Factors influencing sales performance in the hotel industry: a case of three star hotels in Nakuru municipality

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.