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From Satisfied to Memorable: An Empirical Study of Service and Experience Dimensions on Guest Outcomes in the Hospitality Industry Lori J. Sipe and Mark R. Testa

L. Robert Payne School of Hospitality and Tourism Management, San Diego State University, San Diego, California, USA

ABSTRACT Central to the experience economy paradigm is the notion that services and experiences are distinct economic offerings; yet, little work has been done to investigate the assumption. This study exam- ined experience economy dimensions (entertainment, esthetics, escapism, and education) alongside service quality dimensions (tech- nical and expressive) on three outcome variables (satisfaction, service quality, and memorable experience) in the hospitality and tourism industry context. Findings provide empirical support for the progres- sion of value posited in past research and reveal that experience and service dimensions indeed differ in their impact on guest outcomes. Significant differences across four types of offerings—dining, lodging, events, and attractions—are discussed within the context of extant literature.

经验经济范式的核心是服务和经验是截然不同的经济供给的概念； 然而，很少有人做过调查这一假设。本研究探讨体验经济维度（娱 乐、美学、逃避现实、教育）与服务质量维度（技术和表现）对三 个结果变量（满意度、服务质量、难忘的经历）在酒店及旅游行业 背景。研究结果提供了实证支持的价值，在过去的研究假设的进 展，并透露，经验和服务方面确实不同，他们对客人的结果的影 响。四种类型的餐饮，住宿，活动和景点之间的重大差异在现有文 献的背景下进行了讨论。

KEYWORDS Experience economy; hospitality industry; measures; memorable experiences; service quality

Introduction

Pine and Gilmore (1998) captured the attention of academic researchers and business practitioners by describing a progression of economic value from commodities to pro- ducts to services to experiences. According to the authors, this transition from a service to an experience economy means that as services become more commoditized, perceptions of competitive advantage diminish. Therefore, all actions of the organization must con- tribute to delivering experiential offerings that engage customers in a memorable way. Almost two decades later, experience innovation has been touted as the next frontier to drive customer value (Lippincott, 2014; Zorfas & Leemon, 2016), and industry studies

CONTACT Mark R. Testa [email protected] L. Robert Payne School of Hospitality and Tourism Management, San Diego State University, San Diego, CA, USA.

JOURNAL OF HOSPITALITY MARKETING & MANAGEMENT 2018, VOL. 27, NO. 2, 178–195 https://doi.org/10.1080/19368623.2017.1306820

© 2017 Taylor & Francis Group, LLC

claim that emotional value is the number one factor for improved customer loyalty (Forrester, 2016).

A major implication of Pine and Gilmore’s work is that experiences represent a higher level of customer value than services because they are memorable and rich in sensations. Other scholars have echoed the importance of memories to distinguish services and experience offerings. Poulsson and Kale (2004) described the commercial experience as an engaging act wherein the consumer perceives value in the encounter and the subse- quent memory of that encounter. Kylänen (2006) contended that multi-sensoral, memor- able experiences can lead to personal change. The theoretical distinctions offered by these authors seem to hold true for the hospitality and tourism industry where memories are a point of differentiation (Pizam, 2010).

Indeed Pine and Gilmore’s work has been increasing in its influence to hospitality and tourism researchers, based on the number of scholarly citations, it has received in the past several years. A study of the reach of the seminal article Welcome to the Experience Economy (Pine & Gilmore, 1998), for example, found that more than 50% of its citations are from first- tier management, hospitality, and tourism-related journals (Ferreira & Teixeira, 2013). The same review indicated, however, that empirical studies are underrepresented. The reason for the dearth of practical studies is likely due to the fact that few of the theoretical contributions offer easily operationalized starting points for empirical studies. Indeed, only 10% of the articles citing Pine and Gilmore’s work involved measuring customer experiences in some way. Scholars have articulated the need for measurement tools that capture the dimensions of service beyond those controlled by the firm (deliverable dimensions) to include more affective and subjective (impressionable dimensions) constructs of guest experiences (Beltagui, Darler, & Candi, 2015). This study responds to the need for empirical studies of customer experience. The investigation was guided by the following research questions:

● What are the relationships between service and experience dimensions and three customer outcomes—satisfaction, service quality, and memorable experience—in a hospitality and tourism marketplace?

