The Impact of Service Guarantees on Consumer Responses in the Hotel Industry

Using equity and perceived justice theories, an experiment was designed to investigate consumer responses (customer satisfaction and word-of-mouth behavior) that may result after a service guarantee is invoked in a hotel setting. The impact of three factors concerning the effectiveness of a service guarantee response made by a hotel employee included: (1) the level of compensation collected by the consumer; (2) the promptness of the response on the part of the service employee; (3) the lack of a complaint as a prerequisite to invoking the guarantee. Lessons for designing an effective guarantee for the hotel industry are discussed.