Effect of Strategic Management Practices on the Organizational Performance of Star Rated Hotels in Nairobi County, Kenya

Abstract

Kenya's hotel industry in faces many challenges ranging from operating, marketing, technological and economic, and that impede its performance. As of 2015 Kenya had a supply of approximately 58,000 beds, translating to an annual bed capacity of 21 million, against an occupied bed capacity of 5.8 million and a bed occupancy rate of 29.1% indicating there is an oversupply in the industry. Total revenue per available room in the country has been declining over the last five years; with a CAGR of 5.8% as at 2015 averaging at USD 81. In spite of this, there is scarcity of empirical information in relation to the effect of strategic management practices on the organizational performance of the star-rated hotels in Nairobi County, Kenya. This study aimed at determining the effect of strategic management practices on the performance of Star-rated hotels in Nairobi County, Kenya. Specifically, the study examined the effect of strategic planning, corporate governance, monitoring and evaluation and quality management on the organizational performance of hotel industry in Nairobi County, Kenya. The target population of the study was 120 management staff of five, four, three and two-star hotels in Nairobi County. The study used Statistical Package for Social Sciences (SPSS version 23) for analysis. Additionally, the study used a multiple regression analysis for the purpose of analysing the relationship between the study variables. The study results indicated that the strategic planning affected organizational performance of star-rated hotels in Nairobi County; corporate governance had a positive influence on organizational performance of star-rated hotels in Nairobi County. Further it is evident that organizational performance in star-rated hotels is affected by how an organization undertakes constant and regular testing of the company monitoring and evaluation activities