● Are there significant differences in guest ratings of service and experience dimensions across the dining, lodging, events, and attractions segments of a hospitality and tourism marketplace?

Literature review

Classifying economic offerings

For many years, the predominant divisions of economic offerings have been goods and services. Classifying an offering as either a good or service depended on the characteristics of tangibility, separability, homogeneity, and perishability (Zeithaml, Bitner, & Gremler, 2006). These distinctions were helpful from the point of view of companies that provided the economic offerings. For example, the managerial challenges for product companies included issues like storage and transportation. For service companies, the managerial issues focused more on consistency and standardization. With the growing importance of intangible offerings and experiential consumption, the traditional product/service para- digm has become less relevant. In the marketing literature, for example, the theory of

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service dominant logic was introduced to shift thinking about value from a firm’s perspective to a customer-centric perspective (Vargo & Lusch, 2004). Other scholars identified the need for theoretical frameworks that more accurately reflect today’s market- place but argued that considering everything a “service” would not attend to the hetero- geneity of the marketplace (Achrol & Kotler, 2006).

Pine and Gilmore called for the “untying” of services from experiences and articulated an argument to support their notion that services and experiences were as different as products and services (1998). They suggested that the economy was evolving from the delivery of commodities to the delivery of goods, from goods to services, and was transitioning from services to experiences. Coffee illustrates this well. Coffee beans were originally considered an undifferentiated commodity. Then, companies like Folgers cre- ated grounded coffee products in a can, which consumers could purchase at the grocery store and prepare at home. During the service economy, the delivery of coffee became a service offered by restaurants and coffee carts, and even drive-thru coffee kiosks. Today, Starbucks, with their premium-priced coffee drinks, is most often credited with trans- forming coffee into an experience.

Scholars are divided as to whether or not services and experiences are indeed distinct economic offerings. Some view experience offerings as a subset of the services industry and don’t see the need to differentiate (Gronroos, 2000). Others have expressed the sentiment that services should be split into functional and experience-oriented offerings (Hansen et al., 2013). Distinctions have also been made between product companies that add experiential compo- nents (think luxury car dealerships) with companies like theme parks, who “sell” an experi- ence as the primary economic offering (Sundbo & Sørenson, 2013). In the hospitality and tourism context, differentiating intangible offerings according to their utilitarian and hedo- nistic value has revealed interesting dichotomies about time, predictability, people, and involvement (Poulsson, 2014).

Service vs. experience in hospitality and tourism

This study was designed to integrate theoretical constructs from both service theory and experience economy logic that are most relevant for the hospitality and tourism context. Three distinctions between services and experiences, particularly relevant to this current study, are standardization versus uniqueness, the level of guest participation required, and satisfying needs versus creating memories. The utility of these theoretical comparisons is that they spark new ways of thinking about what customers value and thus may provide insights for managers in the hospitality and tourism industry faced with transitioning from a service to an experience economy.

Services have been defined as intangible activities performed on behalf of another individual whose primary purpose is to fulfill a need (Toffler, 1970). The service sector, originally comprising activities like banking, auto repair, hair cutting, dry cleaning, and fast food, now makes up close to 80% of economic activity in many industrialized nations. Service industries have traditionally focused on utilitarian needs and emphasized standar- dization and reliability (Ziethhaml, Parasuraman, & Berry, 1990). Likewise, many hospi- tality firms emphasized the utility of their offerings. For example, the food services sector touts consistent delivery of its menu items, and service standards have long been a mainstay in the hotel industry. On the other hand, experience firms focus on

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differentiating their uniqueness and are most closely linked to innovation processes for growth (Sundbo, 2009). The distinction between standardization and differentiation is central to the experience economy paradigm (Pine & Gilmore, 1998). This dichotomy is sure to present challenges for hospitality and tourism firms that must balance attention to practical needs of their guests while continuously innovating their experiential offerings.

