Open AccessEnhancing Customer Satisfaction and Loyalty Through Experiential Marketing and Service Quality in Indonesian Heritage Hotels
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This research is focusing on the impact of experiential marketing and service quality towards customer satisfaction and loyalty within the context of heritage hotels in West Java, Indonesia. Utilizing a quantitative approach, data were collected through surveys from 300 respondents who had experiences staying in three heritage hotels. To examine the data, structural equation modeling, or SEM, was utilized. Results indicate that experiential marketing significantly enhances customer loyalty. Conversely, although service quality was positively received, it did not show a significant effect on loyalty. The research highlights that while all respondents enjoyed their stay, appreciating both the service and architectural aesthetics, a disconnect was noted among younger guests who perceived the hotels primarily as lodging facilities rather than as sites of historical significance. The study suggests that to maintain relevance and appeal, especially among younger demographics, heritage hotels should integrate modern amenities with engaging storytelling and immersive experiences that leverage technology and social media. These strategies could facilitate a deeper appreciation of the historical aspects, potentially enhancing both customer satisfaction and customer loyalty.1. Introduction
The need to compete with modern hotels with the newest technology has forced heritage hotels to reconsider and rework their strategies to remain in business. Historic hotels should provide their guests with an unforgettable experience by making the most of their historical significance. Pleasant experiences in heritage hotels are crucial for several reasons. They help differentiate those hotels from their competitors, create emotional connections, and immerse guests in the hotels' rich history and traditions. These experiences also contribute to brand building, as guests associate the hotels with memorable moments and outstanding service, leading to loyalty and advocacy. Additionally, guests with exceptional experiences are more likely to spend more on extra services, resulting in higher revenues for the hotels. Positive reviews and reputation also contribute to the hotels' reputation, attracting new guests and enhancing their visibility. Furthermore, in addition to providing a competitive advantage, heritage hotels are essential to the preservation of cultural heritage.
History demonstrates that one of the first travel industries called heritage tourism, connects ancient civilizations on pilgrimages with modern tourists seeking deep cultural experiences (Timothy & Boyd, 2006). Heritage tourism entices visitors to take a trip back in time and discover the historical sites and cultural artifacts that serve as reminders of earlier civilizations, which is a gateway to comprehending and conserving the rich fabric of human heritage. In addition, heritage tourism has become one of the sectors with the quickest global growth (Ghanem & Saad, 2015; Mohale et al., 2020; Yoo & Lee, 2015). Heritage buildings are a work of human ingenuity that creates national symbols and regional identities, reflects cultural values and history, serves as a repository for memories of past occurrences, and also benefits the tourism sector (Hasbollah, 2015). Several studies have looked into heritage tourism through museums (García-Almeida, 2019; Hale, 2001; Wu & Wall, 2017), world heritage sites (Ab Wahab et al., 2016), tombs (Mafukata et al., 2021), and heritage hotels (Cheer & Reeves, 2015; Chhabra, 2015).
Heritage hotels fall into the category of lodging that is widely known in a historic area and environment (Yoo & Lee, 2015). Heritage hotels are pre-war structures that have been creatively used as tourist accommodation (Goh, 2015). Heritage structures that are run as hotels should be preserved and utilized wisely (Henderson, 2001), appropriately restored, renovated, and revitalized to maintain their historical value (Xie & Shi, 2019). Indonesia, a popular tourist destination with a wealth of cultural and historical riches, offers a wide variety of commercial lodging options. They are all different in terms of size and design. Some of them have architectural features that have been tastefully renovated and remodeled to function as heritage hotels, reflecting a distinctive cultural history.
Heritage hotels stand as timeless guardians of regional history and charm. These distinguished properties not only offer a retreat from the ordinary but also serve as living testaments to Indonesia's diverse heritages and traditions. Even though the heritage hotels in Indonesia are considered outdated compared to newer and more sophisticated hotels in terms of technology and service, such as smart hotels (Kim et al., 2020), capsule hotels (Subakti et al., 2020), and hotels adopting information technology (Ezzaouia & Bulchand-Gidumal, 2020). Heritage hotels can survive this industry by trying to understand consumer demands, achieve their expectations, and create and maintain loyal customers. However, in an era defined by ever-evolving guest expectations and fierce competition, heritage preservation alone is not enough to ensure the enduring success of these esteemed establishments. Through experiential marketing and service quality, the art of crafting unforgettable experiences offers heritage hotels in Indonesia a compelling pathway to surpass the requirements of their discerning guests instead of just fulfilling those requirements. These hotels could weave narratives that transcend mere accommodation, inviting guests on a journey of discovery and delight.
