THE EFFECT OF SERVICE QUALITY ON HOSPITALITY BUSINESS PERFORMANCE: A CASE STUDY ON FOUR STAR HOTELS OF ADDIS ABABA

Abstract

The primary objective of this study is to assess service quality and business performance on the hospitality sector. Dimensions as adopted in SERVQUAL model (tangibility, assurance, responsiveness, empathy & reliability); have been utilized as measurement constructs to assess the level of service quality and business performance. A quantitative method has been applied to analyze the data collected from representatives of Addis Ababa’s 4 star hotels. Descriptive statistics such as frequency, mean and correlation analysis techniques were applied to analyze background information of respondents. The respondents’ perception on service quality and business performance as well as the relationship of service quality dimensions with financial and non-financial business performance were also analyzed under descriptive statistics. Besides, regression analysis technique was applied to investigate the impacts of service quality dimensions on hospitality business performance. The finding of the study shows that customers are satisfied on tangibility, reliability, and empathy while they are dissatisfied on responsiveness and assurance. The finding on the base of correlation analysis also implies that the relationship between service quality dimensions and business performance have positive and significant relationship between business performance and all service quality dimensions. The finding also confirms the service quality dimensions have an impact on business performance implying that the higher the quality of service, the higher the level of business performance. From this finding, it can be summarized that the hospitality can improve its service by mostly focusing on responsiveness and assurance of service quality dimensions.