Customer Relationship Management and Hospitality

Industry in Nigeria: A Study of Le Meridien Hotel

Limited (Ogeyi Place), Port Harcourt

By
Newman Chintuwa Enyioko (MNIM, MBA. B.Sc)
Email: newmanenyioko@yhoo.com,
Affiliation: Medonice Management Consulting and Research Institute, Port
Harcourt, Rivers State, Nigeria.
&
Chibuike Onwusoro (LLB, BL, PGD, M.Sc. CITN)
Email: odimma1@yhoo.com
Affiliation: Marine Policy and Strategy Institute, Port Harcourt, Rivers State,
Nigeria.


Abstract
This study was set out to investigate Customer Relationship Management and
Hospitality Industry in Nigeria, Le Meridien Hotel Limited (Ogeyi Place), Port Harcourt
was used as the case study. Quantitative and qualitative data were generated from 565
respondents comprising 214 Employees (General), 246 Customers and 105 Management
Staff. The study employed SPSS statistical software packages in the analyses. The
finding reveals that, Relationship Building exists as a moderating variable in the CRM-
BP relationships of the Nigerian hotel industry companies. This study is equally an
attempt to explain the Customer Relationship Management and Hospitality Industry in
Nigeria with the help of the gap model available in literature which suggests that gaps
in service occur at various instances. The study explains that the gap model is a useful
tool to explain the militating factors partly. There is more to the militating factors like
privacy issues, unwillingness of customers to build a relationship with the service
provider and changing tastes and preferences of the customer. Using Le Meridien Hotel
Limited (Ogeyi Place), Port Harcourt as a classic example of superior service quality to
the customers is appropriate in this study. Some simple measures to reduce the militating
factors have been mentioned, which addresses the third research question. The relevant
existing theory has been reviewed and the subject has been explored, using the gap
model (Parasuraman et al 1998) mainly. Based on the research findings and analysis,
recommendations have been given to reduce the militating factors at Le Meridien Hotel
Limited (Ogeyi Place) and luxury hotels in general. The study recommends that hotel
industry companies in todays business environment must be technologically compliant
in order to have competitive edge and build a meaningful and lasting relationship with
their customers.

Keywords: Customer, Relationship, Management, Hospitality Industry, Nigeria
1

1. 1 Introduction
In the mid-twentieth century, mass production techniques and mass marketing
changed the competitive landscape by increasing product availability for consumers.
However, the purchasing process that allowed the shopkeeper and customer to spend
quality time interacting with each other was also fundamentally changed. As a result,
customers lost their uniqueness becoming an account number. Shopkeepers lost track
of their customers individual needs as the market became full of product and service
options. Many companies today are striving to re-establish their connections to new as
well as existing customers to boost long-term customer loyalty (Chen and Popovich,
2003).
Any business begins and ends with the customer (Sugandhi, 2002). Thus, service
organizations are shifting their focus from transactional exchange to relational
exchange for developing mutually satisfying relationship with customers. Extended
relationships are reported to have a significant impact on transaction cost and
profitability, and customer lifetime value. Serving the customers, in true sense, is the
need of the hour as the customer was, is and will remain the central focus of all
organizational activities.
The study explores Customer Relationship Management and Hospitality Industry in
Nigeria with specific emphasis on hotels using the gap model of Parasuraman et al
(1985) and suggests generic strategies to reduce the forces militating against the effective
use of CRM in the sector.


2

1.2 Objectives of the study
The aim of this research is to highlight the Customer Relationship Management and
Hospitality Industry in Nigeria using Le Meridien Hotel Limited (Ogeyi Place) as a
classic example of high service quality. The research objectives are as follows:
(i) What are the major components of relationship building influencing CRM to
yield an increased Business Performance?
(ii) Does relationship building influencing CRM reduce cost?
(iii) Does the gap model explain the militating factor of CRM?
(iv) Is there more to the militating factor of CRM than what is explained in the gap
model?
(v) How can the militating factor of CRM be reduced?
2. Literature Review
2.1 What is Customer Relationship Management?
Customer Relationship Management (CRM) is the core business strategy that
integrates internal processes and functions, and external networks, to create and deliver
value to targeted customers at a profit. It is grounded on high-quality customer data and
enabled by IT (Buttle, 2004). CRM is a business strategy to identify, cultivate, and
maintain long-term profitable customer relationships. It requires developing a method to
select your most profitable customer relationships (or those with the most potential) and
working to provide those customers with service quality that exceeds their expectations.
(McDonald, 2002)
An organizations survival depends largely on harmonious relationships with its
stakeholders in the market. Customers provide the life-blood to the organization in
3