Experiential marketing is a dynamic approach to engaging consumers by creating memorable and immersive experiences that connect them with a brand's products or services on a deeper level. In contrast to conventional marketing techniques that depend on conventional (one-way) communication, experiential marketing creates a lasting impression on customers by encouraging emotional ties and active participation (Ugwuanyi et al., 2021). As a strategy employed by top companies, experiential marketing fosters genuine consumer involvement and provides quantifiable benefits (Smith & Hanover, 2016). Therefore, it has been applied in automotive products (Kustini, 2011), airline industry (Alagöz & Ekici, 2014), museums (Subakti et al., 2016), restaurants (Andalas & Kartika, 2021; Zena & Hadisumarto, 2013), and hotels (García et al., 2018; Ishara & Gayathree, 2020; Nurrahmi, 2019), particularly heritage hotels (Lee & Chhabra, 2015). However, studies focusing on service quality and experience marketing in Indonesia's heritage hotels are limited. Thus, this research focuses to examine the experiential marketing together with service quality of those heritage hotels.
Service quality is essential in heritage hotels because it contributes to heritage preservation, enhances the guest experience, differentiates the hotels in a competitive market, promotes guest satisfaction and loyalty, and preserves the cultural identity of the destinations (Zena & Hadisumarto, 2013). Guests expect a level of service that reflects the elegance, charm, and sophistication of the property. Excellence in service quality can elevate customer satisfaction, creating deeply impressed memorable moments and customer loyalty and encouraging repeat visits (Bichler et al., 2020; Rachmawati et al., 2020). Therefore, this study will examine how service quality can sustain the business of heritage hotels.
There are plenty of heritage-built hotels in Indonesia. Some of them have been acknowledged by the Ministry of Culture and Education, while others have not been registered. Among all the heritage hotels in Indonesia, those in West Java were selected because Java Island is a pioneer in-built heritage due to previous colonialism by the Dutch and is considered the central hub for business. As the previous capital city of Indonesia, Jakarta is located in Java. West Java is well known for having a rich cultural history and is a well-liked tourist attraction that draws both domestic and foreign visitors. By focusing on heritage hotels in this region, insights from this study can help hoteliers and governments improve the overall tourism experience by illuminating the variables that affect customer satisfaction and loyalty. Heritage hotels may attain greater degrees of customer loyalty and satisfaction, ultimately driving success and creating sustainability. Therefore, this study aims to analyze how experiential marketing and service quality affecting customer satisfaction and loyalty at heritage hotels in West Java, Indonesia. The findings of this study can be used specifically by heritage hotel operators to optimize their strategies, maintain their customers by creating unforgettable experiences, and, therefore, sustain their business.
In the contemporary landscape of marketing, industries must offer products that not only fulfill but surpass consumer expectations to thrive. Such offerings should transcend traditional concepts focused solely on glorifying product features, quality of service, and material attributes. These elements are readily replicable amid intense competition. Instead, an offering that proves challenging to imitate and captivates consumer attention involves experiential marketing, which engages consumer emotions through immersive experiences throughout the consumption process. Experiential marketing, merging the most effective elements of the marketing mix into a unified channel, is predicated on consumer reactions to brand interactions involving diverse activities and stimuli (Nurrahmi, 2019; Smith & Hanover, 2016). Schmitt (1999) outlined five dimensions of experiential marketing implemented in heritage hotels: “sensory experiences, affective experiences, cognitive experiences, behavioral experiences, and social experiences.”
Service quality is a reflection of the experience customers have while dining in heritage hotels (Uslu & Karabulut, 2019). The high-quality services provided can satisfy the guests (Dani, 2014). Service quality is closely related to customer satisfaction and encourages consumers to form strong bonds and relationships with heritage hotels. Several studies have mentioned “the relationships between service quality and customer satisfaction” (Dani, 2014; Padlee et al., 2019) as well as between service quality and customer loyalty (Mhlanga, 2018; Rahim et al., 2020). These studies agree that good service quality results in customer satisfaction and creates customer loyalty. Consequently, the frequently employed service quality measurement methods by Parasuraman et al. (1993), encompassing” tangibles, reliability, responsiveness, assurance, and empathy,” were adopted for assessing service quality in heritage hotels for this study.
