Service Recovery In The Hotel Industry

Modified: 16th May 2017
Wordcount: 4069 words

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Aiming at the actuality that the article about service recovery in the hotel industry. Handling complaints, resolving problems, retain the customers and to avoid undesirable outcomes such as negative thinks of the customers for the services. Fortunately significant progress has been made in the hotel industry to service recovery in the last few years. This article based on the literature view, environment and marketing mix strategies to identify what changes has been made in the recent year of hotel industry to achieved maximum customer satisfaction level. We adopt marketing mix 7Ps in the service recovery and analysis what changes has been made in to minimize the service failure in the hotel industry. The confirmatory result shows that the scale service processes to better reliability and validity level, and the basic need of the customer services recovery expectation includes recovery attributes, service failure attributes and empowering employees for problem solution in the hotel industry.

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Hotel industry one of the fastest growing industry in the current scenario .The demand of hotel industry has been increase in recent time and now day’s tourists want highly specialized as well as customized services from hotel industry. In addition, competition in the field of hotel industry and tourism has always been extremely on top and it is always difficult for newcomers to adopt the new trends and demand their own market share. Therefore, Hotel industry professionals need to focus on offering better quality services at affordable prices for the customers. The main goal of the industry is to obtain customer satisfaction in terms of services and money and maintain stable relationship with customers in long term basis.

Services recovery is the action that the services provider should adopt for the services failure (Gronroos,1988,p.10-13) Researches indicated that the service recovery could enhance customers’ perceptive value, satisfactory feeling, loyalty and credit, and the satisfactory service recovery is propitious to reduce customers’ conversion intention and fluidity (Bitner, 1990, Lewis, 2004, & Cong, 2007). McCollough’s “service recovery paradox” even pointed out that customer’s satisfaction after service recovery would exceed customer’s satisfaction without service failure, which more showed the importance of service recovery (Boshoff, 1999, P.236-249)

However, Satisfying a customers is a very difficult job for any industry especially when it comes to services industry. Earlier studies have shown that consumers “level of satisfaction is generally lower for the services than product (Andreasen & Best,1977). When it comes for hotel industry, where customer want high level of services and personal interaction with many departments and services failure is sometimes difficult to avoid by the industry. Services recovery is a important marketing tool which provide a another chance for the hotel industry to satisfy the consumers demands. The outcomes of services recovery will strongly influence the customer’s opinion of the hotel industry.

This essay focuses to identify and evaluate previous services recovery process with the current process in the hotel industry. It is also show that services recovery in the hotel industry has influence on the tourism and the images of a location. Furthermore, essay will show how the services recovery experience affects consumer’s behavior for hotel industry.

Literature Review

Services recovery

The necessity for the service recovery is brought about by services failure. Services failure is define as those situations when the services fails to live up to the customer’s expectations (Michel,2001) or according to Maxham (2001), any services-related mishaps or problems (real and/or perceived) that occur during a consumers experience of the firm. Services recovery has all those actions which is taken by the a services provider in order to resolve the all problem that caused the services failure in the industry( Gronroos,1990) Agenda is not only to resolve the problems but try to find out the source of the problem. A good recovery will reduce customers negative aspect for the industry and increase the services quality level to meet customers expectation.

However as Smith et al. (1999) state, service recovery “includes situations in which a service failure occurs but no complaint is lodged by the customers” (p. 359), it means services recovery also includes that situations where some time customer not able to expressed a complaint or discomfort but the services provider has to indentify or recognized the failure in their services and take initiated a recovery procedure. In addition, studies show very few unhappy or dissatisfied customers actually complain about the services. So it’s very important for the services recovery system to indentify the fault with in the process and rectified on time to betterment for hotel industry.

However service recovery’s major importance is increase customer satisfactions and makes long term relation with the customers. Customer’s satisfaction with the service recovery will directly affect on the customer intentions toward the industry and they will might be think about to repurchase and recommend the service provider for other customers. This is very important for the service industry in term of increase own and industry marker share.

