Acta Universitatis Danubius. Œconomica, Vol 13, No 2 (2017)

Customers’ Perceptions of Value in Relation to Hotels in Gauteng, South Africa

Vongani Ntimane¹, Tembi Maloney Tichaawa²

Abstract: This study is based on the premise that the hospitality industry operates within a highly competitive business environment and that the creation of customer-perceived value is a business component that concerns the striving to gain competitive advantage in terms of financial success, customer satisfaction and loyalty. The aim of the study was to explore the hotel value attributes perceived as being most important by hotel customers. To achieve the objective, a quantitative study design was employed, in terms of which data were purposively and conveniently collected by means of a survey questionnaire that was administered to hotel guests staying in 3- to 5-star hotels. The findings revealed that hotel customers tend to attach a high degree of importance to the issue of value for money, whereas the appearance of the hotel was least important to them of the tourism-related characteristics about which they were asked. Overall, the study found that hotels in Gauteng generally provide service that is satisfactory to their customers, but that the remaining challenge for hoteliers lies in their ability to sustain such levels of satisfaction through continuous employee motivation and skills development.

Keywords: Perceived value; value attributes; perceptions; hospitality industry; South Africa

JEL Classification: Z32; Z33

1. Introduction

In recent times, Sukwadi et al. (2012) have postulated that the study of customer value has caught the interest of academics and managers, because it is regarded as an essential means of gaining competitive advantage. Popova (2006) observes that, since consumers’ perceptions of products and services offer direct input to service and product development, the findings from perceived value studies can easily be converted into marketing strategies and market segmentation. Therefore, Pihlström (2008) contends that understanding what customer’s value is in terms of specific goods or services has long been acknowledged should benefit any customer-oriented organisational strategy. Currently, marketers are focusing on gaining a better understanding of how customers view services and products that are suited to their needs and situation. The reason for this focus, Kotler and Keller (2006) observe, is that the organisations that succeed in today’s complex marketplace are those that are able to deliver superior value from the customer’s perspective.

Consumers are more knowledgeable and empowered than ever before, with customer value presenting a solution to marketers who have to deal with the changing consumer market. Therefore, putting the customer first, and providing superior customer value, have increased in importance (Kotler & Keller, 2006). Customers’ perceptions of value have been found to influence their evaluation of products/services, as well as their behavioural intentions and repeat purchases, all of which affects organisational success (Overby et al., 2005).

Within the hospitality industry, perceived value refers to the perceptions that guests hold before entering the service provider’s facility. The perceptions might include the information provided to the customer, the reservation procedure, and the guest encounters during service delivery (which might include the check-in procedure, guest assistance, physical facilities, and guest service). Perceived value, in this context, consists of two components, namely perceived value before, and during, service delivery (Komppula, 2005). Value is made evident through various elements, including room quality, hotel atmosphere, the quality of meals, and the availability of recreation and sports facilities. Therefore, value is a combination of tangibles and intangibles that differ from place to place. Some customers might consider a service to be of high value, while others might not (Nasution & Mavodo, 2008). Furthermore, Nasution and Mavodo (2008, p. 204) argue that the creation of customer-perceived value is critical in relation to hotels, due to the fact that the hotel subsector is highly competitive compared to other economic subsectors. To be successful, hoteliers (hotel managers) need to provide continuously superior customer value from the customer’s point of view. (Moreover, hotels need to place more emphasis on delivering superior quality products/services, and on ensuring that the needs and expectations of their guests are met). This means that the needs and wants of both current and potential customers require ascertaining (Cant & Van Heerden, 2010, p. 50).

In the hotel context, the creation of value is recognised as the answer for achieving a destination’s competitive advantage (Gallarza & Gil, 2008). With the help of a valid and reliable measurement tool for establishing perceived value, hospitality organisations will be able to identify their existing positive value dimensions and attributes, as well as the areas on which they should improve (Jamal et al., 2011). Currently, hotel customers tend to choose to patronise hotels that offer them the best value within their existing budgetary constraints. Hotel managers, therefore, need to determine which products/services are preferred by hotel guests, so that they can prioritise the preferences that add the greatest value to the hotel’s existing service offerings (Olsen & Connoly, 2000).