Customer satisfaction is achieved when the product or service surpasses pre-consumption expectations (Naini et al., 2022). According to Suchánek & Králová (2019), customer satisfaction is appraising a specific purchase after it has been made. It also applies to new customers, who focus on different qualities than those who have previously used the product. Total contentment with a purchase, also known as general satisfaction, can be characterized as cumulative customer satisfaction (Fornell et al., 1996). As a result, this definition of customer satisfaction is broader and more consistent with how satisfaction is understood in this study. Previous studies have shown the connections between customer satisfaction and loyalty (Dananjoyo et al., 2022; Hasfar et al., 2020; Ilham et al., 2020), with few of them specifically focusing on the hospitality industry (Ishara & Gayathree, 2020; Nurrahmi, 2019). These studies agree that customer satisfaction can create customer loyalty for any type of product or establishment. In order to compete in the market, hotels must raise customer satisfaction to meet and exceed the elevated expectations of today's consumers (Ishara & Gayathree, 2020). In this context, the unique heritage character of heritage hotels, if effectively managed, is capable of achieving high levels of customer satisfaction and thereby sustaining customer loyalty (Periañez-Cristobal et al., 2020), ultimately creating customer loyalty to sustain the business. Lupiyoadi, in the study by Naini et al. (2022), stated five factors that affect customer satisfaction, namely, “product quality, price, service quality, emotionality, cost, and accessibility.” Product quality relates to how well a product satisfies client needs; price aligns with anticipated levels of service or quality; service quality is determined by systems, technology, and people; emotionality is the emotional engagement fostered by the product; and accessibility is the affordability and ease of product acquisition. Kotler & Keller (2014) used several dimensions of customer satisfaction, including loyalty, purchasing new products, product recommendations, willingness to pay more, and providing feedback, which were used in this study.
As mentioned earlier, customer satisfaction leads to customer loyalty (Kotler & Keller, 2014). Therefore, further discussions on customer loyalty are required. Customer loyalty is defined as the percentage of customers who continue to select the same goods or services after comparing them to those of other rivals when there is easy access to alternatives (Chen, 2016). However, according to Syafarudin (2021), customer loyalty is a behavior developed through fulfilling experiences and ideals when buying a company's product. The traits of loyal consumers show why they are valuable assets for businesses. Gronholdt et al. (2000) measured customer loyalty by four indicators, namely, “customer repurchase intention, price tolerance, willingness to recommend a brand or company, and willingness for cross-purchase.” These indicators were used for measuring the customer loyalty of heritage hotels in Indonesia in this study. Figure 1 presents the research model for this study.
2. Methodology
A descriptive methodology was employed in this study to represent the traits of circumstances, issues, occurrences, services, groups, or people (Bairagi & Munot, 2019). Through field research (surveys), quantitative data was gathered through a questionnaire, which was completed by respondents, for statistical analysis. This study was conducted on three registered and acknowledged heritage hotels in West Java, Indonesia, namely, Salak the Heritage Hotel, Bogor; Prama Grand Preanger Hotel, Bandung; and Savoy Homann Hotel, Bandung. Due to the unknown total population of hotel guests, a sample of 300 respondents was deemed appropriate, with each hotel contributing 100 respondents. Inferences about the larger number of customers staying at such hotels can be made using a sample size of 100 respondents from each hotel to produce statistically meaningful results. To assess the data and draw conclusions about the hotels' customers, a large sample size is needed to gather a variety of viewpoints and experiences. This decreases bias and increases the validity of the results because the sample is more likely to be representative of the total guest population. The study employed a cross-sectional design, with data collected once through survey questionnaires. The data was then analyzed statistically using SEM. Statistical data and qualitative causal hypotheses were combined with SEM to test and estimate causal links.
The hypotheses of this study are as follows:
1. H1: Customer satisfaction has been positively impacted by experiential marketing.
2. H2: Customer satisfaction has been positively impacted by service quality.
3. H3: Customer loyalty has been positively impacted by customer satisfaction.
4. H4: Customer loyalty has been positively impacted by experiential marketing.
5. H5: Customer loyalty has been positively impacted by service quality.
3. Results
The data was collected from three heritage hotels in West Java, Indonesia, which are: Salak the Heritage Hotel, Bogor; Prama Grand Preanger Hotel, Bandung; and Savoy Homann Hotel, Bandung. 100 respondents were selected from each hotel, totaling 300 participants, with 110 males and 190 females. In terms of education level, most respondents (143 people) held diplomas (levels I-III). The age distribution is as follows: 89 respondents were over 41 years old, 85 were between 30 and 40 years old, 81 were between 26 and 30 years old, and the smallest group, consisting of 45 respondents, was between 18 and 25 years old. In terms of occupation type, 140 respondents are private employees, followed by 110 civil servants, 26 self-employed people, and 24 students.
