The influence of green practices by non-green hotels ...

Int. J. Green Economics, Vol. 11, No. 1, 2017

The influence of green practices by non-green hotels on customer satisfaction and loyalty in hotel and tourism industry Yusnita Yusof Faculty of Applied Social Sciences, Universiti Sultan Zainal Abidin, 21300 Terengganu, Malaysia Email: [email protected]

Zainudin Awang Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, 21300 Terengganu, Malaysia Email: [email protected]

Kamaruzaman Jusoff* Faculty of Resource Science and Technology, Universiti Malaysia Sarawak, 94300 Kota Samarahan, Sarawak, Malaysia Email: [email protected] *Corresponding author

Yahaya Ibrahim Faculty of Applied Social Sciences, Universiti Sultan Zainal Abidin, 21300 Terengganu, Malaysia Email: [email protected] Abstract: Environmental issues are one of the most pressing global concerns the world has currently to address and which has become most critical recently. Malaysia is having to determine its own response to contemporary problems such as water pollution, air pollution, waste disposal, climate change, global warming, deforestation and haze which have plagued Malaysia for some time. Green practices are an important aspect to be explored in the hotel industry. This study aims to measure the impact of green practices in non-green hotels on customer satisfaction and their loyalty. The structural model of the inter-relationships among green practices, customer satisfaction and customer loyalty is developed and executed using Structural Equation Modelling (SEM). The study found that Green Practices in the hotel industry have a significant effect on Customer Satisfaction and Loyalty. Furthermore, Customer Satisfaction mediates the relationship between Green Practice and Loyalty. Thus, hoteliers, of both a green and a non-green status, need to show concern and to participate in conserving the environment to survive in a competitive environment. Copyright © 2017 Inderscience Enterprises Ltd.

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Y. Yusof et al. Keywords: green practices; customer satisfaction; customer loyalty; hotel industry; Malaysia. Reference to this paper should be made as follows: Yusof, Y., Awang, Z., Jusoff, K. and Ibrahim, Y. (2017) ‘The influence of green practices by nongreen hotels on customer satisfaction and loyalty in hotel and tourism industry’, Int. J. Green Economics, Vol. 11, No. 1, pp.1–14. Biographical notes: Yusnita Yusof is currently a doctoral candidate in the field of Tourism Management at Universiti Sultan Zainal Abidin, Terengganu, Malaysia (UniSZA). Her research interest is on environmental management; sustainability; tourism and hospitality management; and consumer behaviour in hotel industry. Zainudin Awang holds a BSc in Statistics from Iowa State, MSc in Applied Statistics from Western Michigan and PhD in Marketing from Universiti Malaysia Terengganu. He is a Professor of Statistic and Quantitative Management in the Faculty of Economics and Management Sciences, UniSZA He has been a lecturer since 1989 and a research consultant since then. His main area of consultancy is Structural Equation Modelling (SEM). Kamaruzaman Jusoff received his PhD in Forest Engineering from Cranfield University, England, UK in 1992. He is currently a Senior Professor and Special Project Officer to the Vice Chancellor of Universiti Malaysia Sarawak (UNIMAS). He was a Senior Research Fellow with the Publication Unit, IT & Corporate Services, Malaysian Oil Palm Board (MPOB) and a Professor with Universiti Putra Malaysia (UPM). He was also a Visiting Professor with Harvard, Kyoto, and Yale University and an Erasmus Mundus Professor in ITC (now University Twenty, The Netherlands), and Lund University, Sweden. His field of expertise is in airborne hyperspectral image processing but has special interest in sustainable and conservation management of green environment and practices. Yahaya Ibrahim received his PhD in Development Studies from Universiti Malaya, Kuala Lumpur, Malaysia in 2002. Currently, he is Senior Professor and former Vice Chancellor, UniSZA. He was a Visiting Professor with Ritsumeikan University, Kyoto, Japan. His research interest is on community development, green environment, consumer behaviour and eco-tourism.