Komppula (2005) contends that, in hotels where there is intense interaction between customer and service provider, perceived value and quality play a crucial role. Consequently, there is a need to profile customers continuously, with a view to understanding their demand and consumption patterns. The current study investigated value attributes deemed important by hotel customers in Gauteng, South Africa, with the intention of making a useful contribution to an important research paradigm, and with a specific focus on proliferating the amount of existing scholarship from a developing perspective. In the study, the terms “customer” and “hotel guest” are used interchangeably to describe the same phenomenon.

2. Literature Review

Preceding works on value, as it is related to the hospitality sector, have examined a number of issues related primarily to the nature of value. The most widely known definition of perceived value is the one proposed by Zeithaml (1988, p. 13), who defines perceived value as “the overall assessment of the utility of a product or service based on the perceptions of what is received and what is given”. The author argues that perceived value is a broad concept that considers not merely the financial implications, but also the psychological factors, involved. For example, Zeithaml (1988) points out that some customers might perceive value as being when the price for a commodity is low, whereas others might perceive value as being when there is a favourable balance between the value received and the price paid for a service. In measuring the benefits and costs of the perceived value component in different ways, some customers might prioritise quality, whereas others might prioritise convenience. Thus, some customers might be more sensitive to the actual cost incurred, whereas some might be more concerned about the amount of time and effort that is sacrificed to obtain a particular (quality of) service or product (Zeithaml, 1988). According to Lee et al. (2012), the value perceived by a specific customer will be high only when the offer that is intended for the customer meets or exceeds their expectations in terms of performance.

The hospitality industry has to create value continuously so as to gain market share and so as to remain competitive. Pricing strategy is an important issue for managers, since it is one of the main influences of accommodation selection decisions, as well as of consumer perceptions of quality and customer satisfaction, all of which eventually leads to customer loyalty (Chen, 2010; Mattila & O’Neill, 2003). Guests expect to receive a higher level of service when they pay more for it (Matzler et al., 2006). Nowadays, hotel customers choose to patronise hotels that offer them the best value under existing budgetary constraints. This means that, before pricing, hotel managers must determine which products/services are preferred by hotel guests. This should then enable them to prioritise those customer preferences that are likely to add the greatest value to the hotel’s existing service offering, which allows for justification of pricing (Olsen & Connoly, 2000).

Perceived value leads to customer satisfaction and loyalty. Therefore, the creation of such value entails examining the value that customers attach to particular products/service that leads to the charging of prices that they are willing to pay for the products/service involved. Taking into consideration the interests of both the customers and the business allows both to benefit therefrom (Hinterhuber, 2008, pp. 41−50).

Customer satisfaction is the result of customers’ perceptions of the value that they believe they acquire from using a particular service or product (Meng et al., 2011). Customer satisfaction plays an important role in discouraging customer defection, thereby improving customer loyalty. Loyal customers are an important and relatively cheap source of advertising for an organisation, as they tend to recommend the organisation concerned to friends and family through word-of-mouth promotion (Popova, 2006).

Different studies have been conducted on the subject of value attributes. Chan and Wong (2006) reveal that location and good service are key factors in customers’ selection decisions, while Mattila and O’Neill (2003) assert that guest room cleanliness, guest room items and friendly and knowledgeable employees are important aspects in terms of the levels of customer satisfaction attained by an accommodation establishment. Zhang et al. (2011) maintain that room design and amenities are aspects of the hotel that add value to their product offered, while location is most important in terms of potential customers choosing between competing brands. Other studies, including that of Callan & Bowman (2000), identify cleanliness, the value-for-money efficiency of service, and safety and security as being of importance to customers.

3. Methods

The current study employed a descriptive, quantitative research design, with the target population of the study being Gauteng hotel customers. The Gauteng province was deemed suitable for testing perceived customer value for a number of reasons. Besides being recognised as the country’s economic hub, the province in question contains two of South Africa’s major cities (Johannesburg, the economic hub, and Pretoria, the administrative capital). Furthermore, during the period from 1994 to 2010, many major international and national hotels were established in Gauteng (Rogerson & Sims, 2012). The hotels concerned contribute significantly to the employment and GDP rate(s) of the country. For the above-mentioned reasons, conducting the study in the area involved was regarded as being likely to be fruitful, not only for hotels in the area, but also for the country as a whole.

