Membership Service quality Customer satisfaction Customer loyalty

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International Journal of Hospitality Management 40 (2014) 81–91

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International Journal of Hospitality Management

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Linking service quality, customer satisfaction and loyalty in casinos,does membership matter?

Yongdong Shia, Catherine Prenticeb,∗, Wei Hec

a School of Business, Macau University of Science and Technology, Avenida Wai Long, Taipa, Macau, Chinab Faculty of Business & Enterprise, Swinburne University, Hawthorn, Victoria 3122, Australiac School of Management and Economics, University of Electronic Science and Technology of China, No. 2006, Xiyuan Avenue, West Hi-Tech Zone, Chengdu,Sichuan, China

a r t i c l e i n f o

Keywords:MembershipService qualityCustomer satisfactionCustomer loyaltyCasino marketing, Macau

a b s t r a c t

The paper compares casino service quality evaluations, customer satisfaction and loyalty between casinomembers and nonmembers, and investigates the relationships among these variables. In particular, thestudy examines a mediation relationship by proposing that customer satisfaction intervenes betweencasino service quality and customer loyalty. The investigation is undertaken at six Macau casinos thatprovide membership to customers. The results show that customers without holding any membershiphave higher evaluations of casino service quality; nevertheless, casino members tend to choose the casinowhich they hold membership with as their first choice. The mediation testing indicates that includingcustomer satisfaction in the model increases the variance in customer loyalty only in the case of casinomembers. Finally, each casino service quality dimension has different effect on gambler satisfaction andloyalty. The research yields insights into customer loyalty research. Strategic implications are providedfor the literature as well as casino practitioners.

© 2014 Elsevier Ltd. All rights reserved.

1. Introduction

Competition among casinos has intensified in the Asia-Pacificregion. One of the most recommended marketing approachesto gaining competitive advantages is building and maintainingrelationship with customers as customer loyalty and retention isrelated to casino profitability (see Kale and Klugsberger, 2007;Prentice and King, 2011). Understanding the importance of cus-tomer loyalty in profitability, casinos make every endeavor toattack gambler patronage. In addition to traditional marketingstrategies such as advertising, personal communications, rewardsand promotions (Gruen et al., 2000; Palmatier et al., 2006; Palmerand Mahoney, 2005; Wulf et al., 2001), delivering quality serviceand enticing customers to join various loyalty programs arepopular approaches to sustaining such relationship (e.g. Baynes,2011; Prentice, 2013a,b).

Service quality and customer satisfaction are commonlyregarded as antecedents of customer loyalty (e.g. Bolton et al.,2000; Bowen and Chen, 2001; Parasuraman et al., 1996). However,

∗ Corresponding author. Tel.: +61 406627622.E-mail addresses: [email protected] (Y. Shi), [email protected]

(C. Prentice), [email protected] (W. He).

in the casino context, gaming consultants or experts claim thatcasino customer satisfaction surveys are waste of time and money.For instance, Baird (2002) indicates that casino guests, unlikecustomers in other industries, are fickle, and their satisfaction ishighly likely to be determined by winning which attracts themto revisit the casino. Consistently, researchers (Bowen and Chen,2001; Chen et al., 2005; Prentice, 2013a,b) argue that gamblersatisfaction has very little influence on their patronage; whereascasino service quality exhibits a direct impact.

A number of studies have examined the factors of gambler sat-isfaction. For instance, Johnson et al. (2012) reported that somecasino atmospherics affect gambler satisfaction. Wong and Fong(2010) found that casino environment and service delivery arerelated to gambler satisfaction. Very little research has been under-taken to examine the influence of gambler satisfaction on loyalty.Nevertheless, in practice, casinos do make every endeavor to satisfycustomers in order to attract their patronage (see Kale, 2005). Giventhe research void, the current study examines the relationshipsamong casino service quality, gambler satisfaction and loyalty.

Providing quality service and satisfying gamblers may be impor-tant to achieve their loyalty, but a large portion of variance ingambler loyalty is left unexplained (see Prentice, 2013a,b). Loyaltyprogram is commonly regarded as an important factor of customerloyalty (see Barsky and Tzolov, 2010). Membership, represented

http://dx.doi.org/10.1016/j.ijhm.2014.03.0130278-4319/© 2014 Elsevier Ltd. All rights reserved.


82 Y. Shi et al. / International Journal of Hospitality Management 40 (2014) 81–91

by various membership cards that are segmented on the basisof consumption and gambling activities, is one of the most com-monly practiced loyalty programs in casinos. To entice gamblersto join membership, casinos offer members various benefits andadvantages on the basis of their membership status. The underlyingmechanism is that membership benefits would attract customersto patronize and consume at the casino.

However, these benefits also prompt customers to becomemembers of multiple entities. Particularly in the case of Macauand Las Vegas, customers often visit and play at several casinosduring each trip. Patronage and retention may not be effective indi-cators of customer loyalty. On the other hand, those who are notinvolved in any membership may patronize and stay loyal to theentity. Consequently, measuring effectiveness of loyalty programcan be challenging (Robert, 2013; Yi and Jeon, 2003). A few stud-ies (Dubé and Shoemaker, 1999; Liu, 2007; Shoemaker and Lewis,1999) have examined the effectiveness of these programs on cus-tomer loyalty. Although significant, the effect is rather small. Theeffectiveness is also contingent upon various drivers and condi-tions (McCall and Voorhees, 2010; Yi and Jeon, 2003). McCall andVoorhees (2010) propose three categories of drivers that may affectloyalty program effectiveness in the hospitality industry. Boltonet al. (2000) and others (e.g. Homburg et al., 2005) suggest that loy-alty program is likely to operate as moderators. The effects of loyaltyprogram are inconclusive. Given popularity of membership pro-grams in the casino industry, especially in the case of Macau sincethese programs were only introduced with debut of internationalcasino operators over the last decade, understanding loyalty pro-gram effects would help marketers determine the more appropriatestrategies in a competitive environment. Previous research on loy-alty program is primarily focused on its effect on members. Thecurrent study approaches the effectiveness of loyalty program froma different perspective by including members and non-membersto analyze their attitudes and behaviors. The following sectionpresents the relevant literature review and forms hypotheses totest the research objectives.

