Service Quality and Customer Retention in Ugandan Guesthouses: The Moderating Role of Work Environment

This study investigated how the work environment moderates the relationship between service quality and customer retention, addressing a critical gap in understanding organisational dynamics and customer loyalty in the guesthouse sub-sector. Objectives: Grounded in service quality and organisational climate theories, it examines how service quality dimensions influence retention and how a supportive work environment enhances this link. Methods: This study employed a quantitative, cross-sectional design to examine the moderating role of the internal work environment in the relationship between service quality and customer retention in Uganda’s guesthouse sector. Using purposive sampling, 300 respondents from 30 guesthouses in Kampala participated. Questionnaires assessed key internal environment factors and service quality perceptions, and data were collected over four weeks and analysed via SPSS 25 using descriptive statistics, Pearson correlations, and hierarchical regression with moderation analysis. Construct validity and reliability were confirmed through EFA and Cronbach’s alpha (>0.70). Results: The findings revealed that service quality significantly boosts retention and that work environment strengthens this effect. Key service dimensions coupled with job clarity, supervision, and staff welfare enhance service delivery. The findings emphasise the need for hospitality managers to invest in both service quality and employee well-being. Strategies such as staff training, employee engagement, and standardised service protocols are recommended. Conclusion: These strategic efforts are crucial for enhancing customer loyalty and sustaining Uganda’s guesthouse industry; thus, improving service quality and fostering a supportive work environment build lasting customer relationships, boost employee well-being, and ensure resilient and competitive growth in the hospitality sector.