The Mediation Effect of Customer Satisfaction on the Relationship Between Service Quality and Customer Loyalty

Abstract

Sustainability of  hotel’s performance can be determined by service quality, satisfaction and customer loyalty. The level of customer satisfaction can be increased if hotels offer good quality performance, and so it can retain customers to stay in a hotel.  Thus, this research aims to identify and explain the influence of service quality for customer loyalty and test the effect of customer satisfaction mediation for the relationship between service quality and customer loyalty in the room division of the hotel. This research was conducted at hotel industries in Dili. Respondents for this research were their customers, and research instruments were questionnaires adopted from previous researches, and SMART-PLS 3.0 was used to test the hypothesis. This research shows that service quality and customer satisfaction are not significant to influence customer loyalty in the room division of hotels in Dili. Moreover, customer satisfaction does not have the effect of mediation for the relationship between service quality and customer loyalty. This research can contribute to enrich the theory and empirical about service quality, customer satisfaction, and customer loyalty. In a practical level, this research can help hotel managers to develop their strategies in order to retain their customers through good service quality.  This research can also help the government to aquire data on the level of customer satisfaction for the service quality of hotels in Timor-Leste, and so can develop the policy of human capital training to improve service quality in hotels and other service industries