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CUSTOMERS’ PERCEIVED RISKS AND ONLINE BOOKINGS OF HOTELS IN UMUAHIA METROPOLIS, ABIA STATE

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Product Code: 00009636

No of Pages: 88

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ABSTRACT

 

This research work evaluated customer’s perceived risk and online bookings of hotels in Umuahia metropolis. It was a descriptive survey research in which 4 specific objectives, 4 research questions and 4 research hypotheses guided the study. The researchers purposively use 18 hotels in Umuahia metropolis as its case study and 384 as its sample size. The research instrument used for data collection was a questionnaire on a 5 point rating scale, which was subjected to a reliability test that produce a reliability coefficient of 0.853, descriptive and inferential statistics on SPSS version 20.0 was used to analyze the data generated. Findings revealed that there is no significant relationship between financial risk and online booing of hotels in Umuahia metropolis and there is a significant relationship between financial risk and online booking of hotels in Umuahia metropolis. Secondly, there is no significant relationship between security risk and online booking of hotels in Umuahia metropolis and there is a significant relationship between security risk and online booking of hotels in Umuahia metropolis. Thirdly, there is no significant relationship between social risk and online booking of hotels in Umuahia metropolis and there is a relationship between social risk and online booking of hotels in Umuahia metropolis. Following the positive and insignificant relationship between online booking as a dimension of customer’s perceived risk, the study recommended that in booking of hotels online, customers should look out for secured and registered sites to avoid loss of money and other financial details and hotel owners introducing online platforms should also make sure that their sites are secured from intruders in other to protect their customers.






TABLE OF CONTENTS

Title page                                                                                                                                i

Certification                                                                                                                            ii

Approval page                                                                                                                        iii

Dedication                                                                                                                               iv

Acknowledgments                                                                                                                  v

Table of contents                                                                                                                    vi

List of figures                                                                                                                         ix

List of Tables                                                                                                                          x

Abstract                                                                                                                                  xi

CHAPTER ONE: INTRODUCTION                    

1.1    Background of the Study                                                                                      1

1.2.   Statement of the Problem                                                                                     3

1.3    Objective of the Study                                                                                          5

1.4    Research Questions                                                                                              5

1.5    Research Hypotheses                                                                                            5

1.6    The Significance of the Study                                                                              6

1.7    Scope of the Study                                                                                                7

 

CHAPTER TWO

2.0       Introduction                                                                                                                8

2.1       Conceptual Framework                                                                                              8

2.1.1    Concept of Online Booking                                                                                        8

2.1.2    Benefits of an Online Booking System                                                                      10

2.1.3    Challenges of Online Booking                                                                                   13

2.1.4    Risk                                                                                                                             15

2.1.5    The concept of perceived risk                                                                                    16

2.1.6     Dimensions of perceived risk                                                                                    19

2.1.7    Types of perceived risk                                                                                               19                                                                                            

2.1.8    Factors that Influence Consumer Risk Perception                                                     21

2.2       Theoretical Review                                                                                                     24

2.2.1    Theory of Perceived Risk                                                                                           24

2.2.2    Technology Acceptance Model Technology Acceptance Model                                     26

2.3       Review of Empirical Studies                                                                                      31

2.4       Summary of Literature Review                                                                                  37

 

CHAPTER THREE     

3.1 Introduction                                                                                                            39

3.2 Research Design                                                                                                     39

3.3 Sources of Data                                                                                                                 39

3.4 Area of the Study                                                                                                    39

3.5 The Population of the Study                                                                                   40

3.6 Sample Size Determination                                                                                              40

3.7 Data Collection Instrument                                                                                               41

3.8   Validity of the Research Instrument                                                                        41

3.9   Reliability of the Instrument                                                                                    41

3.10 Method of Data Analysis                                                                                                42

 

CHAPTER FOUR: RESULTS AND DISCUSSION

4.1 Introduction                                                                                                                      43

