A better quality service is a convenient way to achieve customer satisfaction.

The methodology of this research has been explained in chapter 2. Following the research methodology, the study has been conducted on the customer satisfaction in this section. There are two sections in which this chapter is divided. The first section consists of the composition of the survey, the targeted population, the rate of response of the questionnaire, administration and execution of the task. Analysis of the collected data and its interpretation has been conducted in the second part of this chapter.

The questionnaire has been constructed to capture the responses of the customers towards the different satisfaction factors such as quality of staff, quality of service, etc. The questions in the questionnaire have been constructed as simple as possible so that it is understandable by the respondents and there is no such confusion. The questionnaire has been so designed so that the responses of the customers towards the parameters of customer satisfaction has been recorded. There are a total of eighteen questions in the questionnaire. Out of the eighteen questions, there are two pre survey questions.

The pre survey questions have been framed for the validation purpose of the study. Answer to this question was to indicate whether the participant is relevant for the study. The questions for pre survey was to identify whether the participant have visited any hotels in UAE and whether the non UAE resident have ever visited UAE. A participant who have not visited UAE or any hotels in UAE is not eligible to be a part of this study and thus the participant will not be considered to proceed with the study.

The survey contained questions on customer satisfaction, customer acquisition and customer retention characteristics. The information on customer acquisition and customer retention will be impacting

The targeted population for this study are the people who have visited the hotels of UAE at point in his or her life. The questionnaire was distributed to 150 participants, out of which 100 participants were found to be valid. The error margin of the collected sample is 5 percent. The number of respondents collected is not sufficient to represent the whole population. Thus, tis is one of the limitation to the study.

Relationship Marketing

The survey was conducted by an electronic version by constructing google forms. The link to the google form was distributed via social networking sites and e-mail to approximately 150 people. The survey was opened on 15^th February and closed on 15^th March, with a total duration of 1 month. There was a confidentiality statement included with the invitation of the survey forms.

To check the relationship between customer satisfaction, customer acquisition and customer retention in the hotel industry, regression analysis has to be conducted. The variables required for the regression analysis are the variables mentioned above. Here, customer satisfaction is considered as the dependent variable and customer acquisition and customer retention are the independent variables.

There are two parts in this chapter. The first part is the analysis of the survey data and the second part contains the analysis of the data with reference to the framed hypothesis. The main aim of this research was to evaluate the factors responsible for customer satisfaction and the extent to which the factors affect customer satisfaction. As discussed in the previous sections, customer satisfaction is affected by customer retention and customer acquisition.

With reference to the survey conducted, it has been observed that out of the 150 survey forms, 100 were found to be valid. Out of the 150 distributed forms, 120 were returned from which 20 did not fulfil the pre-survey and hence these 20 responses were not considered in the total number of respondents. The survey forms were distributed via google forms and the link was distributed by electronic forms such as facebook and e-mail.

From figure 5.1, it can be seen that out of the respondents, there are 36 percent male and 64 percent females. Thus, the analysis results that will be mainly based on the satisfaction of the female customers more than the satisfaction of the male customers.

From figure 5.2, it can be seen that there are more Arabic respondents in the data than the non-Arabic respondents. 66 of the respondents have been found to be Arabic and 34 respondents have been found to be non-Arabic. Thus, it can be said that the satisfaction measures that will be observed from this analysis will be mostly based on the responses of the Arabic people than the people of other nationality.

From figure 5.3, it can be seen clearly that most of the respondents belonged to the age group of 20 – 29 years. 45 respondents out of the 100 respondents belonged to the age group of 29 – 29 years. Thus, the visiting of hotels is mostly done by the young people. The people of older age show a lower intention of visiting hotels. 32 respondents out of the 100 respondents visiting hotels belong to the age group of 30 – 39 years. 17 respondents who have visited the UAE hotels belong to the age group of 40 – 49 years out of the 100 respondents and only 6 of the selected respondents who have visited the UAE hotels belong to the age of 50 years or more. Thus, the number of people who have visited the hotels in UAE for different reasons decreases as there is increase in the age of the respondents.

Defining CRM

To run the regression analysis, at first the relationship between the variables employee retention and employee acquisition with the employee satisfaction has been assessed. The relationship between the desired variables has been shown with the help of correlation analysis. It can be seen from the correlation matrix given in table 5.1 that, customer satisfaction has a strong positive relationship with customer retention and customer acquisition. Thus, if there is increase in customer retention and customer acquisition, the satisfaction of the customers in the hotels increase. The relationship is represented diagrammatically in figure 5.4 and 5.5 respectively.