2. Literature review

2.1. Casino loyalty program and membership

Customer loyalty has a positive relationship with casino profit-ability (Kale and Klugsberger, 2007). The factors that affect gamblerloyalty have implications for profitability. Loyalty programs, servicequality (e.g. Parasuraman et al., 1996; Prentice, 2013a,b) and cus-tomer satisfaction (e.g. Bowen and Chen, 2001; Hallowell, 1996)are commonly recognized to be key influences in the formation ofconsumer loyalty in service environment.

Loyalty programs have been widely researched and generallyacknowledged to be an effective approach to gaining customer loy-alty (e.g. Bolton et al., 2000; Uncles et al., 2003). Previous researchon the effects of loyalty program has reached two inconsistentconclusions (Bolton et al., 2000; Dorotic et al., 2012; Dowling andUncles, 1997; Uncles et al., 2003). One stream of research views loy-alty program as encouraging customer loyalty and usage, regardlessof quality service delivery (e.g. Bolton et al., 2000). An alterna-tive view concludes that “Given the popularity of loyalty programs,they are surprisingly ineffective. . .The program is unlikely to sig-nificantly increase the relative proportion of loyal customers orprofitability” (Dowling and Uncles, 1997, p. 81). These researchersargue that some customers would purchase the firm’s productsanyway, regardless of benefits associated with loyalty programs.The view is particularly true in the case of casino gamblers. Researchon gambling motives (e.g. Smith and Preston, 1984; Stewart andZack, 2008) indicate that gambler visits and revisits to a casino aremainly triggered by these motives.

Nevertheless loyalty programs are one of the most commonmarketing approaches to attracting gambler loyalty in casinos (seeBaynes, 2011). Membership cards that can be swiped at all transac-tions (casino games, restaurants, stores, hotel stays) are provided tocustomers who participate in respective loyalty programs offeredby the casino. The transactional data is used to structure offersand rewards. These benefits include accessing to various specialevents, free accommodations and cash back programs (Palmerand Mahoney, 2005). The level of benefits is dependent on thelevel of customer relationship with the casino. Additionally, mem-bership benefits include utilitarian factors (e.g. economic savings,convenience, gifts), hedonic factors (e.g. personalized treatment,exploration of new products, entertainment), and symbolic factors(e.g. recognition by firm, social status) (Dorotic et al., 2012). Despitetheir likely influence on customer loyalty behaviors, these offeringscan incur huge cost on casinos.

Barsky and Tzolov (2010) indicate that loyalty programs areonly effective for selected groups of customers (e.g. Elite Elderssegment), but not effective for the largest segment of casino cus-tomers, labeled Unmoved Members in their study. The authorssuggest that better personal treatment, enhanced promotions andperks should be offered to engage these customers. Crofts’s (2011)thesis provides a thorough review of casino loyalty programs inthe USA and concludes that casino management and employeesshould be involved in loyalty programs and endeavor to engagecustomers with new programs in order to enhance effectivenessof the programs. Research into effectiveness of loyalty programsis inconclusive. These studies are primarily focused on members’attitudes (i.e. satisfaction) and behaviors (repurchase). In somecases, customers who are not involved in any loyalty programspatronize the casino frequently. Their repetitive patronage maybe attributed to their loyalty or simply to their inertia or personalidiosyncrasies (i.e. favoring the casino’s fengshui, better chance ofwinning). In other cases, those who are in possession of some casinomembership are not even aware of these programs, behaving likenon-members. Hence, studying members per se is not sufficientto capture effectiveness of loyalty programs (Barsky and Tzolov,2010). Understanding non-members’ attitudes and behaviors couldhelp casinos gain better insights into loyalty program effects. Inview of The, The study examines the attitudes and behaviors ofboth members and non-members.

As discussed previously, casino members, or loyalty programparticipants, are provided with membership benefits, dependingon their recorded consumption behaviors which are used to clas-sify members into different tiers. Those on the top tiers can accessVIP services which are specially designed to cater for casino highrollers; those at the lower tiers can still access some special servicethat non-members are unable to such as hotel room discounts orfood vouchers (see Prentice, 2013a). The level and range of servicereceived by members and non-members are often vastly differ-ent despite their consumption behaviors. Such experience mayaffect their perception of casino service quality, subsequently theirattitudes (the level of satisfaction) and behaviors (repurchase). Con-sistent with the foregoing discussion, the following hypothesis isoffered:

H1a. Casino members have higher level of service evaluation thannon-members.

H1b. Casino members have higher level of satisfaction toward thecasino than non-members.

H1c. Casino members have higher level of loyalty toward thecasino than non-members.


Y. Shi et al. / International Journal of Hospitality Management 40 (2014) 81–91 83

2.2. Casino service quality, gambler satisfaction and loyalty

Service quality has important influence on customer loyalty (e.g.Cronin and Taylor, 1992; Parasuraman et al., 1985). The servicequality–customer loyalty relationship is also established in thecase of casinos (Prentice, 2013a, 2013b). Researchers generallyagree that service quality precedes customer satisfaction (Croninand Taylor, 1992; Gruen et al., 2000; Spreng and Mackoy, 1996;Taylor and Baker, 1994), and satisfied customers tend to stay loyalto the service provider (Anderson and Sullivan, 1993; Hallowell,1996; Halstead and Page, 1992; Rust and Zahorik, 1993; Taylor andBaker, 1994; Woodside et al., 1989). However, some hold differ-ent views and indicate that customer loyalty, depending on thestudy context, is not necessarily preceded by customer satisfac-tion (e.g. Bitner, 1990; Bowen and Shoemaker, 1998; Heskett et al.,1994; Shoemaker and Lewis, 1999). Service quality is found tohave direct influence on customer loyalty (see Parasuraman et al.,1996; Prentice, 2013a; Prentice et al., 2012). Kale (2005) indicatesthat customer satisfaction is an unstable condition of loyalty, andsatisfied customers may not return. Using an example of a car man-ufacturer, Kale reported that only 30–40 percent of repurchases aregenerated from satisfied customers.

