The Mediating Role of Customer Satisfaction in the Relationship between Customer Relationship Management and Firm Profitability: Evidence from Premium Hotels in Uganda

Christopher Sebuliba – https://orcid.org/0009-0006-7151-0421

Frank Pio Kiyingi

Fred Lwanga – https://orcid.org/0000-0002-2444-2552

Nkumba University, Uganda

Email: christsebuliba@gmail.com

Abstract: This study examined the mediating role of customer satisfaction in the relationship between customer relationship management (CRM) and firm profitability among premium (four- and five-star) hotels in the Greater Kampala Metropolitan Area (GKMA), Uganda, guided by Service Profit Chain theory. A cross-sectional, explanatory sequential mixed-methods design was used. The population was 2,407 employees of six purposively selected hotels; 343 frontline employees were sampled with Yamane’s formula and simple random sampling, of whom 340 responded (99.13%), and 36 key informants were interviewed. Data were collected with a structured questionnaire (content validity index .708 to .815; Cronbach’s α .921 to .977) and an interview guide, and analysed with descriptive statistics, correlation, regression and path analysis in STATA 18 and AMOS, and thematically. CRM significantly predicted customer satisfaction (B = .8227, p < .001, R² = .6138), and satisfaction significantly predicted firm profitability (B = .8498, p < .001). With satisfaction in the model, CRM kept a significant direct effect on profitability (B = .8074, p < .001) alongside a significant indirect effect (.2036), indicating partial mediation. Hotels should pair CRM investment with systematic satisfaction monitoring and route guest feedback into service recovery, while industry bodies should develop guest-satisfaction benchmarks.