the impact of customer loyalty programs towards

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THE IMPACT OF CUSTOMER LOYALTY PROGRAMS TOWARDS CUSTOMER RETENTION - A CASE STUDY OF FRONT OFFICE

DEPARTMENT IN INTERCONTINENTAL BALI RESORT

By Atiqi Fitriani

11403001

BACHELOR’S DEGREE in

BUSINESS ADMINISTRATION – HOTEL AND TOURISM MANAGEMENT CONCENTRATION

FACULTY OF BUSINESS AND COMMUNICATION

SWISS GERMAN UNIVERSITY The Prominence Tower

Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 - Indonesia

July 2018

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By Atiqi Fitriani

11403001

BACHELOR’S DEGREE in

BUSINESS ADMINISTRATION – HOTEL AND TOURISM MANAGEMENT CONCENTRATION

FACULTY OF BUSINESS AND COMMUNICATION

SWISS GERMAN UNIVERSITY The Prominence Tower

Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 - Indonesia

Revision after Thesis Defense on 17^th July 2018

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THE IMPACT OF CUSTOMER LOYALTY PROGRAMS TOWARDS CUSTOMER RETENTION - A CASE STUDY OF FRONT OFFICE DEPARTMENT IN INTERCONTINENTAL BALI RESORT

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Atiqi Fitriani STATEMENT BY THE AUTHOR

I hereby declare that this submission is my own work and to the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

Atiqi Fitriani

____________________________________________

Student Date

Approved by:

Dr. Nila K. Hidayat, S.E. M.M

____________________________________________

Thesis Advisor Date

Dr. Nila K. Hidayat, S.E. M.M

____________________________________________

Dean Date

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Atiqi Fitriani ABSTRACT

THE IMPACT OF CUSTOMER LOYALTY PROGRAMS TOWARDS CUSTOMER RETENTION - A CASE STUDY OF FRONT OFFICE

DEPARTMENT IN INTERCONTINENTAL BALI RESORT

By Atiqi Fitriani

Dr. Nila K. Hidayat, S.E. M.M, Advisor

SWISS GERMAN UNIVERSITY

This research aim to evaluates the current loyalty program in a 5 star Hotel in Bali and identifies the impact of customer loyalty program to customer retention. Loyalty program seen as an important tool in various industries, especially in hotel in facing the tight competition, to attract customers and build long-term relationship with customers. Therefore, an effective loyalty program is important to be applied. Sample sizes of 170 hotel’s members were randomly taken to fill questionnaires through interview with guest relation officer in the hotel. Simple regression analysis used to analyze the impact of customer loyalty programs to customer retention. This research found loyalty program has significant impact to customer retention. Furthermore, this research strengthen the psychological value has a greater impact than financial value to customer retention. Focusing on a specific loyalty program in a five star international chain hotel in Bali, make the result of this research provides understanding for under researched area of customer loyalty program and customer retention in hotel industry. Moreover it also contributes advice for hotel management regarding their loyalty program development.

Keywords: hotel, customer loyalty programs, customer retention

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Atiqi Fitriani

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Atiqi Fitriani DEDICATION

I dedicate this thesis for my beloved family and the future of my country, Indonesia.

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Atiqi Fitriani ACKNOWLEDGEMENTS

Firstly, my deepest gratitude is for Allah SWT, for the blessing and guidance to me to let me finish this thesis on time, I would also thank to peoples surround me who always support me.

1. To my beloved parents who always support me in the first place during the difficult times in writing thesis. My mom, Riska Triani who always giving ideas and advices and shared her experiences in dealing with research. My dad, Donny Valiandra who always reminds me that everything will be great in the end and my sister, Vani Fadhila who always brighter my moods with all the things she does.

2. My Advisor, Mrs. Nila K. Hidayat, S.E. M.M, thank you for all guidance, knowledge, shared experiences and patience to answer all my questions in accomplishing my thesis work. For HTM lecturers, Mrs. Munawaroh, Sir Are and Mrs. Karin, thank you for all the shared knowledge and experiences during these all four years. For my English lecturer, Jane Sweed, thank you for correcting my grammar and English phrases in my thesis.