terms of competitive advantage, revenue and profits. Managing relationships with
customers is imperative for all types and size of service organizations. A sound base of
satisfied customers allows the organization to move on the path of growth, enhance
profitability, fight out competition and carve a niche in the market place. Bennett (1996)
described that CRM seeks to establish long term, committed, trusting and cooperative
relationship with customers, characterized by openness, genuine concern for the delivery
of high quality services, responsiveness to customer suggestions, fair dealings and
willingness to sacrifice short term advantage for long term gains. Schneider and Bowen
(1999) advocated that service business can retain customers and achieve profitability by
building reciprocal relationships founded on safeguarding and affirming customer
security, fairness and self esteem. It requires that companies view customers as people
first and consumers second. Trust, commitment, ethical practices, fulfillment of promises,
mutual exchange, emotional bonding, personalization and customer orientation have been
reported to be the key elements in the relationship building process (Levitt,1986;
Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ).
CRM refers to all business activities directed towards initiating, establishing,
maintaining, and developing successful long-term relational exchanges (Heide, 1994;
Reinartz & Kumar, 2003). One of the results of CRM is the promotion of customer
loyalty (Evans & Laskin, 1994), which is considered to be a relational phenomenon,
(Chow & Holden, 1997; J acoby & Kyner, 1973; Sheth & Parvatiyar, 1995; cited by
Macintosh & Lockshin, 1997). The benefits of customer loyalty to a provider of either
services or products are numerous, and thus organizations are eager to secure as
significant a loyal customer base as possible (Gefen, 2002; Reinartz & Kumar, 2003;
4

Rowley & Dawes, 2000). Recent developments in Internet technology have given the
Internet a new role to facilitate the link between CRM and customer loyalty (Body and
Limayem, 2004). It is common knowledge that a dissatisfied and unhappy customer will
share his unfortunate experience more than a satisfied customer. It is also observed that a
fraction of unhappy customers choose to complain while others simply switch their
loyalty to others service providers. Loss of customer is loss of business along with the
opportunity for business growth and profitability. Feedback collection from the customer
is essential for the supplier to ascertain customer satisfaction and scope for improvisation
(Sugandhi, 2002).
2.2 Customer satisfaction, loyalty and business performance
The rationale for CRM is that it improves business performance by enhancing
customer satisfaction and driving up customer loyalty (see figure 1). There is a
compelling logic to the model, which has been dubbed the satisfaction-profit chain
(Anderson and Mittal, 2000). Satisfaction increases because customer insight allows
companies to understand their customers better, and create improved customer value
propositions. As customer satisfaction rises, so does customer repurchase intention
(Anderson, 1994). This in turn influences actual purchasing behaviour, which has a
significant impact on business performance.
5


Figure 1: Customer satisfaction, customer loyalty and business performance

(Buttle, 2004)
Customer satisfaction has been the subject of considerable research and has been
defined and measured in various ways (Oliver, 1997). Customer satisfaction may be
defined as the customers fulfillment response to a consumption experience, or some part
of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an
unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a
continuum, where the location is defined by a comparison between expectations and
outcome. Customers would be satisfied if the outcome of the service meets expectations.
When the service quality exceeds the expectations, the service provider has won a
delighted customer. Dissatisfaction will occur when the perceived overall service quality
does not meet expectations (Looy, Gemmel & Dierdonck, 2003). Sometimes customers
Customer
Satisfaction

Customer
Loyalty

Business
Performance

Understanding
customer requirements

Meet customer
expectations

Deliver customer
value



Behavioural loyalty

Attitudinal loyalty

Revenue growth

Share of
customer

Customer tenure


6

expectations are met, yet the customer is not satisfied. This occurs when the expectations
are low (Buttle, 2005).
Customer loyalty can be defines as customer behavior characterized by a
positive buying pattern during an extended period (measured by means of repeat
purchase, frequency of purchase, wallet share or other indicators) and driven by a
positive attitude towards the company and its products or services (Looy, Gemmel &
Dierdonck, 2003).
2.3 CRM and Service Quality
Service quality is essential for an organizations survival and growth. Interest in
service quality emerged in 1970s. Ever since, the topic has attracted substantial attention
among researchers and practitioners (Gronroos, 2001). Service quality is a form of
attitude representing a long-run, overall, evaluation, which is different from customer
satisfaction, a more short term, transaction specific judgment. The level of customer
satisfaction is a result of the customers comparison of the service quality expected in a
given service encounter with perceived service quality. This implies that satisfaction
assessments require customer experiences while quality does not (Caruana, Money and
Berthon, 2000).
2.3.1 Customers perception of quality:
Quality of a particular service is whatever the customer perceives it to be. Service
quality as perceived by the customer may differ from the quality of the service actually
delivered. Services are subjectively experienced processes where production and
consumption activities take place simultaneously. Interactions, including a series of
7