A questionnaire survey was used to collect the required data from the hotel guests in question. Besides considering the existing literature, the survey was developed with due consideration of previous studies that had been undertaken in the field (Callan & Bowman, 2000; Dolnicar, 2002; Dube & Renaghan, 2000; Popova, 2006), keeping in mind the local South African context of the current research. The questionnaire employed focused on the demographic information of the customers involved, and on their evaluation of the hotel service, as well as the degree of importance that they attached to the hotel value attributes. The attributes were: location, value for money; the brand image and reputation; safety and security; the physical appearance of the hotel; food and beverages on offer; the bathrooms and bathroom amenities, as well as the rooms and room amenities, available; perceived service quality; and transportation. A ranking system for responses was used to rate the degree of importance that the respondents attached to each of the value attributes mentioned in the main questionnaire. A 4-point Likert-type scale with responses ranging from 1 = Not important, through 2 = Least important and 3 = Important, to 4 = Very important was used.

A convenience sampling method was used to target the estimated 124 hotels that were considered to fall with the 3- to 5-star category range. Before the study was carried out, a letter of consent was sent to all the hotel managers concerned, and all the respondents were made aware of the nature of the study. A total of 300 valid questionnaires were solicited from hotel customers with the assistance of front- office staff. The survey conveniently targeted only hotel customers who had stayed in the hotel for at least one night. The Statistical Package of Social Sciences (SPSS) Program, version 23.0, was utilised to process the data obtained via the questionnaires. Descriptive statistical percentages for the frequencies involved were employed to present the data gathered from the responses that were obtained to the research questions asked.

To ensure the reliability of the data, the Cronbach’s alpha was used to assess the internal consistency of the scale used. A generally agreed-upon level of Cronbach’s alpha coefficient value is 0.70, implying that a measurement scale is reliable when the value is above 0.70 (Gliem & Gliem, 2003). According to Table 1, all the value dimensions that were tested with the instrument ranged from 0.73 to 0.88, thus confirming the reliability of the scale.

Table 1. Cronbach’s alpha coefficient results

4. Results and Discussion

4.1. Demographic Profile of the Hotel Guests

The study found an almost equal gender distribution, with women forming 49% of the respondents, and men 51%. This finding confirms that, in general, Gauteng hotels tend to provide service to both men and women – thus the major market for hotels in Gauteng is not gender-specific. This finding is consistent with those of Kleynhans and Zhou (2012), who found no significant difference between the percentages of the different genders among hotel customers in Gauteng. In terms of purpose of visit, the majority (66%) of the hotel customers claimed to be visiting the hotels for business purposes rather than for those of leisure (34%), as can be seen in Figure 1 below. The customers were mainly South Africans (63%), suggesting that local customers constitute the major market share of the clientele using such accommodation establishments. This finding was in line with a study conducted by Varki and Colgate (2001), who revealed that the majority of the customers doing business with hotels proved to be citizens of the country in which the hotels were situated.

Figure 1. Nationality and motives for stay of respondents

Figure 1 further illuminates the fact that, while the majority of both South African and non-South African customers (73% and 55%) patronised the hotels mainly for business purposes, the figure for non-South Africans who visited the hotels for leisure purposes was high (55%), when compared to South African customers (27%). The big difference in percentages in this respect indicates that more non-South African customers were staying in Gauteng hotels for leisure purposes than were South African. Concerning age, the findings revealed that the majority of respondents came from the employable age group of between 25 and 54 years. Interestingly, those concerned were business professionals, or people who owned businesses that required them to travel to attend meetings and other business- related activities. From the remaining age group categories (55–64 and 65> years), the majority were found to be leisure guests.

4.2. Hotel Guests’ Perceptions of Value

Hotel guests’ perceptions of value were measured across the ten value dimensions based on a 4-point Likert-type scale, for which the results are shown in Table 2 below.

