Abstract

Customer loyalty is the goal towards which many businesses, including tourist hotels place importance on. Loyalty does not only mean repurchasing, but also involves positive talk about the service to others. This paper models customer satisfaction as a mediating variable of service quality and customer loyalty. It investigates the effect of service quality on customer satisfaction and then the effect of customer sarisfaction on customer loyalty. The impact of switching barriers on customer loyalty is also investigated. The results show that there are two components of service quality affecting customer satisfaction, namely Core service (β = 0.406) and Physical environment (β = 0.254). The research also reveals that Customer satisfation (β = 0.688) and Switching barriers (β = 0.110) both have impacts on customer loyalty, in which customer satisfation plays the key role.