moments of truth between the customer and the service provider occur. Such buyer-seller
interactions or service encounters have a critical impact on the perceived service. The
Nordic Model, originated by Christian Gronroos and developed by others, adopts a
disconfirmation of expectations approach. This claims that customers have certain
expectations of service performance with which they compare their actual experience. If
the expectations are met, this is confirmation; if they are over performed, this is positive
disconfirmation; if they are underperformed this is negative disconfirmation. According
to Gronroos (1984), the quality of service as perceived by customers has two dimensions;
a technical or outcome dimension and a functional or process-related dimension.
What customers receive in their interaction with a firm is clearly important to
them and their quality evaluation. This is one quality dimension, the Technical Quality of
the outcome of the service production process. Interestingly, other customers
simultaneously consuming the same or similar services may influence the way in which
customers will perceive a service. Thus, the consumer is also influenced by how he
receives the service and how he experiences the simultaneous production and
consumption process. This is the second quality dimension, the Functional Quality of the
process, closely related to how the moments of truth of the service encounters themselves
and are taken care of and how the service provider functions. Illustrated in figure 2, there
are the two basic quality dimensions, namely, What the customer receives and How the
customer receives it; the technical result or outcome of the process (technical quality) and
the functional dimension of the process (functional quality. on customers buying
behaviour).
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Figure 2: Two service quality dimensions
(Gronroos, 2001)
2.3.2 The Perceived Service Quality approach
Gronroos (1982) introduced a service oriented approach to quality with the
concept of Perceived Service Quality and the model of Total Perceived Service Quality.
This approach is based on research into consumer behavior and the effects of
expectations concerning goods performance on post-consumption evaluations. In
previous sections, the two basic quality dimensions (the what and the how) in the minds
Total

Quality

Image (Corporate/ Local)
Technical quality of
the outcome: WHAT
Functional quality
of the process:
HOW
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of the customers has been discussed. However, the quality perception process is more
complicated. It is not the experiences of the quality dimensions alone that determine
whether quality is perceived as good, neutral or bad. d. As illustrated in figure 3, the
expected quality is a function of factors, namely, marketing communication, word of
mouth, company/local image, price, customer needs and values. Marketing
communication includes advertising, direct mail, sales promotion, websites, internet
communication and sales campaigns. These are directly under the control of the company
unlike the image and word of mouth factors which are indirectly controlled by the
company. Image of the company plays a central role in customer perception of service
quality. Thus, it is imperative that image be properly managed. External impact on these
factors could possibly occur, but they are a basically a function of the previous
performance of the firm, supported by for instance advertising. Lastly, the needs of the
customers as well as the values that determine the choice of customers also impact on
their expectations. Thus, the level of total perceived quality is not determined simply by
the level of technical and functional quality dimensions, but rather by the gap between
the expected and experienced quality.




10


Figure 3:Total Perceived Quality
(Gronroos, 2001)
2.3.3 Gaps between customer expectations and perceptions:
There exists a gap between expected service quality and perceived service quality.
In an attempt to explain such gap, Parasuraman et al (1985), came up with a gap model
which is intended to be used for analyzing sources of quality problems and help managers
understand how service quality can be improved. The model is illustrated in figure 4.


Expected
quality
Image

Experienced
quality
Total perceived quality
Image

Technical
quality:
WHAT
Functional
quality:
HOW

Marketing
communication
Sales
Image
Word of mouth
Public relations
Customer needs
and values

11





















Figure 4: The Gaps Model (Source: Parasuraman et al, 1988)

