JOURNAL OF HOSPITALITY & TOURISM RESEARCH Kim et al. / RELATIONSHIP MARKETING EFFECTS OF RELATIONSHIP MARKETING ON REPEAT PURCHASE AND WORD OF MOUTH Woo Gon Kim Oklahoma State University Jin Soo Han Kyunghee University Euehun Lee Sejong University This study explores what kinds of relationship marketing activities affect relationship qual- ity between customer-contact employees and hotel guests. In addition, this study investi- gates whether relationship quality influences relationship consequences such as commit- ment, repeat purchase, and word of mouth. This study will help hotel managers design guidelines for efficient relationship marketing activities. The effective use of relationship marketing strategies can increase repeat guests and positive word of mouth. To analyze data collected from 27 luxury hotels in Seoul, South Korea, structural equation modeling was used to discover a causal relationship. The empirical results of this study are twofold: Greater guest confidence and communication result in higher relationship quality, and higher relationship quality results in greater guest commitment and more repeat purchase and positive word of mouth. KEYWORDS: relationship marketing; LISREL; relationship quality . As the economy becomes more service and technology oriented, a lengthy and involved relationship between buyers and sellers will be increasingly necessary (Levitt, 1983). South Korean hotels faced their toughest competition during the currency devaluation of 1997, when South Korea received bailout loans from the International Monetary Fund. This resulted in dramatic decreases in restaurant and banquet revenues for most luxury hotels. Because food and beverage reve- nues in Seoul’s luxury hotels are an average of 1.2 times higher than room reve- nues, the currency upheaval deteriorated the overall revenue structure and gave hotel managers a new challenge to overcome. Under the worst market conditions to date and with decreased customer bases, many hotels fought to maintain their previous market shares or to survive at all. To succeed in so competitive a market- place, hotel managers learned that they had to be more customer oriented. That is, Journal of Hospitality & Tourism Research, Vol. 25, No. 3, August 2001, 272-288 © 2001 International Council on Hotel, Restaurant and Institutional Education 272 at Universiti Teknologi MARA (UiTM) on March 7, 2016 jht.sagepub.com Downloaded from