Challenges Hindering Success of Tour Businesses Owned by Indigenous Entrepreneurs in the Tourism Industry in Kenya

Abstract

The main objective of this study was to determine the challenges hindering success of tourism businesses owned by indigenous entrepreneurs in the tourism industry in Kenya. Empirical literature showed that though tourism industry is the third largest contributor to the gross domestic product, tour businesses owned by indigenous entrepreneurs are yet to get a good share of the market share. It also informs that foreign operators get high profits than local operators for example in the year 2007, they earned an aggregate profit of 78 % as compared to 22% earned by the local operators. In addition, technology has led to small margins and cut throat competition as a result of independent travellers who access the suppliers directly avoiding tour operators. Positivist research philosophy and descriptive research design were adopted for this study. Stratified sampling method was used to ensure representation from the six strata from the Kenya Association of Tour Operators (KATO) classification. Sample size was 104 tour operators. The response rate was 79.86%. Statistical Package of Social Sciences version 16 was used as a statistical tool for analysis. Descriptive analysis, exploratory factor analysis, multicollinerity test, ANOVA test and linear regression tests were carried out for each variable. The study found that all the independent variables: resources; policies; ICT; service quality; and clusters and networks while analysed individually have positive influence on the dependent variable success of tourism businesses owned by indigenous entrepreneurs. The combined effect of all the independent variables shows a positive effect of 84.9% on the dependent variable. However, the optimal model after addressing multicollinearity was attained by three variables: Service Quality, ICT, and Clusters and Networks. The study therefore concluded that success of tourism businesses owned by indigenous entrepreneurs in the tourism industry can mainly be achieved through high service quality level, adoption of ICT and engagement in relevant clusters and networks. The major recommendations from the conclusions includes: integration of service quality into the firm's strategic plan and values to make it part of its policy, make an effort to get ISO certification through service quality improvement via benchmarking and learning from those who have succeeded in the business. In addition, local operators should also adopt ICT through computerization, having functional websites with right features and well maintained. Finally, local operators should create clusters and networks to achieve synergy. This can be strengthened by joining other networks particularly in the virgin market to enhance visibility and strategic positioning.