Translation of perception into
service quality specifications
Management perceptions of
customer expectations
Service delivery (including pre
and post contacts)
External communications to
consumers
Word of mouth
communications
Personal needs Past experience
Expected service
Perceived service
Gap 2
Gap 3
Gap 5
Gap 4
Gap 1
Customer
Company
Translation of perception into
service quality specifications
Management perceptions of
customer expectations
Service delivery (including pre
and post contacts)
External communications to
consumers
Word of mouth
communications
Personal needs Past experience
Expected service
Perceived service
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Firstly, the model demonstrates how service emerges. The upper portion of the model
includes phenomena related to customers, while the lower portion includes phenomena
related to the service provider. The expected service is a function of the customers past
experience and personal needs and of word of mouth communication. It is also influenced
by the market communication activities of the firm. The service experienced, which in
this model is termed as perceived service, is the outcome of a series of internal decisions
and activities. Management perceptions of customer expectations guide decisions
regarding service quality specifications to be followed by the company when service
delivery (i.e. the execution of the service express) occurs. The customer experiences the
service delivery and production process as a process-related quality component and the
technical solution received by the process as an outcome-related quality component. As
illustrated, marketing communication can influence the perceived service and also the
expected service. This basic model demonstrates the steps that have to be considered
during analyzing and planning service quality. The five discrepancies (so-called quality
gaps) between the various elements of the structure are a result of inconsistencies in the
quality management process. The ultimate gap (Gap 5) i.e. the gap between expected and
perceived (experienced) service is a function of other gaps that possibly occurred in the
process. The five gaps are discussed below:
1. The Management Perception Gap (Gap1): This gap occurs when the
management perceives the quality expectations inaccurately due to inaccurate
information from market research and demand analyses, inaccurately interpreted
information about expectations, nonexistent demand analysis, bad or nonexistent
upward information from the firms interface with its customers to management
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and numerous organizational layers which stop or change the information that
may flow upward from those directly involved in customer contacts. Necessary
action to open up or improve the various internal information channels has to be
taken in such situations.
2. The Quality Specification Gap ( Gap 2): This gap signifies that service quality
specifications are not consistent with management perceptions of quality
expectations due to planning errors or insufficient planning procedures, bad
management of planning, lack of clear goal-setting in the company and
insufficient support for planning service quality from top management. The
planning related problems vary depending on the size of the first gap. However,
even if there is sufficient accurate information on customer expectations, planning
of quality specifications may fail due to lack of real commitment to service
quality among top management. Commitment, dedication and devotion to service
quality among management as well as service providers are of highest importance
and priority in closing the Quality Specification Gap.
3. The Service Delivery Gap (Gap 3): This gap means that quality specifications
are not met by performance in the service production and delivery process due to
specifications which are too complicated and/or too rigid, employees not agreeing
with the specifications and therefore not fulfilling them, specifications not being
in line with the existing corporate culture, bad management of service operations,
lacking or insufficient internal marketing and technology and systems not
facilitating performance according to specifications. The possible problems here
are many and varied and usually the reasons for the existence of a Service
14

Delivery Gap are complicated and so are the cures. The reason for this gap can be
divided into three categories: management supervision, employee perception of
specifications and rules/customer needs and wishes, and a lack of
technological/operational support.
4. The Perceived Service Quality Gap (Gap 5): This gap signifies that the
perceived or experienced service is not consistent with the expected service
resulting in negatively confirmed (bad) quality and a quality problem, bad word
of mouth, a negative impact on corporate or local image and lost business.
However, this gap may also be positive, which leads either to a positively
confirmed quality or over-quality. If a Perceived Service Quality Gap occurs, the
reason could be any one or a combination of those discussed above or other
additional reasons. Addressing these gaps could be a basis for developing service
processes in which expectations and experience consistently meet and a good
perceived service quality will enhance.
2.4 Customers and Relationship with their Service Provider
It is clear that companies want relationships with customers, but it is far less clear that
customers universally want relationships with their suppliers. In a business to customer
context, relationships may be sought when the customer seeks benefits over and above
those directly derived from acquiring, consuming or using the service. The benefits
include recognition, personalization, power, risk reduction, status and affiliation (Buttle,
2004). Examples of each such benefit are mentioned below
Recognition: A customer may feel more valued and important when recognized
and addressed by name
15

Personalization: For example, over time, a hotel manager may understand a
customers particular preferences or expectations
Power: For instance, some of the power asymmetries in relationships between
banks and their customers may be reversed when customers feel that they have
personal relationships with their bank officers and managers.
Risk reduction: Risk may be in the form of performance, physical, financial,
social or psychological. High levels of perceived risk are uncomfortable for many
customers. A relationship has the ability to reduce, or even eliminate risk. For
example, a customer may develop a relationship with a garage to reduce the
perceived performance and physical risk attached to having a car serviced. The
relationship provides the assurance that the job has been skillfully accomplished
and the car is safe to drive.
Status: For example, customers may feel that their status is enhanced by a
relationship with an organization, say, the Hilton.
Affiliation: peoples social needs can be met through relationships. For example,
many people join particular forums or associations to be a part of a community.
2.5 CRM and Hotel Industry
The hotel sector today has been recognized as a global industry, with producers
and consumers spread around the world. The use of hotel facilities such as: room,
restaurant, bar, nightclub or health club; are no longer considered a luxury. For many
people these services have become an integral component of lifestyle. Moreover, in the
last two decades, demand for and supply of hospitality services beyond that of the
traditional services intended for travelers have escalated the growth of the hospitality
16