The second of three distinctions relevant to this study concerns the level of consumer involvement in services compared to experiences. While services typically involve the customer in some way, experience offerings involve deeper levels of engagement on the part of the consumer. Pine and Gilmore (1998) approached experiences from the per- spective of the firm and focused on how they deliver or stage experiences. Other promi- nent researchers argue, however, that organizations can really only provide an opportunity for an experience, because experience is something that happens in people’s minds (Sundbo, 2009). Therefore, by definition, without a user’s participation or engagement, there would be no experience. This individualized, customer-centric approach is often privileged in scholarly discussions of experiential offerings. Increasing the level of guest engagement figures prominently in the hospitality and tourism literature as evidenced by studies that focus on employee/guest interactions (Chandler & Lusch, 2015).

Finally, memories and emotional value, as opposed to consistency and functional value, have been highlighted as key distinctions in theoretical papers about experi- ences as economic offerings (Pine & Gilmore, 1998; Sipe, 2016). Researchers, inte- grating work done in the field of psychology, have identified several dimensions of memorable experiences. Many of these constructs, not surprisingly, have found their way into the discourse of experience economy studies and the hospitality and tourism literature. For example, the theory of optimal experience based on the concept of flow posited by Csikszentmihalyi (1990) describes Immersion as a state in which people are so involved in an activity that nothing else seems to matter. Offering experiential activities (bocce ball courts at the establishment for example) alongside food and beverage is one example of making dining experiences more engaging and immersive. Renewal and escapism is another construct that has been linked with memorable experiences in the hospitality and tourism industry. When people get away from their everyday lives, they are freed up to think about their lives with new perspective, thereby enhancing the memorability of an experience (Leblanc, 2003). In lodging, for example, helping guests escape may involve innovating physi- cal spaces, a redesign of environmental cues that contribute to a sense of being transported to another time and place. Surprises and novelty are considered triggers for memorable experiences. Guests remember experiencing new places, trying some- thing new, unique food and interesting tours, for example (Farber & Hall, 2007). Social interaction is another trigger of memorable experiences. Engaging with others in collective experiences, especially with local people and actual living environments, makes travel experiences more memorable (Tung & Ritchie, 2011). Hedonic or pleasurable experiences allow guests to construct and recall their experiences, since memorable experiences are emotional in nature (Zimmerman & Kelly, 2010). As consumers become more sophisticated, they are seeking meaningful experiences to satisfy their unmet needs, and these experiences last longer in their memory (Tung & Ritchie, 2011).

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Measuring the realms of experience

Many of the aforementioned triggers of memorable experiences are also evidenced or alluded to in much of Pine and Gilmore’s work (1998, 2011). The authors identify four realms of experiences across two axes of customer immersion and customer level of participation. Entertainment experiences such as watching a theatrical play tend to be passive and involve more absorption than immersion. Esthetic experiences such as a visit to an art gallery are immersive, but in both cases, the participants remain fairly passive. Educational and escapist experiences require active participation on the part of the consumer, like descending the Grand Canyon (escapist) or taking a ski lesson (educational). Pine and Gilmore contend that optimal experiences encompass all aspects, forming a “sweet spot” (p. 102).