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Introduction

Malaysia, in recent times, has become one of the most visited countries in Southeast Asia. An increase of tourist arrivals (from both domestic and international visitors) has caused an increase in the quantity of accommodation that is available each year and places the hotel industry as one of the most competitive segments in the tourism industry. However, since tourism involves the interaction between humans and the environment, the increase in tourist arrivals and in tourism activities can be observed to have an impact on the environment (Siti Nabiha et al., 2011). Environmental issues are global issues which affect the world over, including Malaysia and have become one of the most critical issues. The most significant aspects are global warming and pollution. Environmental problems such as water pollution, air

The influence of green practices by non-green hotels

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pollution, waste disposal, climate change, global warming, deforestation and haze have plagued Malaysia for some time (CIA, 2015; Zam et al., 2014). National development plans, namely the Five-Year Malaysia Plan, the National Tourism Policy and the National Ecotourism Plan have been designed to address these problems. The 10th Malaysia Plan concentrated on the steps to solve global warming, environmental conservation and sustainability, while the 11th Malaysia Plan (2016–2020) will focus on four distinct areas, including strengthening resilience to climate change and natural disasters, enabling an environment for green development, adopting the concept of sustainable consumption and production and conservation of natural resources for present and future generations (Economic Planning Unit, 2015). According to Lita et al. (2014), attention to environmental issues and business practices is more popular in developed countries compared with developing countries, particularly in the aspects of community awareness and government policies and regulation. Meanwhile, the hotels in Malaysia are more focused on facilities and services rather than environmental policies and practices (Abdul Samad et al., 2008). Since environmental awareness has been increasing across the world, green practices are regarded as an important aspect to be explored in the hotel industry in current times. Siti Nabiha et al. (2011) proposed five drivers for adopting green practices in the hotel industry. The drivers include regulation or government policies, demands from customers, level of competition, green awareness at the organisational level and organisation’s attitude towards change. According to Wang (2012), by applying green practices in their organisation, the hospitality industry was able to increase the reputation of the organisation. Green Practices refer to the process and procedures adopted by the management in such a way that all activities and programs of the hotels are directed towards minimising negative environmental impacts (Al-Shourah, 2007). Procedures outlined by the management of these hotels were directed towards being environmental friendly in all aspects. The most common green practices in hotels was an energy efficiency procedure, solid waste management practices, and steps taken for water conservation. Other green practices are eco-cuisine, energy efficient lighting, installing hinge activated lighting and using electronics as an email and check in using the internet rather than using paper (Wolff, 2008). The need for energy consumption in hotels is very high globally, especially because of their heating and cooling systems. Therefore, most hotels are now using a system whereby, when guests leave the room, all the energy appliances will shut down except for refrigerators, alarm clocks and other essential appliance. This is because customers often simply leave the room without switching off the appliances (Alexander, 2002). Furthermore, many hotels provide the option for the guest to have sheets, towels and other linens washed every day. Daily washing increases the use of energy, washing chemicals and indirectly will increase pollution. So, this choice will automatically reduce the cost of energy and water conservation. Moreover, the use of fluorescent light is one of the solution rather than using incandescent lamps in terms of energy saving in guest rooms (Alexander, 2002). Water saving is also one of the practices that preserves the environment emphasised. The use of excess water in the hotel makes it costly and also put pressure on the local environment. As a solution, low-flow showerheads and faucet aerator should save water consumption (Alexander, 2002). Solid waste management is important in reducing cost in waste hauling fees and at the same time can create green environment. Paper, food, metals, plastics, aluminium and glass are samples of solid

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waste in hotel (Alexander, 2002). Recycling program is widely used in hotel worldwide to reduce waste through buy recycled content products. Customer satisfaction, especially marketing has been a popular topic in academic research that provide revenues and profits and one of the critical components of the hotel industry’s position of value to a guest (Maghzi et al., 2011). It is important to recognise and anticipate customer needs (Dominici and Guzzo, 2010) to ensure customer satisfaction is achieved. This is supported by Ranjbarian et al. (2011) who reported that customer’s satisfaction is related to the needs and expectations of the customers towards previous personal experience, well known products or what the company has promised and the price of the goods or service. Customers are satisfied if they have positive feelings that results from having received beyond what was expected, including the purchase decision and the needs associated with the purchase (Kotler and Armstrong, 1996; Wiele et al., 2002; Akbar and Parvez, 2009). To be successful managers, one must concentrate on retaining existing customers by implementing effective policies for customer satisfaction and loyalty (Dominici and Guzzo, 2010). This is due to the cost of attracting new customers is higher than the cost of retaining the existing ones, Customer loyalty refers to the strength of the relationship between an individual’s attitude towards product, brand, service, store or vendor and repeat patronage. Based on a research by Oliver (1999), customer loyalty consists of both attitudinal and behavioural commitment to the relationship, such as being price insensitive, giving positive word of mouth and repeat patronage. Attitudinal loyalty is closely related to the power of psychology and attitudes towards products or services offered at the green hotels. Customers who have high attitudinal loyalty will endure and resist attempts in contrary directions. It is likely to influence behaviour among customers. Most hotels are now faced with the challenge of meeting and further exceeding these customer expectations to ensure repeat patronage, which is the bedrock of any business (Caruana et al., 2000). Meanwhile, Asgharian et al. (2012) found that green customer loyalty is the willingness to keep repurchase of the product and service offered, keep using the same accommodation service which are concern on the environmental issues and to suggest the service to close friends and families. Although several factors have been reported as relevant for gaining customer loyalty, nonetheless, customer satisfaction is highly recognised for its fundamental role (Jamal and Naser, 2002). The success of the tourism industry, especially in the hotel sector, depends on the customer satisfaction (Nurul Syaqirah and Putra Faizurrahman, 2014). Moreover, an emotional link to customer loyalty is one of the key strengths of any green product (Hartmann and Ibanez, 2006). An article reviewed by Cohen et al. (2014) on Customer Behaviour literature published in three major tourism journals namely Annals of Tourism Research, Tourism Management and Journal of Travel Research from 2000 to 2012 reveals that from 519 articles, 117 articles were on satisfaction, trust and loyalty. This indicates the concept of satisfaction and loyalty is the most important conceptual dimensions of tourism customer behaviour research amongst others being highlighted so far. Therefore, this paper looks at the perceptions of the customer towards a non-green hotel; a non-green hotel refers to the hotel that has been registered with the Ministry of Tourism and Culture, Malaysia, but has not been awarded as a green hotel by the ASEAN Tourism National Organization. However, this type of hotel has the probability of adopting a green practice in their chains of hotel even though they have not been awarded as a green hotel. Thus, the objectives of this paper are three-folds, namely to