4.2 Presentation and Interpretation of Data                                                                            43

4.2.1 Analysis of Study’s Survey Response Rate                                                                  43

4.2.2 Bio Data of the Respondents                                                                                         44

4.2.3 Analysis of Quantitative Data Relating to Financial Risks                                           45

4.3 Testing of Hypotheses                                                                                                       48

4.4 Discussions of Findings and implications                                                                        54

 

CHAPTER FIVE: SUMMARY CONCLUSION AND RECOMMENDATIONS

5.1 Introduction                                                                                                                      55

5.2 Summary of Findings                                                                                                       55

5.3 Conclusion                                                                                                                        55

5.4 Recommendation                                                                                                              56

5.5 Contribution to Knowledge                                                                                              56

5.6 Suggestions for Further Studies                                                                                       57

 

 

REFERENCES

 


 

LIST OF FIGURES

 

Fig 2.1.            A conceptual framework for perceived risk                                                   17

 

 

 


 

LIST OF TABLES

Table 4.1:   Questionnaire Distribution/ Return Response Rate                                     43

Table 4.2:   Descriptive Statistics of the Respondents                                                    44

Table 4.3:   Responses on the Influence of Financial Risk on Online Booking of Hotels

in Umuahia Metropolis                                                                                         46

Table 4.4:   Responses on the Influence of Security Risk on Online Bookings of Hotels

in Umuahia Metropolis                                                                                47

Table 4.5:   Responses on Effect of Wasted time Risk on Online Bookings of Hotels in

Umuahia Metropolis                                                                                    48

 

Table 4.6:   Responses on Effect of Social Risk and Online Booking of Hotels in

Umuahia Metropolis                                                                                    49

 

Table 4.7:   Correlations Results between Financial Risk and Online Booking of Hotels

in Umuahia Metropolis                                                                                50

Table 4.8:   Correlations Results between Security Risk and Online Booking of Hotels

in Umuahia Metropolis                                                                                51

 

Table 4.9:   Correlations Results between Wasted Time Risk and Online Booking of

Hotels in Umuahia Metropolis                                                                       52

Table 4.10: Correlation Results between Social Risk and Online Booking of Hotels in

Umuahia Metropolis                                                                                              53


 

 

 

 

 



 

CHAPTER ONE
INTRODUCTION


1.1     BACKGROUND OF THE STUDY

1           Online shopping has become an intrin

2            

Online shopping and booking has become an intrinsic part of life in the 21st century. More and more consumers are discovering the advantages of purchasing goods via the Internet (Bányai & Novak, 2011). The Internet allows consumers to shop anytime, anywhere, with the ability to compare products and prices with a few clicks, and to read the experiences of other buyers with the desired product and the selected web shop. 63% of the European Union´s population purchased goods online in the last 12 months in 2019, with the highest proportions seen in the UK (87%), Denmark (84%), and Sweden (82%). This compares with 22% in Bulgaria, 23% in Romania and 34% in Serbia (Eurostat, 2020). In Africa, the e-commerce turnover has been increased since the turn of the millennium (Veres, 2018).

The technical, legal, and security requirements of the online booking space have developed steadily over the past two decades. The Internet has become a highly regulated sales channel in the world. Despite these developments, the inter-national crime statistics show an increase in the Internet connected fraud (e.g. credit card fraud, non-payment, non-delivery). Accordingly, consumers continue to book for goods and services online with perceived risk, which ´has an impact on their willingness to use online services´ (European Commission, 2020). At buying online, consumers focus more on avoiding potential risks than on maximizing benefits (Kiss & Faragó, 2013). Customers are concerned not only about fraudulent activities, but also the lack of physical trials and the absence of personal contact with sales personnel (Dai, Forsythe & Kwon, 2014). Furthermore, uncertainties could result from perceptual bias as well. Such perceptual bias could arise out of selective attention, selective distortion, and selective memory of the costumers (Kotler, & Keller, 2012).

