Could the Failure be Turned Into an Opportunity? A Thesis About Addressing Service Recovery in a Strategic and Brand-oriented Way for Reaching Higher Competitive Advantage in Hotels

Iryna Illichova & Kristina Britt Magnusson

Student thesis: Master thesis


Today, hotels need to find ways to be different on the market where they operate. They compete for loyalty from guests’ side and strive to differentiate their brands. At the same time, guests can easily switch between service providers, once they are not happy with the quality of received service. The competitive environment puts pressure on hotel management to know their guests’ preferences and to deliver the best service possible according to the taste of their guests. When it comes to service failures, research has pinpointed the importance of recovering for them in order to keep the guests loyal, which contributes to brand value. On the other hand, brand evokes expectations from customers’ side, which then raises a question of how service recovery and brand can be connected in theoretical and practical ways. Current research lacks explanations of how to make service recovery more sophisticated and equivalent to the brand promise. The aim of this thesis is therefore to reach higher level of understanding of service recovery processes and to provide the tools for possible improvements for existing practices with regards to service recovery in the hotel industry. Three theoretical fields of service recovery, customer loyalty and branding are molded in one theoretical framework to make a more profound overview of service recovery. Such framework combined with two layers of empirical data from a multiple case study and a survey with potential hotel guests. Altogether, this data allowed us to provide an understanding of why service recovery matters from the viewpoint of branding and how to approach it strategically. This was done through uncovering insights from social actors who are involved in the service recovery process. The results of this thesis showed that currently service recovery is addressed through listening to customers’ evaluations, dealing with complaints and involving front-line employees. Nonetheless, the results also imply room for improvement with regards to active implementation of instant service recovery inside the hotels and investment of more resources for front-line employees. Following this, it has been possible to outline theoretical contributions and managerial implications, such as meetings where managers and front-line employees discuss documented guest feedback. In conclusion, this study is valuable for theory, since it allowed to make contributions in the form of service recovery implementation. Thus, this thesis proposes a valuable tool for hotels for making service recovery a competitive advantage for their brands. Keywords: service failures, service recovery, customer loyalty, brand value

EducationsMSocSc in Service Management, (Graduate Programme) Final Thesis
Publication date2016
Number of pages303