In the casino context, gaming researchers (Kale, 2005; Prentice,2013a,b) and consultant (Baird, 2002) argue that gambler sat-isfaction is not a precondition of customer loyalty, as gamblersatisfaction may be simply attributed to gambling results whichaffect their choice of the casino they prefer to visit. Prentice(2013a,b) found that service quality has direct impact on gamblerloyalty. Gambler satisfaction may not guarantee future patronage.Practitioners and casino consultants admit that satisfied gamblershave great influence on peer gamblers. They tend to spread pos-itive word-of-mouth (WOM) and act as casino advocates. WOMis considered an effective marketing tool for casinos since tradi-tional promotion mix has its constraints in some jurisdictions, forinstance, China. Hence, gambler satisfaction, to a certain degree,adds variance to loyalty. However, the variance may differ betweenmembers and nonmembers, as discussed previously. On The basis,the following hypothesis is offered:

H2a. Casino service quality has a direct effect on customer loyalty.

H2b. Including satisfaction as a mediator enhances servicequality–customer loyalty relationship.

H2c. The relationship between service quality, satisfaction andloyalty differs between casino members and nonmembers.

Although very little research has examined and confirmed therelationship between gambler satisfaction and loyalty, casinos domake every endeavor, i.e. offering premium services, to satisfy cus-tomers with intention to attract their future patronage. Qualityservice offered by casinos does have impact on gambler satisfac-tion. For instance, researchers reported that casino atmospherics(Johnson et al., 2012), service environment and service delivery(Wong and Fong, 2010) exert significant effects on gambler satis-faction. However, other services such as game offerings have verylittle influence on satisfaction (Wong and Fong, 2010). Similarly,Prentice (2013b) examined casino service quality as a multidimen-sional construct and found that each dimension has different effecton gambler loyalty. In particular, casino tangible offerings, despitehow fancy and luxurious they are, have very little impact on cus-tomer loyalty; whereas employee empathy has negative effect onloyalty in the case of Chinese gamblers in Macau. Consistent withthe foregoing discussion, the following hypothesis is made:

H3a. The influence of casino service quality on gambler satisfac-tion differs across various dimensions.

H3b. The influence of casino service quality on gambler loyaltydiffers across various dimensions.

3. Methods

3.1. Sample and procedure

The investigation is undertaken in Macau – the world’s largestgaming destination. Competition among the casinos in Macau hasintensified since international operators embarked in 2002. Byearly 2013 the compact city (less than 30 km2) has had 39 casinos(DICJ, 2013). The operators are compelled to practice relationshipmarketing with a focus on delivering quality service to achievecustomer loyalty, with a view to maximizing casino profitabil-ity.

Five research assistants were recruited to conduct the survey.Prior to the survey, the assistants were trained in regards to ques-tionnaire distribution and sampling. A face-to-face intercept with aself-report survey was conducted at the casinos that offer member-ship to customers, namely, Venetian, Galaxy, S.J.M., Wynn Resorts,MGM Grand paradise, and Melco Grown. Prospective respondentswere selected amongst those who have participated in gamblingand were leaving the survey casinos.

To minimize prospective biases of visiting patterns, the surveywas conducted at different times of day and days of the week –Monday, Wednesday, Friday and Sunday for the first week; Tues-day, Thursday, Saturday for the next week. The afternoon timeperiod was used first and then the morning time period in thefollowing weeks. The data were collected over one month period.Customer participation agreement levels did vary systematicallybut their response did not. Upon completion of the survey, a thank-you gift (a food voucher or an umbrella) was provided to eachparticipant.

The survey was a four-sided booklet written in Chinese andincluded all questions related to the study. The survey was pilotedtested twice (n = 40) for clarity. Six questions were revised afterthe first pilot test and two were revised after the second pilottest.

A total of about 70 percent of customers approached agreed toparticipate in the survey. Participants completed the survey whilebeing seated at a fold-up table outside the gaming area. 90.2 (669)percent of these customers answered all questions in the survey. Ofthe respondents, 59 percent were male; 82 percent were touristsand 10 percent were foreign workers; 62 percent had a bache-lor degree or equivalent; 39 percent were between the ages of35–44 while 25 percent were aged 25–34; 41 percent earn monthlysalaries of between 4000–7999 MOP while 37 percent reportedearnings of 8000–14,999 MOP. Members made up 48 percent ofthe respondents and 61 percent had visited Macau casinos onceor twice over the previous 12 months; 56 percent were MainlandChinese, 21 percent were Chinese from Hong Kong, and 11 percentwere Chinese from Taiwan. Respondents’ demographic informationis present in Table 1.

3.2. Measures

3.2.1. Casino service qualityAlthough measurement of service quality has been debated

extensively in the relevant literature, SERVQUAL is widely acknowl-edged as a valid measure across contexts. The scale is based on agap model suggesting that service quality results from comparingcustomer expectation and perception of the service (Parasuramanet al., 1985, hereafter referred to as PZB). The scale involves fivegeneric dimensions: tangibles, reliability, assurance, responsive-ness and empathy and consists 44 items measuring customer



Table 1Respondents’ demographic information.