industry globally, leading to intense competition in the market-place. One of the greatest
challenges facing hotel organizations today is the ever-growing volume and pace of
competition. Competition has had major implications for the customer, providing
increased choice, greater value for money and augmented levels of service.
In the hotel industry, Customer relationship management (CRM) is more than the
practice of collecting guest-centric data. Its the art of using historical, personal, and
experiential information to personalize a guests stay while generating incremental
revenue opportunities. For instance, knowing a traveler is an avid sports fan creates the
opportunity to market tickets to a game; knowing a guest had a less-than-memorable
experience in the hotel restaurant gives you a chance to win them back the next time they
are in town. With the latest offerings in CRM, hoteliers can develop comprehensive guest
profiles from reservation information and demonstrate to guests that the property is in
touch with their needs, drive guest-centric data down to the transaction level, allowing
employees and guest-facing technology to deliver greater value to the guest, generate a
realistic profile on the spending and stay patterns of guests, allowing the property to
create guest-centric marketing for increased loyalty and spending, etc.(Microsoft, 2006).
2.6 Customer retention is a performance indicator that has the tendency of a customer
to stick with a brand above and beyond the objective and subjective assessments
(Sorce, 2002:10). Customers have considered the inadequacies of the classical/traditional
approach (marketing mix) in determining emerging marketing management phenomena
from the service marketing perspective. Customer retention appears to offer significant
benefits to organisations in saturated markets. Dawes and Swailes, (1999:36) posits that
successful customer retention circumvents the costs of seeking new and potentially risky
17

customers, and allows organisations to focus more accurately on the needs of their
existing customers by building relationships.
2.7 Market Share
As expressed by Ekelund,. (2009), sales figures do not necessarily indicate how a
firm is performing relative to its competitors. Rather, changes in sales simply may reflect
changes in the market size or changes in economic conditions. The firms performance
relative to competitors can be measured by the proportion of the market that the firm is
able to capture (Neely, 1998:5). Market share according to the hospitality Relationship
Building group, is the percentage or proportion of the total available market or market
segment that is being serviced by a company.
Mack (1996:32) stated that there are three steps to follow while retaining the
customers and increase market share; tailor products, prices and packaging for major
customer segments; the management structure of the organisation must change so that
regional executives play a larger role in responding to local markets and major customer
segments; And separate brand families while distribution models are deployed to serve
specific segments of the markets. Market share as an organisational performance
indicator is achieved only through customer satisfaction, retention and relationship
profitability.
2.8 Cost Reduction
Datta et al (2007:6) argued that, the longer customers are retained by an
organisation, the more obvious benefits will accrue. Most especially, as Reichheld and
Kenny (1990:20) observed that, it could cost five times more to obtain a new customer
than to keep an existing one. The costs of retention and this inequality are particularly in
18

evidence in the service sector (Ennew and Binks, 1996 and Reichheld and Sasser, 1990).
Meanwhile, IBM (2004:4) observed that hotel industry companies are facing ever-greater
competitive threats from foreign entrants. Hotel industry companies are therefore
compelled to actively seek out new revenue streams while defensively adopting a
renewed focus on efficiency and costs through Relationship Marketing Orientation.
In order to attain maximum efficiency and reduced costs in all its ramifications,
six business drivers for core systems agenda were introduced (IBM 2004:5). These are;
Operational efficiency (doing more with less); flexibility to deliver the fast time-time-
market demanded for new and innovative products (bringing differentiated new products
to market rapidly and efficiently is essential); an integrated, real-time view of the
customer i.e. cross-selling and up-selling are very important for hotel industry companies
seeking to reduce costs (customer centricity through database); Low-cost product
manufacturing, processing and distribution required by transaction-intensive retail hotel
industry companies.

3. Methodology
The study employed survey method in the choice of 565 respondents. Since the
level of analysis was the individual workers and the customers of Le Meridien Hotel
Limited (Ogeyi Place), Port Harcourt the study worked with a sample size of 565, using
the Krejcie and Morgan (1970) sampling determination method. Stratified random
sampling method was also used to select the respondents and structured questionnaire
employed to generate quantitative data. The usable returned questionnaire was 409
(72%); See table1 below for details.
Table 3.1: Questionnaire Distribution and Retrieval
19

Company staff No Administered No Retrieved Acceptable No. % of success
Employees (General) 214 163 161 28
Customers 246 177 173 31
Management Staff 105 82 75 13
Total 565 422 409 72%
Source: Desk Research Data
The in-depth interview (IDI) method and observation were used so as to generate relevant
qualitative data to shed more light on issues already contained in the questionnaire.