Justice Theory in service recovery

Justice theory is majorly used in services recovery studies to help analyze customers perceive the entire recovery process. With the help of it we can identified which elements affect the customer’s image of the locations. In the terms of services industry, inputs can be defined as the costs (economic, time energy cost etc.) that is service failure in the industry and outcomes after process will services recovery tactics (e.g. cash refunds ,apology, replacement etc.)

In addition customer will determine whether a recovery attempts was fair or not in terms of services recovery or they will satisfied with the changes has been done by the recovery system. There are three dimensions are :-

• Distributive justice (focusing on the outcome of the recovery process)

• Procedural justice (examining the process undertaken in order to arrive at the final outcome)

• Interactional justice (referring to the manner in which the process is implemented and the customer is treated)

(Hoffman et al., 2000; Tax, Brown & Chandrashekaran, 1998)

Image of the destination

Image of the destinations is very important aspect in hotel industry and here we have to linkup between customers’ satisfactions with the services recovery and the image of the destinations. It is very new aspect in the services recovery process. In the current scenario destinations image is very important to increase the profit margin of the industry. For example any destinations where consumer’s get satisfied with the hotel services and all then defiantly he will going to share his experience about particular destinations and talk about the hotel services . That will generate more demand and more people get attracted to visit those locations. Lots studies measures that there is difference between the pre- trip and post -trip image of the destination. Some time its positive and some time negative.

Post trip behavior

Post trip behavior is important component of service recovery process. It’s very useful for continues improvement in the services. Most of the services and especially hotel industry use that tool very effetely for example customer feedback form after service offered ,and always ready to take customer suggestion and opinion about their services. It’s also important to retain the customers for the next time because find a new customer is very difficult and crucial task in hotel industry rather than continue with the same customers .If customers will be satisfied with the services then it might be possible they can bring few more customer for them. That is mouth publicity which is very useful and effective in marketing without investing money.

Macro Environment

Macro environment include the following element are Technological, Political, Economical, Social-Culture. It is also called PEST. For more precision the term PESTET is also used. Find here the PEST framework for the environment auditing in terms of the service recovery. What influence it has on the service recovery in hotel industry to achieved customer satisfaction. Hotel industry has to be consider all the factor before going to make any service recovery process.


Legislative Structure

Government and political stability

Taxation Policies

Pressure groups

Monopolistic restrictions

Political orientations

Trade Union Power

Environmental protection legislation

Foreign trade legislations

Employment legislation


Business Cycles

Money Supply

Inflation Rates

Investment levels


Energy Costs

GNP trends

Patterns of ownership




Educational Levels

Social Mobility




Levels and focuses of government and industrial R&D expenditure

Speed of technology transfer

Product Life Cycle

Joint Ventures

Technological Shift

The (change)costs of technology

Table 1.1 PEST frameworks for the environment auditing (Source: Wilson, R. M. and Gilligan, C.2003)


Green environment is very important factor when it come services industry or hotel industry. There has been so many changes happened in the last few years. In the recent time service recovery highly depend on the environment policy to provide customer satisfactions. In addition, consumer looking for environment free service to protect the environment and services recovery also use it as a tool to reduce service failure and create brand value in the market.

Concept of STP

After focusing on the environmental analysis, now we will discuss market related segmentations, Targets and Position of the industry. These are very important tools of the services recovery process to identified best strategies to come up with the failure. The following figure shows the eight stages of STP process.

1. Identify the current position, capabilities, objectives and constraints..

Situation Analysis

2. Identify the segmentation of variables and segment of the markets for their services

3. Develop profiles of each segment according to requirement

Market Segmentation

4. Evaluate the potential and attractiveness of each segment and try to minimize the services failure.

5. Select the target segment(s).

Market Targeting

6. Identify the positioning concept within each target segment in terms of customer satisfaction.

7. Select and develop the appropriate positioning concepts to achieved 100% services level.

Product Positioning

8. Develop the marketing mix strategy for service recovery in the industry.

The Marketing Mix

Table 1.2 The eight stages of the segmentation, targeting and positioning process (Source: Wilson, R. M. and Gilligan, C. 1998)

Marketing Mix Strategies:- Marketing mix is a very important tool of marketing and it is very helpful in the decision making process. Once we evaluate the industry services level and market scenario e.g. internal and external issue and segment the target market for a particular product, industry will think about their strategies to achieve the target and for that management need to design strategic plan to get enter the into the market by using marketing mix tool e.g. price place product and promotion to recover from the failure in services.

