Customer loyalty in the hotel industry: the interplay of justice perceptions and satisfaction as a mediator: evidence from Nepal

This study examines the influence of distributive, interactional and procedural justice on customer loyalty following service failure in the hotel industry, with customer satisfaction as a mediator. Recognizing service failure as a critical issue impacting satisfaction and loyalty, this study is based on a deductive research approach in which data were collected via structured questionnaires from 481 hotel customers in Far Western Nepal who had experienced a service failure within the preceding 6 months. The study employs a convenience sampling technique within a descriptive and correlational research design. Better and earlier integration of cognitive–affective–behavioral (CAB) model and social exchange theory, the results revealed that interactional justice exerts the strongest effect on customer loyalty, followed by distributive justice, while procedural justice has the least impact. Furthermore, customer satisfaction partially mediates the relationship between all three dimensions of justice and customer loyalty. The findings suggest that hotels in Nepal may prioritize interactional and distributive justice emphasizing empathy, clear communication and discount and rebate in their service recovery strategies to enhance customer satisfaction and retention. This research addresses a gap in the literature concerning service recovery, providing valuable insights for the local hotel industry in the Western part of Nepal. This study adds value in understanding justice theory within service failure contexts in a developing country.