Title:
STRATEGIC TRANSFORMATION OF THE MICE INDUSTRY IN THE NUSANTARA CAPITAL BUFFER CITY: STRUCTURAL ANALYSIS OF FACILITY QUALITY, SATISFACTION, AND CUSTOMER LOYALTY IN THE ERA OF FISCAL AUSTERITY

Authors:
Laxmi Rachmaniah, Marjoni Rachman and Meiki Permana, Indonesia

Abstract:
The Meeting, Incentive, Convention, and Exhibition (MICE) industry in Indonesia is currently at a critical crossroads triggered by two waves of macro-economic disruption: the relocation of the national capital to Nusantara (IKN) in East Kalimantan and the implementation of strict government budget efficiency policies (fiscal austerity). This research report presents an in-depth empirical analysis regarding the determinants of customer loyalty in Samarinda, the main buffer city of IKN, amidst a structural market shift from government dominance toward a competitive corporate sector. Adopting the Stimulus-Organism-Response (S-O-R) framework and Resource Dependence Theory, this study tests a structural model placing Perceived MICE Facility Quality (X1) as the physical stimulus influencing Customer Satisfaction (M) and Customer Loyalty (Y). Using primary data from 220 respondents consisting of corporate clients, government officials, and professional event organizers, the analysis was conducted using the Partial Least Squares Structural Equation Modeling (PLS-SEM) method. The research results reveal significant findings:(1) MICE Facility Quality has a very strong direct influence on Customer Satisfaction (?= 0.66, p < 0.001), confirming that in the context of buffer city infrastructure development, the tangibles aspect becomes a key performance indicator6.(2) Facility Quality also directly influences Customer Loyalty (?= 0.42, p < 0.001), indicating the existence of functionality-based loyalty.(3) Customer Satisfaction is proven to partially mediate the relationship between facilities and loyalty with a significant effect (?= 0.57, p < 0.001).These findings provide crucial managerial implications for the hotel industry in Samarinda: in the post-capital relocation era, investment in technological modernization and venue ergonomics is no longer just added value, but a fundamental prerequisite for survival and winning over the increasingly critical private market.