4. Data Analysis
A. Quantitative Analysis
Scale reliability Analysis: Table 4.1, reports the reliability of the scales of the constructs
under study based on Cronbachs Coefficient Alpha (Nunnally, 1978 and Ahiauzu, 2006).

Table 4.1: Reliability Test Results
S/No The Variables No of items Cronbachs Alpha
1 Customer Relationship Management CRM) 23 .868
2 Business Performance (BP) 9 .752
3 Contextual Factors (Relationship Building) 3 .771
Source: SPSS Output

Table 2 reveals an overall Cronbachs Alpha Coefficient of 0.9 for C RM, 0.8 for
BP and 0.8 for relationship building as a contextual factor and were all higher than the
0.7 set standards. Also considering the reliability coefficient of the six sub-scales, they
are positive (Table 4).
Validity Test: The validity analysis was carried out through the SPSS software package,
using the Confirmatory Factor Analysis to test for the Multicollinearity, construct and
20

contents validity of the data. Table 3, revealed that there was no Multicollinearity,
because no variable correlated too high. The study determinants of CRM, BP and OF is
greater than 0.0001 and none of the correlation matrix value is greater than 0.8, thus no
need for elimination. The result revealed a very high KMO which is more than 0.50 to 1
and as such, we are confident that our sample is appropriate for this study and the data
adequate (Kaiser, 1974).
Table 4.2: Confirmatory results of factor analysis on CRM and BP
Dimensions of RMO Initial
Extraction
(Coefficient) Eigenvalues KMO Determinant
Test of
Sphericity
Trust 1 0.515 3.159 0.829 0.142 0.000

-52.65%

Bonding 1 0.633

Communication 1 0.708

Shared value 1 0.567

Empathy 1 0.531

Reciprocity 1 0.605




Dimensions of BP Initial
Extraction
(Coefficient) Eigenvalues KMO Determinant
Test of
Sphericity
Market share 1 0.703 1.726 0.542 0.595 0.000

-57.55%

Customer retention 1 0.767

Costs reduction 1 0.556




Dimensions CF Initial
Extraction
(Coefficient) Eigenvalues KMO Determinant
Test of
Sphericity
Customer Building 1 0.633
1.266
(63.296%) 0.5 0.929 0.000

Source: Research Data
KEY:
KMO= Kaisser-Meyer-Olkin (Measure of adequacy)

On the other hand, Bartletts measure of sphericity test shows significance less
than 0.05 meaning that there exist relationships between the variables. Testing construct
validity requires a summary test on Nomological and Convergent test. Nomologically,
21

there was positive and significant association between the two main constructs, also,
there was evidence of convergent validity in the C RM and BP scale as the scales showed
correlation among them and converge on the common constructs.
The analysis of the frequencies on our organizational factor which is represented
by Relationship Building with its item questions showed very high impact of moderation.
Electronic and telephone hotel industry as well as, computerization of services are
claimed to have greater influence as confirmed with a mean score of 4.56. Also,
Customer Building most especially, communication and information greatly influence
the relationships as supported by a weighted mean score of 4.53. This therefore implies
that Relationship Building is highly influential when practicing C RM in the hotel
industry sector in other to achieve business performance.

Table 4.3: Results of Contextual Factor (Relationship Building) Influence on CRM and
BP
Variables Statistical index Technology (Ho)
CRM
Zero order partial
correlation BP



0.642


Control 0.602 0.184
BP Control - 0.271
Source: survey data and SPSS output window version 15.0
Note: It is significant at 2-tail level.


Relationship Building as moderating variable partially correlates C RM and BP
with 0.602 and significant at 2-tailed level. This means that Relationship Building
actually influences the relationship between C RM and BP variables. In this instance, the
moderating variable Relationship Building has lower correlations than the simple
correlation of 0.642, which is the Spearman Correlation between C RM and BP. This
22

implied that Relationship Building is a mediating variable that partly explains the
correlation between C RM and BP.

Table 4.4: Correlations between CRM and BP
CRM Scales Market Share Customer
Retention
Cost reduction
Trust .304** .222** .121**
Bonding .351** .519** .417*
Marketing Communication .397** .421** .376**
Shared Value .433** .521** .383**
Empathy .396** .337** .188**
Reciprocity .429** .470** .269**
**Statistically significant at the .01
level
*Statistically Significant at the .05
level


B. Qualitative Analysis
4.2.1 Does the gap model explain the militating factors of CRM?
The gap model attempts to explain the gaps in the service quality provided by a
service company. A customer expects a certain level of service quality from the luxury
hotel, which may not be duly met. This would be regarded as a gap in service quality.
The researcher tried to highlight the militating factors of CRM considering the gaps in
service quality as one of the main militating factors to CRM. The members of the focus
groups pointed out that there are loopholes in every system which can also be called as
gaps in the system. For the luxury segment hotels, the main constituent of the militating
factors to CRM is the gaps in service quality. The focus group members felt that it was
essential for the hotel to enquire about customer needs. The group members felt that the
hotel should know what they want and must make all efforts to know what they expect.
23