3. To Shirleen, Isabella and Michelle, thank you for making this last semester doesn’t feel so heavy because we all get through all the hard times with laughers together. To Chatarina Putri who saved me from the stresses with SPSS, thank you for the knowledge. To all HTM B class, thank you for the past 4 years of togetherness, my university life won’t be full of memories without every single one of you. To Evelyn putri, thank you for always cheers me up and giving advices. To Chuiers, Chandra, Lia and Fatin, thank you for the moments shared since high schools, thank you for being my personal SPSS tutors and the endless support to finish my thesis.

4. To InterContinental Bali Resort, thank you Pak Wawan and Bu Mieke to let me study the hotel further. To Pak Joni and Bu Manik and Bli Dodik thank you for your precious times in assisting me get the information. To Bu Ratna, Bu Diana, Yulia, Yuri, Mbo Melly and all the GRA’s and Front Office team thank you for put me in the first place in collecting the questionnaires.

5. Last but not least, to every people who help and support me in unexpected ways directly or indirectly, without your participation I won’t be in this position, so thank you so much.

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Atiqi Fitriani TABLE OF CONTENTS

Page

STATEMENT BY THE AUTHOR ... 3

ABSTRACT ... 4

DEDICATION ... 6

ACKNOWLEDGEMENTS ... 7

TABLE OF CONTENTS ... 8

LIST OF FIGURES ... 10

LIST OF TABLES ... 11

CHAPTER 1 – INTRODUCTION ... 12

1. 1. Background ... 12

1. 2. Research Problems ... 15

1. 3. Research Questions ... 16

1. 4. Research Objectives ... 16

1. 5. Scope and Limitation ... 16

1. 6. Significance of Study ... 17

CHAPTER 2 - LITERATURE REVIEW ... 18

2. 1. Framework of Thinking ... 18

2. 2. The Growth of Tourism Industry in Bali ... 19

2. 3. Customer Satisfaction ... 21

2. 4. Customer Loyalty ... 22

2. 5. Customer Loyalty Program ... 23

2. 6. Customer Retention ... 27

2. 7. Previous Study ... 28

2. 8. Study Differences/Similarities ... 36

2. 9. Hypothesis ... 36

CHAPTER 3 – RESEARCH METHODS ... 37

3. 1. Type of Study ... 37

3. 2. Unit of Analysis / Unit Observation ... 37

3. 3. Sampling Design ... 37

3. 4. Location & Time Frame of Study ... 39

3. 5. Data Sources & Collection ... 40

3. 6. Research Model ... 42

3. 7. Variable Operationalization ... 42

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Atiqi Fitriani

3. 8. Data Processing Procedures ... 44

3. 9. Data Analysis Technique ... 48

CHAPTER 4 – RESULTS AND DISCUSSIONS ... 51

4.1. Brief Company Background ... 51

4.2. Respondent Profile ... 52

4.3. Descriptive Analysis ... 53

4.4. Inferential Analysis ... 59

4.5. Hypothesis Testing Result & Analysis ... 61

CHAPTER 5 – CONCLUSION AND RECOMMENDATIONS ... 65

5.1. Conclusion ... 65

5.2. Managerial Implications ... 65

5.3. Recommendation for Further Study ... 67

GLOSSARY ... 69

REFERENCES ... 70

APPENDICES ... 75

Appendix 1. Validity Test ... 75

Appendix 2. Reliability Test ... 84

Appendix 3. Regression Analysis ... 84

Appendix 4. Normality Test ... 85

Appendix 5. Heteroscedacity Test ... 85

Appendix 6. Cross tabulation Test ... 86

Appendix 7. Questionnaire Design ... 88

Appendix 8. Interview Transcript ... 91

Appendix 9. Interview Photos ... 94

Appendix 10. Curriculum Vitae ... 95