Variable % Number

Gender Male 58.7 (393)Female 41.3 (276)

Status in Macau Resident 4.0 (27)Foreign worker 10.0 (67)Tourist 82.1 (549)Others 3.9 (26)

Education Middle or senior school 33.8 (226)Bachelor degree or equivalent 62.5 (418)Master or above 3.7 (25)

Age 18–24 years 11.1 (74)25–34 years 24.7 (165)35–44 years 39.5 (264)45–54 years 13.0 (87)55–64 years 7.3 (49)65 or above 4.5 (30)

Monthly salary <4000 MOP 9.6 (64)4000–7999 MOP 40.8 (273)8000–14,999 MOP 37.5 (251)>15,000 MOP 12.1 (81)

Member Yes 48.4 (324)No 51.6 (345)

Visiting frequency 1–2 times 60.9 (408)3–4 times 27.7 (185)5 times or above 11.4 (76)

Place of residence Hong Kong 21.2 (142)Macau 4.0 (27)Taiwan 11.1 (74)Mainland China 55.9 (374)Others 7.8 (52)

Notes: N = 669, MOP indicates a Macau pataca, equivalent to approximatelyUS$0.129.

expectations and perceptions (PZB, 1985; 1988; 1991a,b; 1994a,b).However, the original scale is rather lengthy. Researchers (e.g.Babakus and Boller, 1992; Carman, 1990; Cronin and Taylor, 1992,1994; Teas, 1993, 1994) suggest that its 22 performance-baseditems are adequate to measure the firm’s service quality. The per-formance items have been used in the casino context (Chen et al.,2005; Prentice, 2013a). Hence, the study adapted these items tomeasure respondents’ perceptions of casino service quality. Thealpha reliability of the scale in the current study is .93.

3.2.2. Customer satisfactionFollowing Oliver’s (1997) conceptual model of customer satis-

faction, a three-item scale developed by Anderson et al. (1997) andby Fornell et al. (1996) was used to measure customer satisfactionin the study. The scale’s alpha reliability was .87.

3.2.3. Customer loyaltyFour items that are indicative of gambler behavioral intentions

were used to measure casino customer loyalty. These items includerepurchase intentions (Baloglu, 2002), intention to recommend(Fornell, 1992), positive word of mouth intentions (Zeithaml et al.,1996), and preference (Gronhold et al., 2000). Cronbach’s alphavalue for the scale was .79.

3.2.4. Casino membershipMembers were identified using a dichotomous item “Are you

a member of the casino you have just visited?” (Member is codedas 1, non-member as 0). An extra question “Did you participate ingambling in the casino?” was asked to ensure that all prospectiverespondents had participated gambling in the survey casino,

Table 2Confirmatory factor analysis results.

Constructs Loading CR AVE ˛

Service quality .89 .62 .871. Tangibility .732. Reliability .843. Responsiveness .704. Assurance .845. Empathy .81

Customer satisfaction .87 .70 .871. Overall satisfaction .902.Confirmation of expectations .813. Performance versus ideal .79

Customer loyalty .84 . 57 .791. Repurchase intention .742. Recommendation intention .823. Positive word of mouth .854. Preference .68

Notes: CR, composite reliability; AVE, average variance extracted; ˛, Cronbach’salpha.

4. Analyses and results

4.1. Measurement validity

The construct validities were tested prior to testing the hypothe-ses by using the two-step approach suggested by Anderson andGerbing (1988). The results indicate that all items have signifi-cant loadings on their corresponding constructs and that compositereliabilities of the study variables were above the recommended.60. The convergent validity was supported. The internal validityof the measures appears to be adequate (Bagozzi and Yi, 1988;Nunnally and Bernstein, 1994). Discriminant validity was tested bycomparing the average variance extracted (AVE) of each constructand shared variance among the study variables (see Farrell, 2010).According to Fornell and Larcker, discriminant validity is supportedif the AVE for each construct is greater than its shared variance withany other construct. The results show that the AVE of each vari-able is larger than the recommended .50. Results of the squaredcorrelations among the study variables also fall into the accept-able range. The discriminant validity was confirmed. Coefficientalpha was calculated for each of the five SERVQUAL dimensions(tangibility, reliability, responsiveness, assurance and empathy)and the respective values were .78, .88, .72, .94 and .95.Particu-larly results generated from fit indices indicate that SERVQUALcan be used as the first-order (�2 = 1.312, df = 2, RMSEA = .01;CFI = .99; TLI = .98) or second-order structure (�2 = 544.91, df = 126,RMSEA = .07; CFI = .95; TLI = .91) (Table 2).

4.2. Hypotheses testing

Descriptive statistics and correlations for the study variablesare presented in Table 3. Independent-Samples T-test was under-taken to test H1a–c. To understand better how members andnon-members perceive casino service and differ in their level satis-faction and loyalty, we compared the means for each dimension ofservice quality and each item that was used to measure customersatisfaction and loyalty. Each service quality dimension is indica-tive of different aspect of casino service. Understanding differenceof these aspects between members and members would help prac-titioners and marketers gain better insights, and develop moreappropriate marketing strategies and provide the right service.Likewise, each item of customer loyalty is indicative of differentfacet of loyalty including revisit/repurchase intention, likeliness ofrecommending the casino, willingness to spread word of mouth,and preference to patronize the casino. Those who intend to revisitthe casino may not necessarily recommend the casino or select the



Table 3Descriptive statistics and correlations.

Mean S.D. 1 2 3 4 5 6 7 8

1. SERVQUAL 5.43 .552. Tangibility 5.99 .58 .75**

3. Reliability 5.09 .65 .84** .49**

4. Responsiveness 5.53 .77 .77** .49** .58**

5. Assurance 5.62 .59 .79** .61** .58** .46**

6. Empathy 5.10 .77 .88** .58** .68** .57** .67**

7. Satisfaction 5.35 .71 .76** .63** .64** .57** .61** .64**

8. Loyalty 4.87 .89 .77** .55** .75*** .58** .59** .64** .77** –

Notes:* p < .05.

** p < .01.*** p < .0005.

Table 4Results for comparing means of service quality, customer satisfaction and loyalty between members and nonmembers.

