ABSTRACT
The hotel industry is one of the most dynamic industries and one of the largest employers in the world today as well as contributing economic development of many countries. In Kenya, it has been identified as one of the main sectors that can lead to the achievement of the country’s Vision 2030 goals. Quality of service has been taken as the measure of performance in the hotel industry. However, few studies have considered the factors that influence the quality of service. This project aimed at assessing the factors influencing the sales performance of the three-star hotels in Nakuru municipality in order to offer some insights in the creation of quality among hotels in Kenya. The hotels include Bontana, Midlands, Kunste, Agricultural resource centre (ARC), and Lake Nakuru Hotel and Lodge. A pilot study was done and data for 2008 to 2012 was obtained from all the five three-star hotels in Nakuru which showed that sales figures were lower than expected, but factors that influence sales performance were not identified or documented. Primary and secondary data obtained were analyzed using descriptive statistics and panel fixed effect regression model to address three key objectives of the study: examine the trends of three-star hotels’ sales performance in the study area; assess the perception of guests on the quality of service; and finally to determine the factors that affect the sales performance of three-star hotels. The results of the analysis indicated that most of the three-star hotels had fluctuating trends in their sales throughout the period under study. Analysis of the respondents’ perception on the services offered by the three-star hotels indicated that majority of them had fair prices, enjoyed spacious rooms with courteous staff, clean restaurant and convenient hotel locations. Majority of the hotels were rated highly in terms of attractive exterior and excursions. The panel fixed effect regression results indicated that, the number of staff, and expenditure on equipment were negatively significant at ten (10) percent and five (5) percent respectively on sales performance of the hotels. On the other hand, the expenditure on staff training and suppliers were positively significant at five (5) percent with effects on sales performance of the hotels. As Kenya strives to be an industrialized nation by 2030, the growth and development of the hotel industry should be given much attention as it is seen to significantly contribute to this realization. The results of the study affirm that policy and management/institutional changes, along with increased investments in quality of service, have significant influence on sales performance of the three-star hotels.
CHAPTER ONE
INTRODUCTION
Background to the Study
The hotel industry has continued to grow all over the world and like any other business the hotel industry aims at improving revenues through value addition to guarantee repeated visits. The expectation is that the hotel management should embrace the marketing concept, which entails total customer focus. According to, Neil and Alison (1994), organizations which are customer forecast endeavor to become obsessed with the desire to meet customers’ needs. The service industry, and in particular the hotel industry exhibits tight competition within, thereby motivating individual firms to offer services of high quality so as to build and retain that competitive edge that results in sustained sales growth of its products and services offered to customers. A firm can use this knowledge to create marketing strategies that take advantage of its competitors’ weaknesses, and improve its own business performance. Hospitality businesses must deal with such complex factors as globalization, terrorism threats, ecotourism, internet commerce, new business and financial models, and rapidly changing consumer demands (Morrison et al., 1999).
Businesses endeavor to outperform each other in the competitive world due to the proposition made by Saleemi (2009) who showed that, companies are now shifting from product and sales philosophy to marketing philosophy, where, the customer has become the centre of the business culture. Strategies for improved sales and customer satisfaction include reliability of the business; assurance that employees have the knowledge and courtesy to give trust and confidence to customers; among others, the physical facilities available that can influence the sales performance. Generally, the customer gets satisfaction depending on the service performance in relation to their respective personal expectations. This is because the building of success in today’s businesses is on the firm’s ability to raise customer expectations and delivering performances to match those expectations. Such organizations maintain a high level of performance across all of the selling and sales management activities required to support the sales process. There is no easy answer to solve every sales performance issue, but taking a strategic and deliberate approach to how to address the challenges of a given organization can provide a roadmap to improvement of sales. One of the main objectives of every firm is to achieve and sustain a competitive advantage. In the hotel industry, most rivals are determined according to similarity of price, segment, service and proximity. Everyone is working overtime to grab the guests.