Table 5.1: Correlation matrix showing relationship between Customer satisfaction, acquisition and retention in hotel industry

	Satisfaction	Retention	Acquisition
Satisfaction	1
Retention	0.66	1
Acquisition	0.71	0.53	1

 From the results of the regression analysis, it can be seen clearly that the model fitted has a significance value of 0.000, which is less than the hypothesized level of significance. Thus, the fitted model is significant. Moreover, the coefficient of determination is 0.61, which indicates that 61 percent of the variability in customer satisfaction can be explained by the parameters of customer retention and customer acquisition. Explaining more than 50 percent of the variability with a confidence of 95 percent indicates that the fitted model is very good.

It can be seen from the coefficients table that with each unit increase in the customer retention scores customer satisfaction scores increase by 0.38 and with each unit increase in the customer acquisition scores customer satisfaction scores increase by 0.46.

Table 5.2: Regression Statistics
Multiple R	0.78
R Square	0.61
Adjusted R Square	0.60
Standard Error	0.69
Observations	100

Table 5.3: ANOVA
	df	SS	MS	F	Significance F
Regression	2	71.707	35.854	75.947	0.000
Residual	97	45.793	0.472
Total	99	117.500

Table 5.4: Table of regression coefficients

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	0.56	0.242	2.301	0.024	0.076	1.036
Retention	0.38	0.073	5.240	0.000	0.236	0.524
Acquisition	0.46	0.069	6.677	0.000	0.324	0.597

The hypothesis that was to be tested in this report is given as follows:

Null Hypothesis (H₀): There is no effect of Customer Relationship Management (CRM) concept on Customer Satisfaction

Alternate Hypothesis (H_A): There is significant effect of Customer Relationship Management (CRM) concept on Customer Satisfaction

To test the hypothesis, regression analysis has been conducted. The concept of customer relationship management states that customer satisfaction is affected significantly by customer retention and customer acquisition. This relationship has been established true with the help of the regression analysis. From the results of the regression analysis, it can be said that the null hypothesis is rejected. Thus, there is significant effect of Customer Relationship Management (CRM) concept on Customer Satisfaction.

Conclusions

On the basis of the analysis conducted so far and also with the discussion of theories conducted with the help of both the primary survey data as well as the secondary data obtained from different articles, it can be concluded that significant impact of the concept of customer relationship management have been observed in the adoption of customer satisfaction on the hotel industry in UAE.

Integration of CRM

Further analysis has confirmed that customer satisfaction in the hotels is highly impacted with the customer acquisition and customer retention factors. Analysis has also shown that there is a positive relationship between these factors. Thus, customer satisfaction increases with the increase in customer retention and customer acquisition. This gives an indication that the hotel industry must work on the factors of customer retention and acquisition. This will help them to increase satisfaction in the customers and thus, more and more customers will be coming to the hotels for several programmes and thus will be of benefit of the industry.

Overall Conclusion and Recommendation

The study on the effect of customer relationship management concept on adoption of customer satisfaction is a vast topic. In this research paper, the study has been conducted on only the hotel industry. This topic is important to be researched on every single industry as this is one of the most important concepts for the growth of the industry.

Moreover, it is important to work on the factors that will help in the growth of the industry. As this research is conducted in the hotel industry, it has been observed that the growth of the hotel industry depends on the satisfaction of the customers of the hotel. Thus, it is important for the hotels of UAE to improve the satisfaction of the customers. Thus, improvement of the services provided to the customers is extremely important. Especially in countries like UAE, where the hotel industry is on its rise, it is important for the industry to work the satisfaction factors such as customer retention and customer acquisition.

Making this project report has been one of the most challenging and valuable events experienced. The experience has been valuable in various ways. It helped in gaining insights about the concepts of customer relationship management, customer satisfaction, customer retention customer acquisition. The best way in gaining these insights is by doing them. The day to day researches, conduction of survey, analysing the data and preparing the report have helped in better understanding of the concepts. Only the work has to be consistent, and practise has to be conducted with whatever knowledge gained in the classroom.

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The Significance of Customer Satisfaction in Hotel Industry

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