Constructs Member-ship Mean SD T

Service quality1. Tangibility (TANG) NM 6.13 .49 6.29***

M 5.85 .632. Reliability (RELI) NM 5.03 .57 −2.31*

M 5.15 .733. Responsiveness (RESP) NM 5.47 .71 −2.10

M 5.59 .824. Assurance (ASSU) NM 5.63 .45 .78

M 5.60 .715. Empathy (EMPA) NM 5.10 .62 .06

M 5.10 .90

Customer satisfaction1. Overall satisfaction (OS) NM 5.37 .78 .16

M 5.36 .752. Confirmation of expectations (COE) NM 5.08 .87 −1.65

M 5.19 .823. Performance versus ideal (PVI) NM 5.57 .78 −.24

M 5.58 .75

Customer loyalty1. Repurchase intention (RPI) NM 5.37 .83 −3.44**

M 5.58 .772. Recommendation intention (RCI) NM 4.85 1.00 −4.00***

M 5.16 .973. Word of mouth intention (WOM) NM 5.18 .88 −2.29*

M 5.35 1.044. Preference (PRE) NM 3.31 1.44 −7.50***

M 4.21 1.66

Notes: N = 669.* p < 0.05.

** p < 0.01.*** p < 0.001.

casino as their first choice of visit (preference). Existing customers’referral is considered one of the most effective customer acquisitionstrategies in casinos (see Zeng and Prentice, 2014). There are about40 casinos in Macau. Visitors/gamblers often visit and play in a fewcasinos during each trip. Gaining customer patronage is important.Being the first choice of visit is more meaningful for the casino.Gamblers often switch to other casinos after losing money. In viewof this, we analyzed the difference for the sample casinos in theaggregate as well as separately for each casino. Understanding dif-ference of each loyalty facet between members and non-memberswould help casinos use organizational resources more efficiently.

Results show that there are significant difference in customerpreference to visit the casino between members and nonmem-bers. Members tend to prefer the casino they hold membershipwith. Among five service quality dimensions, the only significantdifference between members and nonmembers is the casinotangibles. Nevertheless, it is non-members who have higher eval-uation toward casino tangible facilities. Surprisingly, there is nodifference in the level of customer satisfaction between members

and non-members. The results are displayed in Table 4.Whencomparing the means of these constructs for each casino; it showsthat findings are consistent across the six casinos (see Table 5).

H2a–c involve testing a direct relationship between casinoservice quality and gambler loyalty, and the mediation betweencasino service quality, gambler satisfaction and loyalty. In the test-ing, overall service quality, gambler satisfaction and loyalty wereused. The mediation testing suggested by Singh et al. (1994) wouldinvolve examining H2a. Consistent with Singh et al.’s approach,two substantive models (the direct effect model and the mediationmodel) need to be estimated and compared through competingmodel analyses. In the first case (the direct effect model), the effectof casino service quality on gambler loyalty was estimated. Thesecond case (the mediation model), represents the hypothesizedmodel and involved estimating the effects of (1) casino service qual-ity on gambler satisfaction, (2) casino service quality on gamblerloyalty (H2a), and (3) gambler satisfaction on loyalty. The media-tion effect of gambler satisfaction is established if the mediationmodel yields (1) higher variances, (2) a significant relationship

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Table 5Results for comparing means of service quality, customer satisfaction and loyalty between members and nonmembers for six casinos.

Variables Membership Venetian (N = 222) Galaxy (N = 144) S.J.M. (N = 201) Wynn (N = 21) Melco (N = 59) MGM (N = 22)

Mean (SD) T Mean (SD) T Mean (SD) T Mean (SD) T Mean (SD) T Mean (SD) T

OS NM 5.37 (.79) .04 5.40 (.80) .04 5.39 (.79) .28 5.25 (.71) −.16 5.35 (.78) .07 5.14 (.69) −.66M 5.36 (.75) 5.39 (.77) 5.35 (.73) 5.31 (.85) 5.33 (.72) 5.40 (.91)

COE NM 5.07 (.88) −1.01 5.08 (.90) −.82 5.09 (.90) −.75 5.00 (.53) −.44 5.13 (.92) −.16 4.86 (.38) −1.00M 5.19 (.82) 5.20 (.85) 5.18 (.82) 5.15 (.90) 5.17 (.77) 5.20 (.86)

PVI NM 5.57 (.79) −.18 5.58 (.74) .04 5.56 (.80) −.19 5.75 (.46) 069 5.48 (.99) −.61 5.71 (.49) .37M 5.58 (.75) 5.58 (.79) 5.58 (.76) 5.54 (.78) 5.61 (.69) 5.60 (.74)

RPI NM 5.37 (.83) −2.02 5.38 (.84) −1.76 5.38 (.84) −1.80 5.38 (.74) −.44 5.35 (.83) −.87 5.29 (.76) −.85M 5.58 (.77) 5.63 (.79) 5.58 (.77) 5.54 (.88) 5.53 (.74) 5.60 (.83)

RCI NM 4.84 (1.01) −2.37 4.85 (1.01) −1.76 4.85 (1.03) −2.01 5.00 (.53) −.64 4.87 (1.14) −1.01 4.86 (.38) −1.17M 5.16 (.97) 5.15 (1.03) 5.14 (.98) 5.23 (.93) 5.14 (.90) 5.27 (.88)

WOM NM 5.18 (.88) −1.31 5.16 (.85) −1.80 5.18 (.88) −1.73 5.13 (.83) .63 5.26 (1.01) −.37 5.14 (.90) .46M 5.35 (1.04) 5.46 (1.04) 5.42 (1.04) 4.85(1.07) 5.36(1.02) 4.93(1.03)

PRE NM 3.29(1.43) −4.46*** 3.26(1.43) −3.47** 3.31(1.48) −3.85*** 3.63(1.30) −1.37 3.52(1.65) −1.40 3.29 (.95) −2.06M 4.21(1.66) 4.22(1.77) 4.19(1.73) 4.38(1.19) 4.14(1.66) 4.33(1.18)