Prior to data analysis with Smart-PLS software, the validity and reliability of the data were established. A loading factor greater than 0.7, an Average Variance Extracted (AVE) greater than 0.5, composite reliability (CR), and a Cronbach's alpha greater than 0.7 were required. In the algorithm test, three items (X1.1, X1.9, and Z4) obtained loading values below 0.7 and were discarded. A retest yielded loading values above 0.7, confirming the model's validity and reliability. Overall, the data meets the validity and reliability criteria for this study. Based on the analysis in Table 1, it can be concluded that all the criteria needed to assess validity and reliability have been met. Therefore, it can be ensured that the data used is very reliable and worthy of further processing in more in-depth data analysis.
Variable | Items | Loading | Cronbach's Alpha | CR | AVE |
Experiential marketing (X1) | X1.2 | 0.858 | 0.968 | 0.972 | 0.758 |
X1.3 | 0.857 | ||||
X1.4 | 0.869 | ||||
X1.5 | 0.882 | ||||
X1.6 | 0.888 | ||||
X1.7 | 0.900 | ||||
X1.8 | 0.878 | ||||
X1.10 | 0.863 | ||||
X1.11 | 0.878 | ||||
X1.12 | 0.857 | ||||
X1.13 | 0.846 | ||||
Service quality (X2) | X2.1 | 0.854 | 0.979 | 0.981 | 0.785 |
X2.2 | 0.851 | ||||
X2.3 | 0.852 | ||||
X2.4 | 0.874 | ||||
X2.5 | 0.858 | ||||
X2.6 | 0.896 | ||||
X2.7 | 0.888 | ||||
X2.8 | 0.906 | ||||
X2.9 | 0.898 | ||||
X2.10 | 0.920 | ||||
X2.11 | 0.898 | ||||
X2.12 | 0.914 | ||||
X2.13 | 0.884 | ||||
X2.14 | 0.904 | ||||
Customer satisfaction (Z) | Z1 | 0.941 | 0.955 | 0.968 | 0.882 |
Z2 | 0.941 | ||||
Z3 | 0.955 | ||||
Z5 | 0.941 | ||||
Customer loyalty (Y) | Y1 | 0.869 | 0.901 | 0.929 | 0.767 |
Y2 | 0.856 | ||||
Y3 | 0.939 | ||||
Y4 | 0.834 |
Hypotheses were evaluated using the bootstrapping results, as shown in Table 2. A research hypothesis is accepted if the p-value is smaller than α (0.05) and the t-statistic is greater than the critical value of 1.96. Likewise, if the p-value is greater than α (0.05) and the t-statistic is smaller than the critical value of 1.96, then the hypothesis is rejected.
Hypothesis 1 (H1) is rejected because the p-value is larger than 0.05 and the t-statistic is below 1.96. According to the study's findings, experiential marketing has a small but detrimental impact on customer satisfaction. Although there is a downward tendency, the difference is not statistically significant enough to impact customer satisfaction. Hypothesis 2 (H2) is accepted because the original sample value is positive, the t-statistic (12,253) is larger than the critical value and the p-value (0.000) is smaller than α. The study's findings support the notion that customer satisfaction is positively impacted by service quality, implying that enhancements in service quality can greatly raise the level of customer satisfaction. Furthermore, with a positive original sample value, Hypothesis 3 (H3) has a p-value smaller than α and a t-statistic of 6.501, which significantly surpasses the critical value. Therefore, it is accepted. It is inferred that customer satisfaction significantly impacts customer loyalty, underscoring the critical role of customer satisfaction in marketing strategies and customer relationship management. Furthermore, Hypothesis 4 (H4) has a positive original sample value and a t-statistic of 3.704, which is greater than the critical value, with the p-value smaller than α. Therefore, it is accepted. This shows that experiential marketing has a positive and significant impact on customer loyalty. This underscores the importance of customer experience-centric marketing strategies for cultivating and sustaining robust customer loyalty. As for Hypothesis 5 (H5), the statistical value obtained (1.773) is smaller than the critical value, and the p-value (0.077) is greater than α. In addition, the original sample value is negative. Therefore, it is rejected. Thus, this suggests that service quality has a negative but insignificant influence on customer loyalty. Although there is a negative trend, it does not significantly influence customer loyalty.