2.1 Elements of marketing mix

There is still a debate about the how many elements involve in marketing mix. Mainly management focuses on four elements price, product, place and promotion. Service industry is also considering people, process and physical evidence because it is very important for them.

Generally people know the “4-Ps of marketing”. Which are acts as a guideline for a management to implement their marketing strategies for the company or the industry. According to Kotler et al. (1999) the mix is a set of “controllable tactical marketing tools that the firm blends to produce the response it wants in the target market”.

2.1.1 The 4-Ps of marketing mix

The traditionally marketing mix contain of 4 major elements. But we will discuss “7-Ps of marketing”

Product: – Product has to be categorized – one is physical food that means tangible and other is intangible for illustration Automobile industry has car as a physical product which they can sell in the market and Hotel industry like Lemiridien they have service as a product which is intangible.

Price: -This is more critical and difficult element of marketing mix and management has to put lots of efforts to finalize the product price especially in services industry. For every industry it will vary time to time and circumstances. The price of the product is made on the basis of three factors as shown in the figure below:

Figure 1 Factors influencing pricing decisions by the managers (Source: Liao, M. 2005)

Promotion: – In the current scenario promotional activity is very important to increase the market share and make awareness about changes in the services. It shows the visible face of the industry and its products in front of customer. It creates awareness about the product in the consumer mind. These are the ways which are used by the industry to communicate with the target customer in present time.

Advertising (TV, News Paper, Radio, Internet)

Personal Selling




Sales Promotion

Point of Sales

Place: –

This element plays major role when we discuss about services recovery in hotel industry. How effective they are connected with consumer and offer them their best deal in the market.

People: –

Employees are the key assets of the organization and all business depends on the people. How well they are playing their role in the organization. Especially when we will discuss about the services industry. Service industry always tries to take feedback from the consumer about their employee’s services and give them training and motivation to improve their interpersonal skill to minimize services failure in the industry.

Process: –

Process means proper system to do the things in plan way. Follow the roles and instruction and procedure by which the service is acquired. For illustration computer function means for any operation which is perform by computer goes through pre-define process and then result will be displayed on the screen. Every process has some steps.

Physical evidence: –

It is shown that the physical appearance of the industry is to deliver their services to the consumer like hotel building, public hospitals and school colleges. These all are contain similar types of logo or design to specified company existence. It’s very important for the services industry.

Evaluate the influence of 7Ps in context of service recovery in hotel industry.

After having an overview of marketing mix including environment analysis, now we have to discuss all contents in terms of service industry market strategy for service recovery.

Product: –

In the service industry product are intangible and industry had made too many changes to recover from the service failure. Now industry has different range of product in the market to offer best quality of service and minimize the service failure in the industry. Industry introduces different range of service in their product to satisfied customer demand. Now days hotel have some entertainment zone for the relaxation of the customer.

Price: –

After service failure in the hotel industry .Pricing is very important factor in service recovery process. Customer satisfaction highly depends on the price of the services and facility. Hotel industry has different price range to cover all segments with different range in service quality. It has all basic prices and customer has paid more to get additional features in the current service level. Company has to meet the competitor’s price and also offer some extra benefit to satisfied consumer like free food and transports etc. price is mostly depend on the what service they are offering for the customers and now hotel have different pricing strategies to attract more customers.

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Place: – Place is very important aspect in terms of the service recovery for hotel industry as we discussed earlier image of the destination. Where we are operating and what services we are offering for the client. Some time industry didn’t understand what they have to offer for the customers for their satisfaction. Now industry analyses shows it’s very important for the service industry to identify the locations and its service requirement in that destinations.