The customers expect a certain type of service quality from the luxury hotels for which
they are willing to pay a certain price. If the customers are not satisfied with the level of
service quality provided then they would undoubtedly demand an explanation from the
hotel. As one of the members of the focus group said,
To summarize, the hotel cannot afford to have service gaps in the long run for any
reason whatsoever because then it will simply run out of business.
4.2.2 Is there more to the militating factor of CRM than what is explained in the
gap model?
The focus groups conducted helped the researcher confirm that the gaps model
well explain the militating factors to CRM. However, there is more to the militating
factors of CRM than simply service gaps. The two other main constituents of the
militating factors are privacy issues and changing tastes and personal preferences of
customers.
From the discussions of members in the focus group, the researcher was able to
realise two other components to the militating factor of CRM which is mentioned above.
The members of the focus group were of the opinion that customers do not like intrusion
into their privacy at any cost, especially when they are paying for comfort. The luxury
hotels record all possible data bout the customers in order to know them well. This
according to some members could be a case of intrusion into a customers privacy and
personal space. The customers stay at the hotel for a few days to attain comfort and
relaxation not irritation. As one member commented, I would not pay a dime to get
irritated by the hotel who notes each and every interaction they have with me. This
24

shows that all customers may not prefer to allow the hotel to know them in-depth by
recording interactions.
To summarize, the researcher realises that service gaps, privacy issues, customer
preferences and the customers unwillingness to build a relationship with the hotel put
together can be called the militating factors to CRM. The hotels must know what their
customers want and not simply do what the hotel wants to do to keep the customers
happy.
4.2.3 How can the militating factor of CRM be reduced?
Research shows that there exists a militating factor to CRM. The militating factor
exists mainly due to gaps in service, customers unwillingness to build relationships with
the hotel, the customers preferences changing over time and privacy issues. In general,
when there is a problem there needs to be a solution. If the problem is not solved, it
grows in size and ultimately causes complete failure of the organization.
In the hotel industry, the militating factors to CRM need to be addressed. The
focus group members were of the opinion that service gaps can be reduced by providing
efficient service quality of a standard which shall be accepted by a wide range of
customers. The hotel must well understand the needs of individual customers and cater to
them accordingly. They must not assume about the customers which leads to a gap in
service quality. To reduce the gap, the hotel must enquire instead of assuming. The
privacy issues must be taken care of in order to reduce the militating factors. As one
member said, I dont want the hotel to peep into my pants and say that Sir, we are
simply trying to know what is in your pants. This statement well explains that customers
25

dislike their privacy being invaded into and hampered as it completely disturbs and
annoys some customers.
To summarize, the hotel cannot afford to have service gaps in the long run for any
reason whatsoever because then it will simply run out of business.

5. Discussion of Findings
This study revealed that electronic internet, telephone hotel industry and
computerization of services as components of Relationship Building have greatly
influenced CRM to yield an increased Business Performance. This was confirmed by
Zineldin (2000:12) when he claimed that, the advent of computer, internet and other IT
have revolutionized every facet of business life through the creation and development of
effective and efficient marketing relationship. Aligning with this argument, we observed
the recent transformation in the Nigerian hotel industry operations, shortly after the
reformed programmes. There was the introduction of electronic hotel industry, ATM,
telephone and computerization of services which eventually led to trust, confidence,
commitment and loyalty on the part of the customers. This study also found that efficient
information about communication systems enhances the practice of C RM in the hotel
industry industry. Glazer (1991:8) similarly remarked that companies go electronic to
communicate with their customers and create awareness of their product and services.
Consistent with these findings, Hatch (1998:662) posit that service firms realized that,
what matters most is the brain power and commitment of their employees to build trust,
empathy, communication and bond with customers in order to woo their loyalty,
commitment and advocacy.
26

