| Abstract: | This study investigates the determinants of customer retention at Capital Hotel and Spa in Addis
Ababa. It used a quantitative research approach and employing descriptive and explanatory
research designs to capture customer behavior. Data is collected through structured survey
questionnaires distributed to a sample of 384 customers who have utilized accommodation and
spa services at the hotel. Key variables examined include customer trust in hotel services, service
competency, overall customer satisfaction, hotel reputation, and perceived risk associated with
the services provided. The survey includes closed-ended questions designed on a five-point
Likert scale. Descriptive statistics summarize the data, showing trends and central tendencies
among customers’ perception. Multiple linear regression analysis was used to examine the
determinants of customer retention, evaluating the effect of each variable while controlling for
others. The analysis indicates that several predictor variables significantly affect customer
retention at Capital Hotel and Spa. Trust has a significant positive effect on customer retention
(β = 0.246, p < 0.001), suggesting that higher levels of trust correlate with increased customer
loyalty. Competency also shows a significant positive effect on customer retention (β = 0.115, p
< 0.001), indicating that perceived staff competency enhances customer loyalty. Satisfaction
emerges as the most influential factor, with a strong positive effect on customer retention (β =
0.480, p < 0.001), emphasizing that greater customer satisfaction closely links to higher
retention rates. Reputation further contributes positively to retention (β = 0.148, p < 0.001),
highlighting that a favorable reputation encourages customers to return. Conversely, risk
demonstrates a significant negative effect on customer retention (β = -0.171, p < 0.001),
indicating that increased perceived risk associates with decreased customer loyalty. These
findings emphasize the importance of promoting trust, competency, satisfaction, and reputation
while addressing perceived risks to enhance customer retention. Addressing the identified
determinants can improve customer satisfaction and loyalty, ultimately contributing to long-term
success in the hospitality sector. |
