The impact of HRM practices on service quality, customer satisfaction and performance in the Indian hotel industry

The paper investigates the effects of HRM practices on service quality, customer satisfaction and performance in the hotel industry. A conceptual model is developed and four research hypotheses are empirically examined using structural equation modelling. The data were collected via a survey of Indian based hotels. 52 hotels in India responded to questionnaires pooling 52 HR managers 260 employees (5 from each hotel) and 260 customers (5 from each hotel). The results indicate that HRM practices have a positive influence on the improvement of service quality as well as on customer satisfaction and hotel performance. The study further testified the relationship among them, and provides useful information for future hotel management needs. The findings indicate that creation of customer satisfaction\value in the hotel can be achieved via increasing responsiveness to customers' needs and that the creation of customer value which have a positive impact in the firm's profitability. The results suggest that HRM practices improve hotel service effectiveness and in consequence firm performance replicates and extends in a HRM context research. The study also suggests that management should emphasis on the development of intra-departmental learning and relational capabilities. The findings of this study are important for the hotel industry as the sector is faced with increasing competitive pressures in a highly fragmented, high growth market, and challenges that threaten its viability as evidenced by recent consolidations, merger & acquisition, franchising and foreign collaboration, etc. Further, in terms of theoretical contributions, this research suggests that HRM improvements are as much an outcome of technical and operational measures as they are of managerial, organizational and inter-organizational capabilities. Finally, the study paves the way for further research that would integrate HRM practices and operational factors in the context of analysing improvements in service quality, retaining customers and hotel performance.