Promotion: – It’s most important factor for in services recovery of hotel industry. Promotions offer and schemes play wider role to recover from the service failure earlier consumer don’t know about the services of the hotel where customer going to stay. In the recent time, consumer become more active and aware about the services just because of the promotional activates and they knows what service they will receive. Now day’s industry has very strong promotional system in the world. With the help of this system industry easily transfer all information about destinations and their services with the different range of price. Customer know about new event, campaigning and promotional schemes. All results have an integrated marketing approach so that every employee of the industry could deliver the same image and services of the industry to achieve customer satisfaction with the service. In addition, some company has its call centres and informational centres to guide the customer about product and its proper use. Most of the promotional budgets are spend in communicating towards advertising the product through Television, radio, press and internet.

Hotel industry uses E-marketing tools to promote their new and existing service product in the market and try to improve their position in front of consumer and also have e-store facility, by which the customers could book the rooms and other service.

People: –

People are most important part of services industry. Services industry highly depends on the people. Because there is no physical product and what ever they are charging it’s totally based on what services level they are offering for their customer. Earlier most of the services failure comes from here and most of the dissatisfaction in the industry based on the people behaviour on job. Now industries have better option to hire highly skills employees. so they know how to satisfied customer and how to meet their requirement.


Process of hotel industry has been totally changed in the recent years. Now industry become more professional and qualifies. They know what customer wants and how to deliver it to achieved 100% customer satisfaction. Industry has standard process to fulfil the customer demand and minimize services failure with in the industry.

Physical Evidence: –

Physical evidence is very important for any industry but it’s quite difficult to understand in the hotel industry. Because of there is no tangible product so industry not able to show what will the offer for the customer .But in the recent time hotel can show their services for the customers what they will offer and what facility they have for the customers .

Evaluate effective marketing strategies for services recovery in hotel industry.

Product Strategies:-The hotel industry has variety of right mix product for every market segment with best feature and services. Now day’s hotel industry has very focused segmentation e.g. lower to upper range product and services according to that. They have target audience and positioning strategies. Industry has flexible product so if a customer wants to add some services in existing facility then they can add on few package in that. Such kind of strategies easily satisfied the customer requirement.

Promotional strategies:- Hotel industry profit more depend on the promotions strategies as compare to earlier time and its very important tool of recovery and generate maximum profit from the market. Internet play wider role in to promote hotel industry through out the world customer can book the room in advance and they have all information about the locations and services which will they get in the hotel .Internet easily transform information to customers. Hotel industry is spending million of dollars to increase the market value with the help of promotional scheme. All hotels provide all the details about their product and services on their company official website and also highlights the best feature about the product.

Process: – Hotel industry is one of the best industries in the world. Service recovery in the process also has been changed a lot. In the recent years industry become more professional and structured. They follow its own process to meet customer demand and satisfied them with services.

Conclusion: –

In this article, we are tried to find service recovery in hotel industry on the basis of marketing mix. Where they are change their strategies to achieve customer satisfaction and come up with the failure which happened earlier in the market. The article use marketing mix approach to identify the market scenario and fault in the market in terms of services and where they made changes to recover from the failure. This model intended to expand the impact of 7Ps on the services recovery from the service provider. Putting the article into the practice its shows service provider made so many changes to recover from loses in the industry in terms of marketing afford and strategies. After analysis of marketing mix model in hotel industry it’s clearly show that industry had too many changes to become more profitable industry. Now it has more flexible service product in the market and trying to become more flexible as per the customer demand. Industry also effectively using technology to achieved their target and objective.

However service industry don’t have physical product which they can show to the customer so they have to more effective and fast service offer for the customer to take positive feedback from the customers. In addition, industry also takes responsibility to build a strong image of the destination so that it attracts other customer to visit there. Hotel services in very important to maintain the positive image of the destination. 7 Ps of marketing is very effective to evaluate the service of the hotel industry. Where promotions activities is more important factor to improve the service level and differentiate between earlier and existing service in the industry. Hotel industry introduces some other new service to improve customer satisfaction. Therefore, in this article we discuss about the changes in service level people role in the system and how well they are involve to improve the service of the hotel industry in order to customer satisfaction and increase the profit margin.



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