TANG NM 6.13 (.50) 3.62*** 6.12 (.48) 2.13* 6.12 (.50) 2.92** 6.28 (.31) 3.14** 6.11 (.60) 1.78 6.32 (.31) 3.27**

M 5.85 (.64) 5.89 (.74) 5.88 (.65) 5.65 (.60) 5.87 (.43) 5.70 (.58)RELI NM 5.02 (.57) −1.41 5.06 (.55) −1.23 5.03 (.58) −1.34 5.13 (.45) .40 4.94 (.70) −.99 5.03 (.39) −.26

M 5.15 (.73) 5.20 (.75) 5.16 (.73) 5.00 (.81) 5.12 (.68) 5.09 (.79)RESP NM 5.47 (.72) −1.23 5.48 (.65) −2.39* 5.47 (.73) −1.62 5.50 (.48) .92 5.43 (.98) −.13 5.46 (.51) .49

M 5.59 (.82) 5.76 (.74) 5.65 (.80) 5.21 (.95) 5.47 (.86) 5.28 (.90)ASSU NM 5.63 (.46) .44 5.60 (.46) −.73 5.64 (.47) .41 5.63 (.19) .39 5.75 (.47) 1.91 5.61 (.20) .12

M 5.60 (.72) 5.69 (.78) 5.60 (.72) 5.54 (.76) 5.47 (.59) 5.58 (.72)EMPA NM 5.10 (.63) .04 5.13 (.61) −.04 5.11 (.62) .09 4.90 (.62) −.30 5.07 (.67) .02 4.89 (.67) −.44

M 5.10 (.91) 5.13(1.02) 5.10 (.91) 5.02 (.96) 5.07 (.67) 5.05 (.90)

Notes: OS, overall satisfaction; COE, confirmation of expectations; PVI, performance versus an ideal; RPI, repurchase intention; RCI, recommendation intention; WOM, word of mouth intention; PRE, preference; TANG, tangibles;RELI, reliability; RESP, responsiveness; ASSU, assurance; EMPA, empathy.

* p < 0.05.** p < 0.01.

*** p < 0.001.



Service

Quality

Customer

Satisfacti o Customer

Loyalty

.279***

.849 *** .672***

M2

Service

Quality

Customer

Satisfacti on

Customer

Loyalty .887 *** .947***

M1

Fig. 1. (a and b) M1 (direct effect model) versus M2 (mediation model).

between casino service quality on gambler satisfaction, (3) sub-stantially reduced or insignificant effect of casino service quality ongambler loyalty, and (4) a significant effect for gambler satisfactionon loyalty.

As shown in Table 6, the two competing models generated goodfit indices. The path coefficients indicate that service quality has sig-nificant effects on gambler satisfaction ( ̌ = .89, p < .001) and loyalty( ̌ = .28, p < .001), and the latter two are also significantly related( ̌ = .95, p < .001). H2a and the mediation conditions are established.Results from testing the mediation model demonstrated in Fig. 1aand b show that the effect of SERVQUAL on gambler loyalty isreduced after including gambler satisfaction as a mediator. Thevariance in gambler loyalty is enhanced from 8 (direct effect ofservice quality on gambler loyalty) to 57 percent in the media-tion model. These findings indicate that gambler satisfaction hasa partial mediation effect in the relationship of service quality andcustomer loyalty.

To test H2c, multigroup analyses were used. The approach isconsistent with that of Wulf et al. (2001) study. The sample was splitinto two groups (members and non-members) to ensure within-group homogeneity and between-group heterogeneity (see, Stoneand Hollenbeck, 1989). In the free models, all paths were con-strained to be equal across subsamples. Differences in chi-squarevalues determine whether the relationship is different, proved by asignificant decrease in chi-square from the equal model to a modelin which one relationship is set free. Results shown in Table 7indicate that the constrained model is significantly different fromunconstrained model (��2 = 117.33, p = .000). Hence, H2c is sup-ported.

When testing the mediation relationship separately for mem-bers and nonmembers, the findings exhibited in Fig. 2a–d show

that, in the case of nonmembers, the direct effect of service qualityon customer satisfaction .90 (p < .001); whereas the direct effect ofcustomer satisfaction on customer loyalty is not significant. Hence,the mediation relationship is not confirmed. In other words, cus-tomer loyalty is directly determined by service quality. In the caseof members, the direct effect of service quality on customer sat-isfaction is .89 (p < .001), and customer satisfaction on loyalty is.82 (p < .001). The relationship between service quality and cus-tomer loyalty became insignificant after introducing customersatisfaction as the mediator. On The basis, the mediation modelis supported.

Results from testing H3a and b indicate that responsiveness,among SERVQUAL’s dimensions, had no impact on member satis-faction; whereas tangibility, responsiveness and empathy did notcontribute to member loyalty. In the case of non-members, empa-thy had no influence on their satisfaction, and neither empathy norassurance affected their loyalty. These findings appear in Table 8.

5. Discussion and conclusions

The study compares service quality, gambler satisfaction andloyalty between casino members and nonmembers, and tests therelationships among these variables as well as how these relation-ships differ between members and nonmembers. The investigationis undertaken at six large casinos in Macau, which represent local(S.J.M.) and international (Las Vegas and Australia) operators. Theresults from comparing the means of various variables show thatthere are two significant distinctions between members and non-members consistently across six casinos: customer evaluation ofcasino tangible facilities and their preference to the casino. Namely,gamblers without casino membership have higher evaluation ofcasino tangibles; and those holding membership with the casinoindicate they would prefer to visit the casino during their stayin Macau. Post hoc analyses show that the majority of nonmem-bers are the first timers in Macau, whereas most of those whohold casino memberships had visited Macau for more than 3 timesprior to the survey. Higher evaluation of casino facilities by non-members or first-timers is probably attributed to “honeymoon”effect. They were likely astonished when exposed to these megaresorts for the first time. However, the comparison indicates thatmembership does have effect on gambler preference to the casinothey wish to visit. The finding is consistent with that of Zeng andPrentice (2014) that casino members would choose the casino theyhave membership with as their first choice of visit. There is no sig-nificant difference in other service quality dimensions (reliability,responsiveness, assurance and empathy) between members andnonmembers across the six casinos. The four dimensions are indica-tive of service provided by casino employees. Perhaps these casinos,apart from their physical appearances (tangibles), make sure that

Table 6Results for the direct effect and mediation models.