Many hotels in Umuahia have valued online booking of hotel rooms in improving the profitability and the overall efficiency of their business without looking at customer’s perception towards perceived risk towards the online booking. Due to uncertainty of online transaction handling today, customer’s perception towards risk has been identified as an antecedent that leads to customer’s hesitance towards adoption of online payments (Yang et al 2015). Customer perceived risk has been extensively studied has proved to shape all purchasing decision to various degrees. Specifically, the risk perceptions of the consumers have been utilized to assess and predict their behavioral intentions during the travel related decision making processes Rittichainuwat ( 2011), Change Hsiao,(2008), Tavitiyaman & Qu, (2013); Lu, (2011). Thus, it is constructive to investigate the effect of OCRs in the context of customer perceived risk associated with online hotel booking. One of the factors affecting the adoption of online booking among customers is the concept of the perceived risk.In a study, made by Beverley et al (2016), which examined customer reviews within the tourism field, the result showed that shoppers online see reviews as providing a quick and easy way to compare and evaluate tourism and hospitality products. They help to reduce the risk which is potentially associated with purchases online. Thus, customer reviews provide trust to the consumers as they see them as reliable upon which to make future purchase decisions (Flanagin and Metzger, 2013).

Online booking is characterized by two words - "Convenience and availability” which means you can book from the comfort of your home anytime, anywhere. Despite the prevalence of e-commerce and online booking, customers may feel uncertain in their online transactions due to the time/space separation between sellers and buyers, unlike traditional booking which takes place face to face between the sellers and buyers. Also, sellers let customers see the actual product before purchasing it. Online booking creates a state of uncertainty in purchasing decisions for customers. This state of uncertainty can lead to wrong purchasing decisions. Therefore, the client may not want to take the risk. These Customers' perceived risks in online purchasing decisions increase greater than that of normal purchasing decisions. These potential risks are financial, time and convenience, psychological, security, and privacy risks that present barriers to online booking. The most crucial duty of every hotel is to monitor and protect their website to reduce risk faced by customers who wishes to book online. Risk issues were first introduced into the consumer behavior research field by Bauer. Bauer’s concept focuses around the claim that customer behavior  entails  risk  in  the  way  that  any  action  undertaken  evokes  consequences impossible to predict, at least some of which may appear undesirable. Customers risk is then the probability of negative consequences resulting from the decision taken and is important at the level perceived by the customer. The range and type of reaction depends on the risk level perceived by the customer and his or her own level of tolerance for the taken risk (Schiffman and Kanuk, 2007).


1.2     STATEMENT OF THE PROBLEM

The hotel industry is really facing high level risks and it has affected the intentions to book in a hotel. The purpose of this exploratory study is therefore to investigate the perceived risks associated with intention to purchase online. With respect to this study, the problem is that many hotels in Umuahia metropolis who carry out online booking do not think of their customer perception towards risk at the process of booking and without proper knowledge of cyber security.

Online booking in the hotel industry is important since people don’t always have to be at the hotel to make reservation. Hence, there will be an increase in customer’s perception on possible risks that may occur in online booking. Criminal activity involving the perpetration of fraud through the use of computer or internet can take different forms. This may result in the interception of private information such as passwords, credit card information, or other type of so called identity theft which is dangerous and poses security issues especially now that the country is fighting hard to tame cybercrime.