Table 2. Hotel guests’ perceptions of value dimensions, in %

Table 3 below ranks the scores obtained when the rating “important” and “very important” are combined. The table reveals a clear picture that value for money (91.6%) was rated the most important predictor of perceived value. A previous related study by Chu and Choi (2000) also found that hotel guests tend to attach high expectations to the products and services that they procure. Dolnicar (2002) contends that all types of hotel customers repeatedly cite price or value for money in the literature as an important attribute of a hotel.

The findings also indicate that the hotel customers surveyed tended to regard bathrooms and bathroom amenities (90.3%) as being the second-most important attribute of hotels. Such findings confirm the importance of the hotel room, which was identified as being the third most important aspect of hotels, with bathrooms and their related amenities forming part of the overall room aspect. Furthermore, such a finding also confirms Dolnicar’s (2002) finding that, although hotel customers tend to regard bathrooms and bathroom amenities, including shower facilities, as important, they are not the most important aspect of a hotel. Therefore, hotel management should be aware that the cleanliness and size of the bathroom, along with the provision of sufficient good-quality towels and bath mats, might be important in guests’ rating of a hotel.

From the data collected in the current survey, it was found that the dimension of rooms and room amenities (88.0%) was deemed to be the third most important contributor to perceived value by hotel customers in the study. Mattila and O’Neill (2003) and Zhang et al. (2011) suggest that room cleanliness and guest room amenities are important aspects of hotel attributes contributing to the overall levels of customer satisfaction, which is consistent with the present findings made. The authors point out that, if customers are not satisfied with the way in which such attributes are delivered, they are likely to switch to supporting competitors, and to negative word of mouth. Thus, hotels have to deliver on the attributes concerned in the best possible way, otherwise the long-term consequences might be dire. Besides the room design (Dube & Renaghan, 2000), guests clearly are concerned about their sleeping place, the provision of which is the fundamental service of any hotel³. According to the findings made in the current study in regard to the hotel room and its importance, such room design should be paid more heed than it is at present by hotel managers when considering the relevant economic and financial factors. Although Popova (2006) found that customers tend to identify cleanliness as being the most important characteristic of a hotel room, the size of the room seemed to have little importance to hotel customers, which is a fact that conflicts with the results obtained in the current study.

Table 3. Rating of value dimensions, based on their importance

“Food and beverages” was rated the fourth most important dimension in the current study, with it being assigned an importance percentage score value of 87.6%. In terms of the dimension, the hotel customers surveyed indicated that they were concerned with the quality of the food and beverages on offer, as well as with the taste of the food involved, and the variety of the food and beverages supplied. However, the surveyed revealed that they attached a low level of importance to such aspects as health-conscious menus. In a study conducted by Dube and Renaghan (2000), food and beverages-related services were rated as an attribute that created perceived value during the hotel experience. Consequently, it is important for hoteliers to provide a variety of food and beverage options (Emir & Kozak, 2011; Sukwadi et al., 2012).

Qu et al. (2000) assert that location is repeatedly confirmed as being a major attribute that hotel customers use to judge the quality of hotel service, with it being a salient factor in hotel selection. In the current study, location was found to be the fifth most important predictor of customer value, with the overall percentage score of importance for the dimension being 86.4%. Evidently, guests consider where a hotel is located when considering at which hotel to stay, with their attendant decision-making also being linked to the purpose of their visit. Moreover, Chan and Wong (2006) report that the convenience of location is regarded as being a key factor in customer selection decisions. The dimension of perceived service quality was identified by Gauteng hotel customers as being the sixth most important value predictor, with it having an overall percentage score of 86.0%. Most of the respondents were concerned about the service levels related to efficient check-in and check-out procedures, the politeness and friendliness of the staff, and the obtaining of reliable service. Therefore, for hoteliers, their levels of professionalism, reliability, congeniality and quick response to service should be of paramount importance (Merlo & Joao, 2011). Elsewhere, Popova’s (2006) study reveals that friendly, polite and helpful staff, efficient service, and the sympathetic handling of complaints are regarded by hotel customers as being the most important aspects of service provision. Kashyap and Bojanic (2000) maintain that hotel staff service is a major area that affects customer decision-making and perceptions of overall hotel service. The results obtained in this respect suggest that the service personnel of a hotel can make a significant contribution towards improving customers’ perceptions of value by treating the latter well, and by performing their duties in an outstandingly professional and efficient way. However, achieving such a high standard of service is likely to be relatively difficult to achieve, because the range of personnel who are employed by a hotel is likely to exhibit varying attitudes and behaviour that tend to make the quality of service delivered inconsistent, as is emphasised by Kandampully et al. (2004). However, hotels are likely to be able to minimise this problem by providing continuous training to their staff, specifically in terms of those aspects that could enhance levels of intellectual skill, professionalism and efficiency in respect of providing service. The provision of such training is especially important for front office personnel who are in ongoing contact with guests.

