Influencing loyalty to budget hotels through environment elements, experiential marketing and customer satisfaction

The purpose of this study is twofold: first, to examine the relationships between environment, marketing and customer satisfaction on building loyalty for hotel industry; and second, to test out those relationships through SEM analysis for further understanding of budget hotel industry dynamics. With an extensive literature review, we identified the research gap and proposed several hypotheses to study. 230 visitors in 30 budget hotels in East Java, Indonesia were surveyed for data collection. The data analysis confirms significant effects of environment elements on experiential marketing, environment elements on customer satisfaction, experiential marketing on loyalty, customer satisfaction on loyalty, environment elements on loyalty through experiential marketing, and environment elements on loyalty through customer satisfaction at budget hotels in East Java. This empirical study contributes to demand management in budget hotel industry through the influences of environment, experiential marketing and loyalty marketing. The hotel managers may design promotion strategies based on the study findings.