Effect of Changing Business Environment on the Performance of the Service Industry: A Case of Five-Star Rated Hotels in Nairobi County, Kenya

Abstract

Service Industry is one of the major drivers of the economy in Kenya. The industry supports the economy through foreign exchange earnings, employment, revenue paid through tax and generally promotes economic stability in the nation. However, the environment within which the industry operates is complex and dynamic. With the rapid changes of environmental factors; Economic, International, Technological and Political, the performance of the service industry is affected, which adversely affects the GDP growth rate in a country. The objective of this study was to establish the effect of changing business environment on the performance of the service industry with focus on five-star rated hotels in Nairobi County. The specific objectives of the study were; to determine the effect of economic aspects, technological aspects, international aspects and political aspects on the performance of the service industry. In this study, descriptive research design was used, where precise and relevant information were presented. The target population of the study were 10 five-star rated hotels in Nairobi County and the sample were 10 five-star rated hotels in Nairobi County which was picked through census. The study used both qualitative and quantitative data which was collected by use of both primary and secondary means, where questionnaires, recorded data and reports were utilized. A pilot study was carried out on three respondents to verify the suitability of the research instruments. Data was analyzed and presented through the use of SPSS software version 24.0. The study findings revealed that the business environment had significant effect on the hotel performance; the economical aspect contributed 32.6% to the hotel performance, the technological aspects contributed 46.51% to the hotel performance, international aspects contributed 37.33% to the hotel performance while political factors contributed 45.83% to the hotel performance. The study revealed that hotel managers should do proper scanning of the business environment for any change to be effected in the business operation as the environment change. The study recommends that government enact favorable policies and business regulations to encourage more investments in the service industry.