Model and structure �2 df ��2 RMSEA AGFI �2/df

M1: SQ → CS → CL 59.751 35 .031 .968 1.660M2: SQ → CS → CL + SQ → CL 49.794 34 9.957 .025 .972 1.423

Note: SQ, service quality; CS, customer service; CL, customer loyalty.

Table 7Model fit indices for unconstrained and constrained models.

Model NPAR CMIN DF CMIN/DF RMR GFI PGFI RMSEA

Unconstrained model 86 315.64 70 4.51 .05 .92 .41 .07Constrained model 74 432.97 82 5.28 .23 .89 .46 .08Saturated model 156 .00 .00 .00 1.00Independence model 24 1053.67 132 7.98 .46 .73 .62 .10Zero model .00 4002 156 25.65 .53 .00 .00



Table 8Results for relationships of SERVQUAL dimensions with gambler satisfaction and loyalty for members and non-members.

Gambler satisfaction Gambler loyalty

Members Non-members Members Non-members

Tangibility .31*** .16*** .02 .41***

Reliability .27*** .19*** .42*** .66***

Responsiveness −.11 .40*** .01 .17*

Assurance .33*** .42*** .29* .12Empathy .18** −.07 −.03 .02R2 .78*** .62*** .33*** .66***

* p < .05.** p < .01.

*** p < .0005.

employee service is delivered in alignment with customer expec-tation, which may also account for non-significant difference incustomer satisfaction level toward the casino.

Results from testing the relationships among casino servicequality, customer satisfaction and loyalty show that service quality

does have a direct effect on customer loyalty. Including gambler sat-isfaction as a mediator in the model indeed enhances loyalty thougha partial mediation appears. However, when analyzing the relation-ship separately for members and nonmembers, the testing showsthat the mediation relationship only exists in the case of casino

Figure Di rect effect models fo r nonmemb ers and memb ers

Service

Quali ty

Customer

Satisfaction

Customer

Loyalty

.132

.891** * .82 2** *

Unconstrained M2: Members

Service

Quali ty

Customer

Satisfacti on

Customer

Loyalty

.92 2** *

.904*** .06 1

Unconst rained M2: Nonmembers

Service

Quality

Customer

Satisfacti on

Customer

Loyalty .90 4** * .952***

Service

Quali ty

Customer

Satisfacti on

Customer

Loyalty .99 3** * .965** *

M1: Nonmembe rs

M1: Membe rs

Fig. 2. (a–d) Mediation models for nonmembers and members.



members. Nonmember satisfaction does not mediate the relation-ship between service quality and loyalty. These findings indicatethat member loyalty is directly influenced by their attitudes (sat-isfaction), and casino service has indirect effect on their loyalty;whereas nonmember loyalty can be achieved by focusing on serviceofferings which directly impact on their future patronage.

When analyzing the influence of each casino service quality oncustomer satisfaction and loyalty, findings show that service qual-ity does explain significant variance in customer satisfaction andloyalty, each dimension has different effect on outcome variables.Four SERVQUAL dimensions (tangibility, reliability, responsivenessand assurance) affect satisfaction significantly; however, empathyhas negative influence, albeit insignificant. Although gamblers pre-fer to receive individual and personal attention from the casino(empathy) which makes them feel special, such attention mayalso be perceived as being “spied”. Instead of attracting their loy-alty, customers tend to avoid or leave the casino that pays specialattention to them. The finding is consistent with that of Prentice’s(2013b) study which was also conducted in Macau casinos. Bothstudies indicate that empathy has a negative effect on gamblerloyalty – Chinese gamblers prefer not to be spied.

When analyzing the relationship separately for casino membersand non-members, tangibility, reliability, assurance and empathyappear to have significant influence on member satisfaction,only reliability and assurance have significant effects on memberloyalty. The findings indicate that some casino services, tangibles(tangibility) and individualized or special attention paid to mem-bers (empathy) that are provided to casino members may makethem happy, but not necessarily attract their future patronageor prompt them to be referrals. Tangibility is indicative of casinofacilities. Members tend to take it for granted that casinos shouldhave up-to-date and appealing facilities and equipment, whichare a bona fide fact in Macau casinos. Gamblers are surely happyto expose to Asia’s Las Vegas. However, most casinos in Macauhave upscale facilities. These are not sufficient to determinecustomer loyalty. The finding is consistent with that of Prentice’s(2013a) qualitative study. The significant influence of reliabilityand assurance on member loyalty is plausible. As gambling ofteninvolves financial transactions (gambling fund check-in, rollingcommission, winning collection etc.), and money transference(transferring gambling funds between parties and countries)for gamblers, particularly for casino members, employee trust-worthiness (reliability) and accuracy (assurance) are importantfor gamblers who are engaged with these transactions. Hence,reliability and assurance significantly influence their loyalty.

In the case of non-members, empathy is the only dimensionthat neither contributes to their satisfaction not to their loyalty.The probably attributes to the fact that non-members receive verylittle attention from the casino; or that gamblers choose not tobe involved with any casino as a member because they have nointention to receive special attention (empathy) from the casino.Engagement in casino membership is not indicative of gamblerpatronage to the casino. Post hoc analysis shows that a compar-atively large percentage of non-members (35 percent) reportedhaving visited the casino for more than 3 times. Tangibility, reli-ability, responsiveness consistently exert significant influence onnon-members’ satisfaction and loyalty. The finding indicates that,to attract non-member patronage and loyalty, the casino shouldfocus on the services that are more likely to satisfy these customers.