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(a) assess the level of Green Practices or environmental friendly procedures taken by non-green hotels in the Malaysian hotel industry, (b) determine the influence of Green Practices by non-green hotels on their Customer Satisfaction and Loyalty, and (c) ascertain the mediation effects of Customer Satisfaction in the relationship between Green Practices and Customer Loyalty among non-green hotel customers

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Method

This study involved hotel guests where the sampling frame for the study cannot be determined as there is no complete list of hotel guests available. The sampling frame was developed based on the Confidence Interval Method (Burns and Bush, 2014). It was created based on the valuable questionnaires with the population (N) size of 932. The calculated sample (n) size is between 96 and 384. However, to obtain an adequate and appropriate number of respondents, the sampling size formula by Krejcie and Morgan (1970) was used. Using the formula, the proposed number of respondents for the study is 281.

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Measurements

This study involves four sections (A, B, C and D) of the self-administered questionnaire. Section A consists of demographic profile while Section B itemised the measuring Green Practices construct. The items were adapted from Moreo (2008), which has been employed to measure Green Consumption in the hotel industry and ASEAN Green Hotel Criteria (ASEAN, 2013). After a few stages of Pre-Testing, Pilot-Testing and Exploratory Factor Analysis (EFA), there are 16 items found suitable for measuring Green Practice. Section C consists of items measuring Customer Satisfaction towards the hotels practicing greens. The instruments measuring satisfaction consist of 14 items adapted from Skogland and Siguaw (2004). In Section D, the study employed instruments modified by Al-Rousan et al. (2010) and Skogland and Siguaw (2004) to measure customer loyalty construct. All responses for Section B, C and D were measured using a 10-Point Interval Scale (rating) with 1 = “strongly disagree” and 10 = “strongly agree”.

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Demographics

Respondents for this study consist of 45.9% male and 54.1% female. The respondents’ age ranged between 21 and 30 years (48.8%), between 31 and 40 years (24.9%), between 41 and 50 years (13.2%), and the remaining are aged above 50 years. There reasons for respondents staying at the hotel are for leisure (33%), for business purposes (17.8%), for educational purposes (10.7%), and for other purposes such as visiting friends, religious activities, and sporting events (39.4%). Interestingly, more than 60% of them are repeat customers of the hotel.

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Findings and discussion

The reliability analysis was conducted to verify the reliability of the instrument for the Green Practice, Customer Satisfaction and Loyalty constructs. Based on Table 1, the Cronbach’s Alpha was greater than 0.7 for all constructs. Sekaran and Bougie (2010) and Awang (2011, 2012) stated that the Cronbach’s Alpha value greater than 0.6 indicate the instruments are reliable to be employed for research. Table 1

The reliability assessment for all constructs

Dimension/Variable

No. of items

Cronbach’s Alpha (n = 281)

