Effect of Strategic Organizational Practices on the Performance of the Hotel Industry in Kenya

Abstract

Hotel is a major enterprise in modern economy. In Kenya, it supports the domestic economy through employment, foreign exchange earnings, contributes to tax revenue base and promotes national economic stability. However, in an increasingly uncertain global business environment, the hotel industry has been affected by volatilities and disruptions. Currently, in Kenya, it operates at 40.3% occupancy level which is below optimal level. In view of the importance of hotel industry to the economy of Kenya, it is essential to carry out research to investigate the effect of strategic organizational practices on its performance. This study concentrated on four and five star hotels and focused on investigating strategic planning, training, safety measures and customer focus because gaps were raised in these variables by other studies. Fieldwork was carried out in Nairobi County because it is the leading hotel market in East African region and the third largest in Sub-Saharan Africa. It is Kenya’s administrative headquarter and houses United Nations Offices and International Companies and Non-Governmental Organizations. Many four and five star hotels were built to serve these and other clients. Due to a number of factors, a slump in the hotel industry was felt in Nairobi. In this study, a sampling frame containing 1803 hotels in the city was received from the County Government of Nairobi. Of the hotels in the list, forty one were four and five star hotels which was of interest to the study. Two hotels were selected for the pilot study. A sample of 146 respondents comprising of senior managers (general manager/CEO and line managers such as ICT, HR, marketing, food and beverage and room) out of 234 target population in 39 hotels were aimed but only 105 returned questionnaires. Data was collected using questionnaires. Pilot study was carried on six respondents to check for the validity and reliability of the research instruments. Data was classified and tabulated according to research objectives. Afterwards, analysis was done using descriptive and inferential statistics. The study reveals that strategic organizational practices have positive and significant effect on hotel performance. In particular, training reveals to have positive and highly significant effect on hotel performance. The study concludes that strategic organizational practices are important performance drivers and that hotels in Nairobi need to consider investing resources in strategic planning, training, safety measures and customer focus. The study recommends that hotel’s strategic planning process be consultative and participatory and aligned to changes in the environment, train staff more on use of new technologies, invest in early warning systems on safety to avert disaster and create innovative connectivity that offers updates, grants awards and generates feedback from customers.