Original Sample (O) | T-Statistics (|O/STDEV|) | p-values | Notes | |
H1: X1->Z | -0.053 | 0.630 | 0.529 | Rejected |
H2: X2->Z | 0.957 | 12.253 | 0.000 | Accepted |
H3: Z -> Y | 0.693 | 6.501 | 0.000 | Accepted |
H4: X1 -> Y | 0.363 | 3.704 | 0.000 | Accepted |
H5: X2 -> Y | -0.238 | 1.773 | 0.077 | Rejected |
4. Discussion
The results of this study show that experiential marketing does not positively influence customer satisfaction, which is not consistent with the findings of Ellitan (2022) and Yuan & Wu (2008). Those previous studies have shown that experience-based marketing does have a significant effect on customer satisfaction levels. These differences may be caused by changes in customer preferences or behavior, variations in market environments, or different research methods used. Therefore, further analysis needs to be conducted to understand those differences. Additionally, it was observed that the majority of respondents, predominantly over the age of 41, appear less influenced by experiential marketing strategies. This cohort tends to report satisfaction upon receiving desired services or products, irrespective of the experiential marketing efforts.
This study shows that service quality positively and significantly influences customer satisfaction, which aligns with the findings of Naini et al. (2022), who conducted research at Pujasera Melawai in Jakarta and found that service quality contributed positively to customer satisfaction levels. Likewise, research conducted by Supriyanto et al. (2021) in the banking sector also supports these findings. They found that good service quality in the banking industry was positively related to customer satisfaction. These findings indicate that service quality is the main factor in influencing customer satisfaction in the context of food centers and the banking industry. By improving service quality, companies can further improve the customer experience and achieve higher levels of satisfaction, which in turn can increase customer loyalty and retention.
Furthermore, this study shows that customer satisfaction has a positive and significant influence on customer loyalty, which aligns with the findings of previous studies (Naini et al., 2022; Supriyanto et al., 2021). Thus, these findings emphasize the importance of prioritizing customer satisfaction to increase customer loyalty. By increasing customer satisfaction through good service and positive experiences, companies can build long-term customer relationships and strengthen their loyalty to the brand or services.
This study also reveals that experiential marketing significantly influences customer loyalty, which aligns with the findings of Samsudin & Putra (2020), which focused on shariah hotels in Indonesia. These findings indicate that experience-based marketing strategies effectively increase customer loyalty, especially in the hotel industry, such as shariah hotels. However, these results differ from the findings from the research conducted by Soliha et al. (2021) at Cafe Exelso Rinjani in Semarang, which found no impact of experiential marketing on customer loyalty at the coffee shop. Although there are differences in the research results, it is essential to understand that the importance of experiential marketing may vary depending on the business context and customer characteristics. Therefore, to optimize the effectiveness of marketing strategies, it is necessary to carefully analyze customer needs and preferences in each industry or business.
Previous studies have shown that service quality has no significant influence on customer loyalty. The perception of service quality provided does not strongly influence customer loyalty (Supriyanto et al., 2021). It is essential to understand these findings because they challenge the conventional belief that higher service quality can increase customer loyalty. The research indicates that the customer experience may substantially influence other factors or aspects of customer loyalty. By diving deeper into these factors, businesses can better tailor their approach to increasing customer loyalty, focusing on the aspects that truly resonate with their customer base.
Every respondent found their stay at a heritage hotel enjoyable due to the hotel's staff providing adequate service and their admiration for the hotel's combination of art, culture, and history elements. Guests did not have grievances regarding the caliber of service they experienced while staying at the hotel. However, it was discovered that not everyone could truly appreciate the historic hotels. According to the age distribution of the hotels' customers, it is evident that visitors over 40 years old have the highest regard for the establishment's history. They are willing to remain loyal visitors regardless of price changes because they genuinely care about the hotels' sustainability. Furthermore, their genuine desire to preserve the heritage hotels as built heritage sites stems from their love for culture. The 18-25 age group, on the other hand, is the youngest generation and does not yet have a sense of ownership or commitment to maintaining the historic property. Although they enjoy staying at historic hotels, they don't yet have a connection to them. Therefore, they simply use the property as a place to stay without considering its historical significance.
5. Conclusions
To sustain heritage hotels, their managers should focus on the younger generations and encourage them to appreciate heritage properties by providing them with modern comforts combined with a rich history, making them feel at home in a setting that is both modern and traditional. Younger generations can learn about the fascinating history of heritage hotels through immersive experiences such as virtual tours and interactive storytelling, which can be achieved by leveraging social media influencers and creating shareable content. Technology can serve as a bridge connecting the past and present. Heritage hotels may attract younger clients and raise their understanding of the rich history within their walls using technology such as interactive historical tours, virtual reality experiences, and augmented reality. Therefore, further research is needed to learn more about the behavior of the younger generation (generation Z) and how to build customer loyalty based on their preferences in heritage hotels.
The corresponding author may be contacted upon request to obtain the data that supported the study conclusions.
We would like to thank the Ministry of Culture and Education of Indonesia for providing us with heritage hotels data, other information, and documents related with this research.
There is no conflict of interest disclosed by the authors.
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