Green Practices

16

0.964

EMPComp_1

7

0.949

EMPComp_2

4

0.875

EMPComp_3

3

0.782

EMPComp_4

2

0.789

Customer Satisfaction

14

0.975

Cognitive

7

0.958

Affective

7

0.953

Customer Loyalty

8

0960

Attitudinal Loyalty

5

0.963

Behavioural Loyalty

3

0.904

The measures of the skewness and kurtosis (Table 2) shows that the value of skewness is –0.073 and kurtosis is –0.245 for the variable of Green Practices construct, the skewness and the kurtosis for Customer Satisfaction construct is –0.371 and –0.233 respectively, and the value of skewness is –0.392 and the kurtosis value is 0.103 for Customer Loyalty variable. From these results, it shows that the scores for all constructs are normally distributed. According to Awang (2014, 2015), the data is normally distributed if the absolute value for skewness and kurtosis is 1.0 or lower. Table 2

The assessment of normality distribution for the data

Construct

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Mean Score

Skewness

Kurtosis

Green Practices

6.40

–0.073

–0.245


6.97

–0.371

–0.233

Customer Loyalty

6.75

–0.392

0.103

Level of green image

Table 3 shows the mean value of green practices in Malaysian non-green hotels. The values of customer perception towards the green practices applied or used in the hotel they stayed. The mean values for all items of green practices is 5.8 and above. Since this study used a 10-point scale, the results reveal that all the items in this study were at a good level (5.8 and above) when the mean value is between 5.51 and 7.75 (Rist and Allen, 2011).

The influence of green practices by non-green hotels Table 3

The level of green practices

Environmental activities Energy efficient lighting Programmable thermostats Refillable amenity dispensers Recycling program Air filtration Designation of smoking area Maintenance for equipment regularly Reuse towels Water saving technology Organic food Noise control Toxic substances signage Awareness programs Soundproofing system Sound-proof rooms Figure 1

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N

Min

Max

Mean

Std Deviation

281 281 281 281 281 281 281 281 281 281 281 281 281 281 281 281

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

6.44 6.34 6.57 6.46 6.09 6.44 6.84 6.68 6.80 6.20 5.82 6.31 6.30 6.36 6.39 6.35

2.080 2.029 2.231 2.387 2.296 2.214 2.353 2.008 2.197 2.196 2.297 2.250 2.198 2.243 2.209 2.133

The initial measurement model for pooled-CFA combining all three constructs

Prior to modelling the structural model and executing Structural Equation Modelling (SEM), the study needs to validate the measurement model of all latent constructs in the model for unidimensionality, validity, and reliability (Awang, 2014; 2015). The procedure involved for validation is Confirmatory Factor Analysis (CFA). Figure 1

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shows the initial model for Pooled-CFA. The Pooled-CFA for all second order constructs. The latent constructs (second order) are pooled together for CFA at once using double-headed arrow as suggested by (Awang, 2014; 2015). The measurement model for three latent constructs need to achieve the requirement for validity namely Convergent Validity, Construct Validity and Discriminant Validity. Based on Figure 1, the Fitness Indexes for the second order have not achieved the required level. The low factor loading item needs to be removed from the model if the fitness indexes are not achieved (Awang, 2014; 2015). However, since the factor loading for all items are above 0.60, the poor fitness indexes might be caused by redundant items. The redundant items can be identified through Modification Indexes (MI) where the value of MI > 15.0 indicates the pair of items is redundant. The modification process needs to deal with one at a time until the fitness indexes are attained. The final measurement model after modifications is shown in Figure 2. Figure 2

The final measurement model for pooled-CFA combining all three constructs

The assessment for construct validity is shown in Table 4. Table 4

The fitness indexes assessment for the measurement model in Figure 2

Name of category

Name of index

Index value

Comments

1.

Absolute fit

RMSEA

0.086

The required level is achieved

2.

Incremental fit

IFI

0.895


3.

Parsimonious fit

Chisq/df

3.062



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Table 4 shows the Fitness Indexes for the measurement model. The index values have achieved the required level for Construct Validity as recommended by Meyer et al. (2006), Awang (2011; 2012; 2014; 2015), Bentler (1990) and Bentler and Bonett (1980). After Fitness Indexes was accepted, then the study needs to assess the Convergent Validity and reliability through the value of Average Variance Extracted (AVE) and Composite Reliability (CR). For AVE, the minimum value is 0.5, while the minimum value for CR is 0.6 (Awang, 2011; 2012; 2014; 2015). The results show that all the constructs and items involved in the measurement model achieved the required value. This is means that all items from the model in Figure 2 were included for further analysis. The results for AVE, which indicate Convergent Validity and CR, which indicate Construct Reliability, are summarised in Table 5. Table 5