6. Implications

The current study has implications for researchers as well as forpractitioners. The study sheds light on clarifying the relationshipsamong service quality, customer satisfaction and loyalty, and offersnew insights into the link by testing the relationship separately for

casino members and nonmembers. The finding that no significantdifference in most loyalty intention indicators (referral, wordof mouth communication, and repurchase intention) is foundbetween members and nonmembers in this study provides anew perspective of loyalty program effectiveness. Although theseprograms are designed to enhance customer loyalty, researchersand practitioners should be cautious when interpreting theireffects since customers who are not associated with any loyaltyprograms have similar level of loyalty to the business/casino. Thefinding presents a challenge to the firm about how nonmembers’loyalty should be rewarded and how membership benefits shouldbe optimized.

Nevertheless, members do tend to patronize the casino they areassociated with more frequently, and choose the casino as theirfirst visit. These behavioral loyalty indicators are often related tocasino short-term profitability. Hence, encouraging customers tojoin loyalty program would benefit the firm in a short run. Theview suggests that the firms should differentiate service offer-ing to members from non-members. For those who are reluctantto be involved with the casino as a member, marketers shouldseek to understand the rationale for their disinterest. As The studyshows that empathy is the only factor that has negative and non-significant effect on non-member satisfaction and loyalty, it isimportant for researchers and practitioners to understand whetherThe is attributed to insufficient attention paid to non-members orto their deliberate intention to avoid such attention.

The result that the link of service quality, customer satisfactionand loyalty is only established in the case of members cautionsresearchers not to generalize the chain relationship without takingthe sample or context into consideration. For instance, the chaineffect is established in the heath setting (Woodside et al., 1989), butconditional in the casino context. The finding yields implicationsfor both researchers and practitioners. Consistent with the theoryof planned behavior proposed and tested by Ajzen (1985, 1991),researchers (e.g. Ajzen, 2002; Sheppard et al., 1988) have reporteda high correlation of attitudes (i.e. satisfaction) and subjectionnorms to behavioral intention and subsequently to behavior (i.e.loyalty), leading researchers to assume the attitude – behaviorrelationship. Indeed, a plethora of studies in service research(i.e. Hallowell, 1996; Rust and Zahorik, 1993) have examined therelationship between customer satisfaction (post-decision atti-tude) and customer loyalty (behavior). The current study cautionsresearchers not to generalize findings without looking into thestudy sample. Practitioners should also examine customer profilesin order to develop more appropriate strategies for achievingcustomer loyalty.

The findings that service quality dimensions have differenteffects on gambler satisfaction and loyalty suggest that casinosshould focus on the aspects that exert significant influence ontheir attitudes (satisfaction) and behaviors (loyalty), though it isimportant to maintain overall quality service. In particular, prac-titioners should be aware that these relationships differ betweencasino members and non-members: the service that affects mem-ber attitude and behavior differ from that does non-members.Understanding and applying these findings would facilitate casinoseffectively utilizing organizational resources.

7. Limitations and future research

Although important, this study presents limitations. Using theSERVQUAL scale alone may not be sufficient to assess gambler per-ception of casino service quality. A context-specific scale that isdeveloped to specifically measure casino service quality should beused in conjunction with SERVQUAL. Although Wong and Fong(2012) developed such a scale in the casino context, the scale’svalidity is yet to be verified. Future research should make an



endeavor in this regard in order to capture a more accurate assess-ment of casino service quality.

Casino membership has various types and tiers. Including thesein the analyses would help casinos to gain a better understandingand insights into the effectiveness of the programs. Comparing theireffects in loyalty may also be worth exploring. The survey was pri-marily conducted in the day time. Expanding the investigation intoevening customers may gain better insights into customer loyalty.

The currently study was only undertaken in Macau and limitedto three major markets, namely: Mainland China, Hong Kong, andTaiwan. Though Macau is the world’s largest gaming destinationand Chinese players are the largest market, the finding may not begeneralized beyond this population. Nevertheless, the study pro-vides insights into the relationships among casino service quality,membership and gambler loyalty. These insights offer a valuablereference for gaming researchers and practitioners. Future researchmay replicate the current investigation in other gaming destina-tions.

Appendix 1. Items for the study variables

Casino service quality(Tangibility)

1. The casino has modern-looking equipment.2. The casino’s physical facilities are visually appealing.3. Casino employees are well dressed and appear neat.4. Materials associated with the service (such as pamphlets or

statements) are visually appealing at this casino.

(Reliability)

5. When the casino promises to do something by a certain time, itdoes so.

6. When I have a problem, the casino shows a sincere interest insolving it.

7. The casino performs the service right at the first time.8. The casino provides its services in time.9. The casino keeps its records accurately.

(Responsiveness)

10. Casino employees tell me exactly when services will be per-formed.

11. Casino employees give me prompt service.12. Casino employees are always willing to help me.13. Casino employees are never too busy to respond to requests.

(Assurance)

14. The behavior of casino employees instills confidence in me.15. I feel safe in my transactions with the casino.16. Casino employees are polite.17. Casino employees have the knowledge to answer my questions.

(Empathy)

18. The casino gives me individual attention.19. The casino has operating hours convenient to customers.20. Casino employees give me personal attention.21. The casino has my best interests at heart.22. Casino employees understand my specific needs.

Customer satisfaction

1. Overall, I feel satisfied with the casino.2. The casino’s performance exceeds my expectations.3. The casino’s performance exceeds my hypothetical ideal for

casino service.

Customer loyalty

1. I intend to continue to patronize the casino in the next few years.2. I would recommend it to those who seek my advice about the

casino.3. I would say positive things about the casino to other people.4. I would prefer to patronize the casino even if another casino

promoted the same or better deal.

Funding

This project is funded by Macao Foundation (0110, 0247) andby the Fundamental Research Funds for the Central Universities(ZYGX2011J116).

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