Abstract

Jackline Bett*, Jennifer Kilonzo, Joseph Kiprotich Ruttoh and Sammy Kimunguyi

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.