The summary for AVE and CR for EMP construct

Comp1

Construct EMP

Comp1

Comp2

Comp3

Comp4

0.79

0.75

0.73

0.67

0.71 0.77

Comp2

0.96

0.70

0.74

0.76

Comp3

0.91

0.80

0.70

0.72

Comp4

0.95

0.84

0.73

0.79 0.81 0.73 AVE

0.819

0.526

0.526

0.515

0.549

CR

0.947

0.913

0.816

0.761

0.708

Construct CS

Affective

Cognitive

Affective

0.92

0.84

0.68

Cognitive

0.95

0.62

0.68

0.91

0.87

0.85

0.86

0.89

0.80

0.73

0.90

0.76

0.86

AVE

0.874

0.649

0.661

CR

0.933

0.927

0.931

Attitudinal

0.98

0.69

0.88

Behavioural

0.87

0.88

0.70

0.90

0.70

0.87 0.84 AVE

0.859

0.705

0.585

CR

0.924

0.922

0.807

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The Discriminant Validity was assessed through developing Discriminant Validity Index Summary as shown in Table 6. Based on Table 6, it can be concluded that the Discriminant Validity for all constructs in this model is achieved because the diagonal value is higher than the values in its row and column (Awang, 2011; 2012; 2014; 2015). It is shows that there is no multicollinerity problem met in the model. Once the entire requirements for testing Unidimensionality, Validity and Realibility for Measurement Model are achieved, thus, this Confirmatory Factor Analysis model can proceed for developing the Structural Equation Modelling. Table 6

The discriminant validity index summary

Construct

EMP

EMP

0.90

Figure 3

CS

CS

0.72

0.93

CL

0.64

0.88

CL

0.93

Structural model of green practices, customer satisfaction and customer loyalty

The inter-relationship among the constructs is modelled and the estimated results are shown in Figure 3. The value of R2 for the model is 0.83. As a conclusion, the model is very good since it could capture 83% of the information on the endogenous construct by including certain exogenous constructs in the model. At the same time, most of the fitness indexes are good since the value achieved the requirement level and the factor loading for all items are good (above the required 0.6). This model indicates that 83% of the Customer Loyalty towards non-green hotels could be gauged by using two exogenous constructs in the model namely Green Practices and Customer Satisfaction, while 58% of the Customer Satisfaction could be measured by using Green Practices. The estimated direct effect between construct is shown in Table 7. The influence of Green Practices on Customer Satisfaction is statistically significant. The direct effect of Customer Satisfaction on Customer Loyalty is also statistically significant. However, the


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direct effect of Green Practice on Customer Loyalty is not statistically significant. Based on this result obtained, the researcher intended to test whether Customer Satisfaction mediates the relationship between Green Practices and Customer Loyalty. To assess the existence of mediation effects of Customer Satisfaction in the relationship between Green Practices and Customer Loyalty, the study employed the procedure by Awang (2014; 2015) as shown in Figure 4. Table 7

The regression path coefficient and its significance

Construct

Path


Construct

Standardised P-Value Estimate



Green Practices

Customer Loyalty




0.921

0.001

Significant

Customer Loyalty



Green Practices

–0.004

0.950

Not Significant

Figure 4

0.762

0.001

Result Significant

The procedure for testing mediator in the model

1. The indirect effect = (0.76 x 0.92) = 0.699 2. The direct effect = 0.00 3. Since the indirect effect is > direct effect, the mediation occurs. 4. Both indirect path (Green Image to Customer Loyalty and Customer Satisfaction to Customer Loyalty) are significant 5. Type of mediation is Complete Mediation since the direct effect for Green Practices to Customer Loyalty is not significant

The indirect effect is 0.699 while the direct effect is 0.00. Since the indirect effect is larger than the direct effect, this means mediation occurs in the relationship. Furthermore, both paths (GI to CS and CS to CL) are significant. Thus, the type of mediation here is Complete Mediation since the Direct Effect is not significant after the mediator enters the model.

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Conclusion

The global awareness towards environmental degradation cannot be taken lightly as far as hotel industry is concerned. Even the non-green hotels have to practice greens or follow the environmental friendly procedures in order to obtain positive perception from

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their customers. The study has proven that Green Practice helps the hotels to achieve customer satisfaction directly. The study also found that the positive perception regarding Green Practices has influence customer loyalty indirectly through customer satisfaction. Thus, to survive in the highly competitive environment such as hotel industry, the service providers (the hotels in this case) need to show concern and participate towards conserving the environment. This study has shown that, the benefit of Green Practices is higher satisfaction; and the higher satisfaction would influence loyalty positively. This result of this study indicates that Green Practices is an antecedent to customer satisfaction, and customer satisfaction is a mediator to customer loyalty.

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