This research initiative draws from three academic investigations into the dimensions of experience that operationalized the realms of experience espoused by Pine and Gilmore. Oh, Fiore, and Jeoung (2007) originally developed a scale to measure the four realms of experience in the context of bed and breakfast accommodations. Starting with 56 items, their final list comprised 16 items across the four dimensions of entertainment, education, esthetics, and escapism. Their study of bed and breakfasts showed that esthetics accounted for most of the variation related to the dependent variable of satisfaction. The 16 items were adapted in a study of cruiser’s experiences by Hosany and Witham (2009). The purpose of their study was to validate the survey instrument created by Oh et al. (2007) in another tourism setting and to investigate the relationship between cruisers’ experiences, satisfaction, and intention to recommend. As a result of their factor analysis, two items were dropped; so, the final quantity of survey items was 14 (either 3 or 4 per realm of experience). They found the entertainment and esthetics dimensions accounted for most of the variance in their regression model. Mehmetoglu and Engen (2011) also drew from the Oh et al.’s study and assessed the dimensions of experience versus customer satisfaction (CS) at a music festival and a museum. Esthetics and escapism had positive associations with satisfaction at the music festival, while education and esthetics were positively correlated with satisfaction at the museum. To measure the realms of experience for this current study, survey item questions were adapted from the three aforementioned studies in hospitality and tourism contexts. Table 1 lists the survey items for esthetics, entertainment, escapism, and education.

Measuring the dimensions of service

While empirical investigations into the realms of experience posited by Pine and Gilmore are just emerging for the hospitality and tourism industry, studies examining customer ratings of service quality are prevalent in the marketing, tourism, and services literature. SERVQUAL (Zeithaml et al., 1990), originally created for the financial services industry, and since adapted to several other service sectors, is frequently used to assess service quality in hospitality and tourism. Their survey includes items related to tangibles, reliability, responsiveness, assurance, and empathy and includes both customer expecta- tions and perceptions. While used extensively, the measure has been criticized for its length (Gilmore & McMullan, 2009), measurement issues (Brady & Cronin, 2001) and focuses on process (Brown, Churchill, & Peter, 1993).

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These criticisms facilitated a greater focus on perception-based measures such as SERVPERF, which focused on performance only (Cronin & Taylor, 1992). The authors questioned the conceptual basis of SERVQUAL indicating that the measure was confused with satisfaction, and that service expectation be removed from the equation. Looking at banks, fast food, dry cleaning, and pest control, the authors provided empirical support for the perception-based measure where a higher score equals higher service quality (Jain & Gupta, 2004). The measure includes 22 items to assess similar characteristics of service quality, i.e., tangibles, reliability, responsiveness, assurance, and empathy. SERVPERF is viewed by many as the more positive measure and has been used extensively in hospitality research (Hartline & Ferrell, 1996; Jain & Gupta, 2004).

The goal for this study of hospitality and tourism firms was to identify service measures that had both proximity to the experience dimensions and some differ- entiation. Measurement scales were selected that might facilitate the theoretical distinctions between a service and experience offering. By using distinct elements of the service spectrum, the relationship among the variables could be clearly identified and compared. The Gronroos literature (1990, 2000) provided some direc- tion in this regard in his discussion of the technical and expressive dimensions of service. Technical service involves the speed and efficiency of service delivery and tends to be an expected component of the service encounter. Pine and Gilmore would argue that this dimension of service has been commoditized. Lack of technical service can actually be a source of dissatisfaction when not provided as it is expected (Pearce, 2005). These aspects of technical service are similar to the responsiveness and reliability dimensions of SERVPERF; however, these established scales include addi- tional items that may not fit this construct. For example, showing a sincere interest in solving problems in the reliability dimension and willing to help in the responsiveness dimension do not neatly fit the notion of efficient and hassle-free service delivery in hospitality. Consequently, an adapted, context-specific measurement scale for tech- nical service was used in this study.

