The Effect of Service Quality and Perceived Price Fairness on Consumer Loyalty through Consumer Satisfaction on Budget Hotel in East Java

Abstract

The purpose of this study was to determine and analyze the influence of service quality and perceived price fairness on consumer loyalty through customer satisfaction in budget hotels in East Java. This study of causality research uses a quantitative approach by testing hypotheses. In this study, the data will be tested using statistical formulas and using Structural Equation Modeling (SEM). The type of data in this study is quantitative data. The data source in this study is primary data. Data was obtained from questionnaires filled by budget hotel customers in East Java through surveys by distributing questionnaires to obtain data from respondents. The scale of data measurement used in this study is the interval scale that is one scale with the other scale has the same distance or size. The data measurement tool used is the Likert Scale. The research population refers to consumers who have stayed at budget hotels in East Java. Sampling is done using non probability sampling withdrawal techniques. The sample size in this study was 200 respondents with characteristics: a minimum age of 21 years and had stayed at a budget hotel in East Java at least more than once in the last 6 months. The results of the study prove that, first, service quality has a positive and significant effect on customer satisfaction (0.87, t-value 2.78). Second, perceived price fairness has a positive and significant effect on customer satisfaction (0.73 with a t-value of 2.45). Third, customer satisfaction has a positive and significant effect on customer loyalty (0.98 and t value 3.69). Fourth, service quality has a positive and significant effect on customer loyalty through customer satisfaction (0.69 and the t-value is 4.04). Fifth, perceived price fairness has a positive and significant effect on customer loyalty through customer satisfaction (0.77 and the t-value is 2.11). Based on these results it can be concluded that if the budget hotel provides quality services and fair prices to its customers, consumers will be satisfied and eventually will be loyal to the budget hotel. Suggestions are proposed for the consumer loyalty theory learning to continue testing variables that affect consumer loyalty apart from the variables examined in this study, namely: service quality, perceived price fairness, consumer satisfaction , and consumer loyalty.