A key attribute that is linked to travel in general is the issue of safety and security at host destinations, with many (83%) of the respondents rating it as the seventh most important predictor of value. This ranking, in the context of the current study and country, namely South Africa, is remarkable, given that the country has, in recent times, been held to be a crime-infested destination. This finding might represent a perception shift of the visitors concerned, owing to their experiences during their stay at one of the establishments concerned, considering that they would have spent at least one night there prior to participating in the survey. Besides the above, South African hotels usually have security measures in place to help ensure the safety of their clientele. Nevertheless, the challenge that remains is for hotel managers to consider risk management strategies continuously when striving to ensure the safety and security of their guests.

Equally important to hotel guests in the current study was the transport services that were made available at the hotel concerned (82.75%), and the hotel brand and its image (76.5%). Despite receiving a good rating in terms of percentage, the appearance of the hotel (65.1%) was perceived as being its least important attribute. However, the relatively high percentages recorded for all the attributes listed in the survey indicate that all ten dimensions were of importance to the hotel customers involved. That the majority of hotel guests (88%) reported being generally satisfied in terms of value for money, and that 87.6% of them expressed their willingness to return to the hotel in question, or to recommend it to potential customers whom they knew.

5. Conclusion

This study has appraised customers’ perceptions of value in relation to various hotels, from a South African perspective. The analysis established that customers are deeply concerned about the value that they receive on deciding to purchase, or to use, hotel service. Despite departing from the global south perspective, the study exhibits parallels with related studies conducted from the perspective of the global north. The price that customers pay seems simultaneously to influence perceived value and quality positively, suggesting that poor performance in terms of attributes could have a negative impact on return stay. Therefore, hotels need continuously to strive to balance the pricing and quality of service that they offer with a view to maintaining, or retaining, customers, and to gaining their loyalty. As Hellstrand (2010) observes, although hotels tend to be differentiated from one another in terms of their service quality, the guests’ perceptions of the service that they obtain at such establishments is difficult to ascertain, due to the nature of the service itself. Consequently, the quest for customer satisfaction should be the focus of attention going forward for hotel management, in the light of the quality of guest experience being the precursor both to the level of satisfaction obtained, and to the perception of value (Hellstrand, 2010).

The recruitment of qualified hospitality personnel, as well as their consistent provision with up-to-date training and skills development linked to the management of hotel services, is, therefore, of essence. If the right standards are achieved in this respect, the possibility of improving upon the relevant performance attributes and of maintaining related quality standards should become a sustained, and sustainable, reality.

As the present study was not without its limitations, caution should be observed when attempting to generalise the results obtained through the survey discussed for the following reasons. Firstly, the study employed self-administered questionnaires, rather than personal interviews. As a consequence, the findings obtained might have suffered from some participants not having interpreted the questions asked in the way that the researchers had intended. Secondly, the use of a purposive convenience sample could mean that the population under study might not truly represent the greater population of hotel guests. Thirdly, the study focused on only one province (Gauteng) in South Africa, so that conducting the same study elsewhere might yield different results. Fourthly, only 3- and 4-star hotels were considered in the study, with the lower categories of hotel and ungraded hotels not being included in the sample. Lastly, the study was conducted at a time of year, namely between August and October, when most of the hotel customers were domestic business customers, therefore the views of foreign and leisure customers, who tend mostly to travel to the country during the holiday season, were only considered to a limited extent. Related research endeavours that are advocated should, therefore, consider such limitations when designing and approaching similar studies in future.

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