Response Strategies and Performance of Star-Rated Hotels in Kisumu City County, Kenya
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Date
2025-10
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Kenyatta University
Abstract
Environmental turbulence such as the political upheavals, epidemics of diseases, terrorist attacks and natural calamities constitute to a significant economic threat to the hotel industry. The turbulence causes issuance of travel advisories leading to reduced visitor numbers and negative performance of the hotels. This is seen as sagging sales, revenue losses, shut down of operations, dwindling occupancy rate and reduction in customer satisfaction. This therefore emphasis the need for management to seek proper response strategies for the hotels to recover and improve their performance. With the above backdrop, the main objective of this study was to determine the effect of response strategies on performance of star-rated hotels within Kisumu City County, Kenya. The specific objectives included focus strategy, cost leadership strategy, differentiation strategy and diversification strategy of the star-rated hotels. This study was anchored on Michael Porter Generic Competitive Strategies model, the Transactional Cost theory and the Resource Based View Theory. The study adopted descriptive research design. The population included all the hotels in Kisumu City County but the target population was the 10 star-rated hotels. The study’s target population covered 80 senior managers handling 8 key departments in the star-rated hotels. Census sampling was adopted due to the small number of targeted respondents and 68 respondents filled and returned the instrument, making the response rate of 85%. A semi-structured questionnaire was used to collect primary data but it was pilot tested using 8 middle level managers in the star-rated hotels. The data collected from the pilot test was analyzed and found to be both valid and reliable since the aggregate Cronbach alpha value was 0.775 above the standard of 0.7. The researcher administered the questionnaire to the respondents at their work places using drop and pick later method, which gave respondents sufficient time to fill the tool. The questionnaires provided qualitative and quantitative data that was entered into SPSS and Ms. Excel for further analysis. The conducted descriptive, inferential and content analyses revealed that focus strategy, cost leadership strategy, differentiation strategy and diversification strategy had positive and significant association to performance of the star-rated hotels. The association between the variables was close based on obtained r values of between a low of 0.643 and high of 0.813. The key findings show focus strategy having the strongest influence on performance of the hotels and followed by differentiation. Diversification and lastly, cost leadership strategy. Based on these findings, the study concludes that all the four aspects of response strategies, namely; focus, cost leadership, differentiation and diversification strategies contributed to the improved performance of the hotels. It was recommended that hotels concentrate on a small segment of the market, adopt strategies to manage costs, innovatively develop new products and services and expand the customer and market base. These suggestions will help in stabilizing the hotel operations during turbulence and upheavals in the business environment. The study is significance to the to the hospitality sector and the management of different hotels by guiding them on selecting, adopting and implementing response strategies in the quest of uplifting performance
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of Master of Business Administration (Strategic Management) of Kenyatta University, October, 2025
Supervisors;
1.Esther Gitonga