Table 1. Independent variables: Experience dimensions and service quality dimensions. Variable Survey item

Esthetic 1 It was pleasant just experiencing the atmosphere Esthetic 2 I felt a real sense of harmony with the surroundings Esthetic 3 The setting was very attractive Entertain 1 Watching activities of others was amusing Entertain 2 Activities of others were fun to watch Entertain 3 I was very entertained Escapism 1 I completely escaped from my daily routine Escapism 2 The experience let me escape in some way Escapism 3 I felt immersed in a different reality Educate 1 The experience made me more knowledgeable Educate 2 I learned a lot Educate 3 It was a real learning experience Tech Serv 1 The service was very efficient Tech Serv 2 Problems were handled quickly Tech Serv 3 The speed of service was very good Exp Serv 1 I was very well taken care of by employees Exp Serv 2 Employees went above and beyond to make me feel special Exp Serv 3 Interactions with employees added value to my experience

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Expressive service relates to the friendliness/personality aspect of the encounter and contains more of an emotional element (Coghlan & Pearce, 2010). In the hospitality and tourism context, employee interactions with guests are considered paramount to deliver- ing on brand promises and are strongly correlated with positive word of mouth (Ottenbacher, 2007). Employee interactions are among the most powerful triggers of memorable tourism experiences (Tung & Ritchie, 2011). No single dimension on SERVPERF captured this notion of expressive service but rather was spread across the empathy and assurance dimensions. Hence, a content-specific set of items was adapted for use in this study.

Using SERVPERF, Gronroos (1990, 2000) and Pearce (2005) as a foundation, three items were created to assess technical service quality focused on speed and efficiency. Similarly, using SERVPERF and work done by Alotaibi and his colleagues (2011) on service interaction quality, a three-item scale was created to assess expressive service. Table 1 lists the survey items for technical and expressive service.

Determining outcome variables

Numerous important customer-related outcomes have been linked to the dimensions of service including customer loyalty (Reichheld, 2003), CS (Oliver, 1997), trust (Palmatier, Dant, Grewal, & Evans, 2006), and perceived value (Zeithaml, 1988). Service quality and CS are constructs that garnered much attention in the literature (Taylor & Baker, 1994). CS is defined as an attitude that results from a comparison of expected and perceived performance (Hume & Mort, 2010). Interestingly, the perception of service quality has been defined similarly as the gap between expectations and performance (Ziethaml, 1988). Given their foundations in empirical studies in the service sector, including the hospitality and tourism context (Hosany & Gilbert, 2010), overall satisfaction and service quality ratings were included as dependent variables in this study.

Empirical studies of the experience context do not offer a similar foundation in out- come measures. One might assume that a similar disconfirmation model of expectations versus perceived performance would be applicable. However, given the theorized distinc- tions between services and experiences as economic offerings, novelty and surprise are part of what makes experiences valuable. The unpredictability of trying something unique amplifies experiential value (Poulsson, 2014). The three studies of experience dimensions cited previously in this paper (Hosany & Witham, 2009; Mehmetoglu & Engen, 2011; Oh et al., 2007) each used CS as the outcome variable. The goal of this study was to build upon previous empirical work by including additional outcomes that might facilitate the theoretical distinctions between a service and experience offering.

Several context-specific outcome measures were considered. Intention to recommend and word of mouth, for example, have been used to capture the notion of loyalty (Lee, Moon, Kim, & Yi, 2015). However, experiences are unique and are not easy to replicate (Hosany & Witham, 2010). Repeatability and loyalty may become less relevant. Perceptions of price/ value (Ali, Hussain, & Omar, 2016) and other financial outcomes were also considered. However, experience logic suggests that differentiation requires less focus on economic value. Firms that offer unique and memorable experiences should be able to command a price premium (Sipe, 2016).