 

Several studies has been carried out on customer perceived risk and online booking of hotel, most of them focused on Perceived Risks as an Intermediary Variable between Online Consumer Reviews and Hotel Booking Intention (Amin et al 2019), The relationship between perceived risk and online purchase behavior (Crespo et al 2009), A Broader View of Perceived Risk during Internet Transactions (Lee et al 2016), The effect of perceived risk dimensions of purchase intention (Bhukya et al 2014), A study of the effect of risk-reduction strategies on purchase intentions in online shopping (Chu et al 2008), Web reviews influence on expectations and purchasing intentions of hotel potential customers (Mauri et al 2013), The impact of online reviews on hotel booking intentions and perceptions of trust (Sparks et al 2011), The effects of perceived value, website trust and hotel trust on online booking intention (Kim et al 2017), Online hotel booking: The effects of brand image, price, trust and value on purchase intentions (Lien et al 2015), A survey of the effect of consumers’ perceived risk on purchase Intention in e-shopping (Samadi et al 2009).

Despite the fact that some studies have been conducted in the area of customer’s perceived risk and online booking of hotel, there is no recent work that covers this present study in Umuahia metropolis. The perceived risk toward online booking has resulted to fear, distrust, time lost, and some psychological effects and so on. This therefore prompts the need to investigate the level of perceived risk associated with customers online booking of hotel which is the gap this current study attempts to fill and is the purpose for this study.


1.3     OBJECTIVE OF THE STUDY

The main objective of this study is to determine the influence of customer’s perceived risk on online bookings of hotels in Umuahia metropolis.

The specific objectives of the study are:

i.     To determine the influence of financial risk on online bookings of Hotels in Umuahia metropolis.

ii.     To examine the influence of security risk on online bookings of hotels in Umuahia metropolis.

iii.     To ascertain the effect of wasted time risk on online bookings of hotels in Umuahia metropolis.

iv.     The effect of social risk on online bookings of hotels in Umuahia metropolis. 


1.4     RESEARCH QUESTIONS

The following questions guided the study

      i.         What influence does financial risk have on online booking of hotels in Umuahia metropolis?

     ii.         To what extent does security risk influence online booking of hotels in Umuahia metropolis?

   iii.         To what extent does wasted time risk have on online booking of hotels in Umuahia metropolis?

   iv.         What influence does social risk have on online booking of hotels in Umuahia metropolis?

 

1.5     RESEARCH HYPOTHESES

The following Null hypotheses will be tested for the purpose of the study.

H01:  There is no significant relationship between financial risk and online booking of hotel in Umuahia metropolis.

H02:   There is no positive relationship between security risk and online bookings of hotel in Umuahia metropolis.

H03: There is no significant relationship between wasted time and online bookings of hotel in Umuahia metropolis.

H04: There is no positive relationship between social risk and online booking of hotels in Umuahia metropolis.


1.6     THE SIGNIFICANCE OF THE STUDY

The findings of this study will benefit Customers, Hotels, and Students/Researchers.

v  Customers: Perceived risk directly affects online customer’s behavior and their intention to purchase. When a customer perceived risk is high, the customer intention to purchase online is low and when customer perceived risk is low, the customer intention to purchase online is high. Risk can be real and as long as risk is real, it will affect online customer behavior. The study is significant to be studied to know the extent of risk associated with online customer behavior.

v  Hotels: Services within the hotel and are key to contributing to customers patronage of hotels but the ease with each customers can book hotel services could mean a substantial increased revenue for hotels that customers perceive less risk in booking online towards such hotels. An increase in the knowledge base of such hotels towards reasons why customers perceive risk will go a long way to help hotels increase their revenue and patronage.

v  Students/Researchers: Due to lack of empirical materials as regards the customers perceived risk on online bookings in hotels in Umuahia, this work will be of benefit to students of Hospitality Management and future researchers because it will serve as a secondary material for those who intend to carryout similar research as it can serve as a base line literature for further research.


1.7     SCOPE OF THE STUDY

This study dealt mainly on customer perceived risk and online booking of hotels, but due to geographic and travel limitations, the researcher’s scope of the study will be limited to investigations based on Hotels in Umuahia, Abia state, Nigeria as the subject of data analysis.

Furthermore, the researcher’s scope will also be limited to the confidential nature of the kind of reports and information obtained from customers who want to patronize and has patronized the hotels.


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