Mediation Role of Revenue Management Practices on the Linkage between Hotel Determinants and Financial Performance of Hotels in Kenya

Abstract

The study aimed at investigating the mediation role of revenue management (RM) practices on the linkage between the internal and external hotel determinants and the financial performance of hotels in Kenya. The study used a quantitative approach adopted a cross-sectional survey research design. The study sampled 225 revenue managers from all-star-rated hotels in Kenya. Data were collected by use of a questionnaire. The findings revealed that, there was evidence of RM practice in hotels (M = 2.44, SD = 0.671) and that the application of RM has some impacts on the financial performance of hotels (M = 3.35, SD = 1.05). Further, the finding revealed a direct relationship between internal and external hotel determinants and financial performance of hotels (R = 0.457, Sig. < 0.05). And an indirect relationship between the internal and external hotel determinants and RM practices (R = 0.478, sig. < 0.05), and further, RM practices and financial performance of hotels (R = 0.751 sig. < 0.05). The finding concluded that RM practices mediate the relationship between internal and external hotel determinants and financial performance (R = 0.759, sig. < 0.05). The beta value for internal and external hotel determinants that was initially (0.457) (in the direct relationship) reduced to (0.127) after introducing RM practices as a vector mediator. The result shows that there is partial mediation, meaning that RM practices partially mediate the relationship between internal and external determinants and the financial performance of hotels. The findings recommend that hotels should enhance the adoption of RM practices to reduce the negative impacts of determinants and aim to contribute to hotels’ financial performance. The research adds to the body of empirical evidence for revenue management and financial performance conceptualization and description. The findings can aid in the conceptualization and advancement of future studies on hotel revenue management.