The place of Relationship Building in hotel industry operations is further
appreciated by McCollum (1997: 9) submission that, the benefits of CRM-BP
correlations was moderated by Relationship Building and led to costs reduction,
efficiency, customer satisfaction and increased customers. This view is consistent with
our findings which show strong, positive and significant correlation experienced between
CRM and Business Performance as represented by increase in Market share due to
advocacy; high Customer retention due to efficient services supported with Relationship
Building and Cost reduction, through the use of Component Based Model and hotel
industry. The influence of Relationship Building goes beyond structural relationships, but
also affects the culture prevalent in the organization.
Research shows that privacy issues are an area of concern for customers. Le
Meridien Hotel Limited (Ogeyi Place) notes all requests and preferences of the customers
and interactions at all instances. The employees interviewed confirm the literature
available that each and every interaction, requests and preferences of the customers must
be noted and fed on the information system to help them serve the customers better. The
customers when interviewed did mention that privacy issues are one of their concerns.
Some customers do not want their privacy intruded into at any cost. They appreciate the
fact that their requests and preferences are met by the hotel during their stays. However,
they do not approve of the hotel noting each and every interaction and observation. One
customer said, It is irritating if someone knows too much about me. I would not want the
hotel to know each and everything about me and my personality. Some customers feel
offended when they realize that the hotel knows too much about them. This portion of the
militating factors is again minute in the case of Le Meridien Hotel Limited (Ogeyi Place)
27

because none of the members interviewed mentioned any sort of misusage of information
the hotel has about them. One customer said that the Le Meridien Hotel Limited (Ogeyi
Place) provides comfortable service to its customers but sometimes, they note too much
about the customers and it could make the customers feel insecure about their private
information being in records at a hotel.Le Meridien Hotel Limited (Ogeyi Place) notes all
possible information to serve the customers better, but it must know if the customers are
comfortable with having personal information in their records.
Another aspect of the militating factor of CRM is that tastes and preferences of
the customers change over time. It is not necessary that a customers wants will remain
uniform throughout.Le Meridien Hotel Limited (Ogeyi Place) customers said that the
hotel puts in serious effort to know what the current or updated preferences of the
customers are so that they can serve them better and meet their expectations.
The militating factor is small in case of Le Meridien Hotel Limited (Ogeyi Place),
but the militating factors in the hotel sector at large is not that small. The case of Le
Meridien Hotel Limited (Ogeyi Place) is one which should educate the other players to
follow their footsteps to help achieve better customer satisfaction. The following section
is the inference for the industry.
6. Conclusion and Recommendations
The research objective of explaining the militating factors of CRM in the hotel
sector with the help of the gap model was successfully accomplished. The gap model
does not fully explain the militating factors of CRM in luxury hotels and there is more to
the militating factors than only service gaps. Privacy issues are a major concern among
customers today. Luxury hotels must ensure that customer privacy is safeguarded. The
28

changing tastes and preferences of customers must be tracked and recorded to improve
service quality. Relationships once established must be maintained living up to the
expectations of the customers. One focus group member commented, The relationship
must be a genuine one meeting our level of expectations.
The study concludes that, to enhance desired value from both quality products and
quality services of the Nigerian hotel industry companies, relationship building is needed
to offer improve quality services to customers in order to meet their needs and put smiles
on their faces.
The hotel sector can deliver the service the customers want to avoid discrepancies
in service. However, if there is any service failure and the customers choose to
complain, the hotel sector can reduce the militating factors of CRM by simple
measures. Some of the possible ways to reduce the militating factors are as follows.
1. Accurate knowledge of what the customers want, need and expect
2. Once the management knows what the customers expect, relevant instruction
should be passed down to the members of staff to cater to the customers
expectations accordingly
3. The members of staff must carry out their tasks to fulfill the customers
expectations whole-heartedly. This helps in adding the extra personal touch.
4. The members of staff must maintain a cordial and warm relationship with the
customers, keeping in mind their individual preferences and fulfilling the same.
5. In case of service failure or dispute, the employees must act immediately to
resolve the situation and leave the customer pleased. The hotel sectormust
empower the staff to take immediate action and give them monetary allowance to
29

resolve the situation quickly without wasting time to consult senior management
like they do at Le Meridien Hotel Limited (Ogeyi Place).
6. The hotel sector can deliver the service the customers want to avoid discrepancies
in service. However, if there is any service failure and the customers choose to
complain, the hotels should consider this as a golden opportunity to restore
service quality. Literature available (mentioned earlier) suggests that only a small
percentage of the customers choose to complain. Efficient complaint handling
shall prove beneficial and advantageous to the hotel sector for its profitable
future.
7. Customers must be treated with highest regards, respect and dignity even if they
are rude. This shall prevent the situation from getting worse and service recovery
might be possible.
8. The service gaps must be closed by efficient management and supervision. The
staff should be carefully recruited and trained. Literature available confirmed by
employee interviews show that employees at Le Meridien Hotel Limited (Ogeyi
Place) undergo rigorous and detailed training to tackle situations and deliver top
class service quality. The hotels must select and recruit staff carefully and train
them to deliver remarkable service quality







30

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