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Since a point of differentiation in the hospitality and tourism context is guest memories (Pizam, 2010), an assessment of how memorable a particular experience is seemed reason- able. A recent study of the experience economy approach to festival marketing included a measure of vividness of memory (Aikaterini, Tang, & Chiang, 2014). This scale was considered, but specific items focused on the ability to recall and did not seem to capture the essence of a meaningful and special experience theorized in this literature review. Instead, a single survey question asked guests to rate how memorable their experience was compared to other, similar experiences. Comparison rating scales have been used in service industry studies to capture customer perceptions (Prajogo, 2006). This provided an additional outcome measure aligned with the progression of customer value espoused in the experience economy paradigm. Hence, the three dependent variables measured in this study were satisfaction, service quality, and memorable experience. Figure 1 provides a conceptual overview of the study.

Research methodology

A survey process was employed aligned with the articulated research questions: (1) What are the relationships between service and experience dimensions and three customer outcomes—satisfaction, service quality, and memorable experience—in a hospitality and tourism marketplace? (2) Are there significant differences in guest ratings of service and experience dimensions across the dining, lodging, events, and attractions segments of a hospitality and tourism marketplace?

Characteristics of participating organizations

The hospitality and tourism industry is used to describe a broad field that comprises lodging, food services, leisure, conventions, travel, and attractions (Ottenbacher, Harrington, & Parsa, 2009). Empirical studies of hospitality consumers tend to focus on one segment of the broader industry, like hotels or events. The experience realms studies described earlier in this paper included one in the lodging context, another about cruisers,

Figure 1. Conceptual model: experience and service dimensions on a progression of outcomes.

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and a third that examined guest ratings from two contexts—a music festival and a museum. The current research initiative sought to explore potential distinctions, while building upon those previous studies. Hence, the following considerations were made when determining the sample for this study:

● A broad spectrum of hospitality and tourism-related firms within a single market- place would allow the comparison of experience realms alongside more traditionally measured service dimensions.

● Participating firms would represent the hospitality and tourism marketplace and convey the overall sense of place unique to the destination.

● First-time visits of leisure travelers would best capture the distinction between ordinary fulfilling of needs and experiential offerings that are unique and memorable.

Using the local convention and visitor’s bureau directory and a university database of local hospitality organizations, four types of firms were targeted to participate in the study—dining, lodging, events, and attractions. Dining firms were all part of a local restaurateur’s collection of 17 uniquely branded restaurants that host leisure travelers throughout the destination. Twelve of his restaurants, ranging from casual to fine dining with average guest checks between 15 and 45 dollars, agreed to participate in the study. For the lodging segment, a list of branded and independent full-service properties was targeted for participation. Properties that pri- marily catered to business travelers as well as offerings positioned as limited service or economy were not considered. Nine hotels participated in the study. They would be classified as upper scale resorts and boutique offerings with average daily rates above the destination’s annual ADR (Smith Travel Research, 2015).

Seven events comprised the events segment of the study. Events were chosen because they brought incremental visitors to the destination and were considered “signature” events reflective of the region. These included a music festival, an annual pop culture convention, and other culture, sports, recreation, and wellness events intended to drive economic impact for the region (San Diego Tourism Marketing District, 2015). Attractions made up the last segment of participating organizations. Eight venues, ranging from large theme parks, smaller amusement facilities, recreation venues, and land and sea- based entertainment offerings, were included.

Participating firms were part of a hospitality and tourism marketplace in Southern California. The destination’s hospitality and tourism industry provides $16 billion in economic impact and, consequently, is a very important piece of the economic health of the region. The destination is among the top five leisure destinations in the United States. Visitors appreciate the wonderful weather that allows them to enjoy recreation and beach activities, visit world famous attractions, attend unique events, and experience first-rate culture, dining, and nightlife (SDCVB, 2013).

Data collection

Data were collected during the summer months on days prearranged with each firm. The goal was to obtain data during busy summer months when a large amount of leisure travelers would be likely. Surveys were conducted on site at the participating organization using a convenience sample of guests. Interviewers approached the guest, explained the

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nature of the study, and indicated that participation was voluntary and that responses were confidential. As previously discussed, locals and frequent guest were omitted from the study. Respondents were screened to ensure that they were a leisure travele

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