In recent years, with the fast developing of social economy, and due to the comfort of the facilities, the standardization of services, a boom in the development of Budget Hotels has been observed. This research is about the role of service quality in customer satisfaction of the budget hotels. This research considers the budget hotels of two countries i.e. U.K. and China. There are five objectives of this research. It conducts the literature review on theories of customer satisfaction and service quality and to examine the role of service quality in customer satisfaction. It conducts a survey in the budget hotels of China and U.K. regarding service quality and customer satisfaction. It examines the impact service quality of budget of hotels on customer satisfaction in China and U.K. Moreover, it also compares and contrasts the role of service quality of budget hotels on customer satisfaction in U.K. and China. The research is based on quantitative research methods where survey strategy is adopted for fulfilling the aim and objectives of this research. This research uses the questionnaire as the data collection tool. The adapted questionnaire is used for this research. The sample of 176 international tourists visiting China’s budget hotels and 158 international tourists visiting U.K.’s budget hotels is obtained. The descriptive analysis is conducted on the collected data. It is found that service quality level of China’s budget hotels is better but international customers of U.K.’s budget hotels are more satisfied. At the end, the research limitations and future research directions are provided.

Key words:  Service quality; budget hotels; customer satisfaction

1. Chapter One: Introduction

1.1. Introduction

Research is based on the existing theoretical basis and the background of the subject for setting the context of the research. This introductory chapter describes the background, aim and objectives and structure of the study, and rationale research are introduced in detail. 

1.2. Background of Dissertation

The travel and hospitality industry of U.K. and China is growing robustly during the past few years and the number of tourists in these two countries are increasing with the every passing year (Oxford Economics, 2015; Wen, 2015). This large number of tourists has generated many opportunities for the tourism and hotel industry of both countries. As time is passing and the global economy is growing, the standards for living quality has improved. Now days, customers have the higher demand for living quality and they look for the such consumption activities which allows them to relax and obtain new knowledge during the time of leisure (AT Kearney, 2015). Likewise, the transport developments occurring in the recent years has opened the door for more efficient and convenient opportunities for both global and domestic tourism (Michopoulou, and Moisa, 2016). 

Further to this, in recent years, the number of budget hotel and branding of these hotels continues to increase (Lee, Morris and Jones , 2009). The budget hotels has their roots in 1920s and they were first introduced in the United States (Shen, 2006). Though, the budget hotels has increased worldwide and there are numerous terms which are used interchangeably with the terminology of ‘economy’, ‘budget’ and ‘limited service’. Still, there is no widely accepted or standardised definition of the budget hotels and numerous researchers has defined it in a different manner. The most agreed upon definition of budget hotel is that it is the lowest category of hotel where rooms and food facilities are available at the lowest prices (Rahimi and Kozak, 2016). 

According to Medlik (2012), the increased popularity of budget hotels is due to the fast development of tourism industry along with the permanent and continuous change which is occurring the market demand. Moreover, the small and medium sized businesses are also flourishing in both Chinese and U.K. economy (Hussain, Millman and Matlay, 2016). Both countries are currently having the huge potential for residents travel. These trends are helping both economies to grow in a rapid manner and achieve the sustained growth. Now, consumer has more leisure time along with the disposable income. This also gives rise to increase in tourism activities. No matter from where the customer belongs, the only demand he/she possesses is to have low price and superior quality of services (Holstila et al., 2016). They do expect to have clean and cheap service and this often determines their satisfaction. The focus of present research is on this aspect, where it tries to explore that how service quality of budget hotels is determining the satisfaction of