Empirical analysis of changing business environment on the performance of five-star rated hotels in Nairobi County, Kenya

Abstract

The hotel industry has a prospect to grow the economy of a nation, through employment creation, providing
market for industry and farm products and consequently reducing poverty levels. Despite the substantive
position of the hotel industry to support the economic development in Kenya, there are external factors that
influence its performance that has not been analyzed in Nairobi County. A census survey was done in all the
ten five-star rated hotels in Nairobi, from which three respondents comprising of the marketing officer, the front
office manager, and the finance manager were selected from each hotel. This made up a sample size of 30
respondents who were interviewed using semi-structured questionnaires. The relationship between the
environmental variables and performance of the hotel industry was investigated using multiple regression
analysis. The results obtained indicated that economical, technological, international and political aspects
positively and significantly influenced the performance of five-star rated hotels, with coefficients of 1.467, 1.226,
1.444 and 1.246 respectively at 5% level of significance. From the findings, it is recommended that five-star
rated hotels should exploit internal capabilities, utilize technology and innovation in order to optimize
performance. They should also engage with various government and service industry players when formulating
policies affecting their industry