Differentiation strategy, firm structure and performance of star rated hotels

Abstract

It is estimated that emerging economies will get over 1 billion international tourists by the year 2030. Strategic management researchers have severally recommended credible research in the area of strategy-structure coalignment in the hospitality industry. The purpose of this study was to analyze the influence of differentiation strategy-firm structure coalignment on performance of star rated hotels in Kenya. This study adopted positivism research philosophy and a descriptive-correlative research design. The population consisted of general managers and functional managers from Kenya’s three, four and five star rated vacation and town hotels as at 2018. Multi-stage sampling that included proportionate stratified sampling and simple random sampling was used. 267 hotel managers were sampled out of which 253 managers responded. The extent to which the hotels were pursuing differentiation strategy was measured by an analysis of the responses to the multi-item Likert scale questionnaire. Structural equation modeling was used for hypothesis testing. The study concluded that differentiation strategy-firm structure coalignment has no significant influence on performance of star rated hotels in Kenya. The study however revealed that differentiation strategy directly and positively affects hotel performance. This study recommends hotel managers to pursue a differentiation strategy that sets their hotel apart from others as this has direct positive effects on the performance of hotels.