It is stated in Ministry of Tourism and Wildlife (GoK 2006), that after impressive growth in the 1960’s to 1980’s, Kenya’s tourism sector experienced an unprecedented decline in the 1990’s due to both internal and external factors, exacerbated by security concerns. Both the number of visitor arrivals and earnings peaked in 1994 and since then, the trend has been steadily downward, with arrivals falling in 2002. The downturn accelerated sharply in early 2003 because of negative travel advisories against travel to Kenya and imposition of flight bans by some countries. The decline has resulted in low bed occupancy and a sharp fall in revenues, leading to partial or full closure of hotels and other tourist accommodation establishments, especially at the Kenyan Coast, resulting in loss of jobs in both the formal and informal sectors. However, with aggressive marketing, the trend has been reversed and 2004 recorded arrivals as before with some of the reasons for the downtrend of visitors in hotels highlighted. This includes; first the deterioration and near collapse of infrastructure in some parts of Kenya which has affected access to tourist attractions sites. Secondly, the lack of a system to ensure equitable sharing of benefits and opportunities of tourism with local communities and thirdly is the unplanned expansion of the accommodation sector compared to the demand. Lack of affordable finance for upgrading accommodation and other facilities has also been cited as the fourth reason where the inadequate funding for sustained tourism marketing and promotion is the fifth. In addition, lack of market diversification (over-reliance of certain products and excluding other potentially viable products) and lack of adequate training, examination, control and licensing has been highlighted. Finally, the relatively high cost and erratic supply of utilities such as electricity and telecommunication services as well as the cumbersomeness of visitors’ entry formalities topped the list (GoK, 2006).
Tourism as an international industry and as the biggest provider of jobs on the planet boasts a greater array of heterogeneous stakeholders than many other industries. In the International Labour Organizations (2010), Tourism industry accounted for more than 235 million jobs globally, an equivalent to 8% of the overall number of direct and indirect jobs. Tourism has also helped in providing employment to a large number of people in Kenya, and according to the Economic Survey (2012), the tourism earnings in Kenya rose by 32.8 percent, from 73.7 billion in 2010 to 97.9 billion in 2011. The hotel industry is seen to shift towards highly competitive, integrated and customer oriented market framework, supported by the progressive career path evident from the fact that more and more universities are now offering hotel management courses, a phenomenon that was rare some ten years ago, even in Kenya. Based on the aforementioned benefits, the Kenya Vision 2030 aims at taking the country to an industrialized status, and the hotel industry has been identified as one of the sectors that will contribute greatly to these achievements (Schulz, 2012). The hotel industry on the other hand has seen customer satisfaction as a key marketing tactic in differentiating itself from its competitors and therefore a heightened understanding of a guest preference and total worth will enhance a guest experience and maximize hotel revenues. Customer satisfaction, according to World Trade Organization (1985) is a psychological concept that involves the feelings of well-being and pleasure resulting from gaining what a person hopes for and expects from a product and/or service. It is the customer’s fulfillment response to consumption experience, a highly personal assessment that is greatly affected by customer expectations and experience. This can be linked to both the personal interaction with the service provider and the outcome experienced by the service users, it is a psychological effect on their choice when they choose a particular hotel or resort to visit and stay in. Dominici et al. (2010) observed that in order to achieve customer satisfaction, it is important to recognize and to anticipate customers' needs and to be able to satisfy them, consequently, the attractiveness of a touristic destination is influenced by the standards of the services provided by the local hotels in the region. Generally, the hotel industry has experienced enormous growth in business volume thereby making them larger and more complex to manage and meet challenges of customer demands. This is further aggravated by the modern communications technology (e-mail, telemarketing, television advertising) which has simply created too much “white noise” in the marketing airwaves (Onyango et al., 2012).
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Item Type: Kenyan Topic | Size: 61 pages | Chapters: 1-5
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