Service guarantees in the hotel industry: Their effects on consumer risk and service quality perceptions

This work proposes a theoretical model that examines how service guarantees offered by hotels affect the perceived quality and perceived risk of consumers, as well as the moderating effect of corporate reputation. We tested hypotheses with an experiment using a 2 (corporate reputation: good and poor) × 2 (guarantees coverage: unconditional and specific) × 2 (payout: money-back and non-money-back payout) between-subjects design. A total of 222 questionnaires were completed by hotel consumers in Taipei. The results indicate that the type of service guarantee significantly affects the perceived quality and perceived risk of consumers. Furthermore, corporate reputation has a moderating effect on the relationship between service guarantee type and the perceived quality and perceived risk. Some suggestions concerning service guarantee strategies for hotel services are given.