Strategic Business Practices and Performance of Hotels in Eritrea

Abstract

The hotel sector is a critical component of the tourism industry because it is the bedrock for the supply of other tourism services. Owing to the sector's phenomenal role in the tourism industry, its performance is deemed critical. To live up to this performance expectation, hotels employ varied strategic business practices in a bid to gain competitive edge in the industry. Therefore, this research sought to establish the relationship between strategic business practices and performance of hotels in Eritrea. Cross-sectional descriptive and explanatory research designs were employed. The study population comprised 64 hotels with 64 purposively selected hotel managers or/and ownermanagers as the respondents. Self-administered questionnaires were used to collect primary data. Descriptive statistics were computed to describe the characteristics of the study variables while inferential statistics were computed to establish the relationships among study variables. The regression analysis yielded adjusted R 2 = 0.278; P=0.000<0.05). This means that strategic business practices (independent variables) collectively accounted for 27.8% of the variability in the performance of the hotels. The study also found that 65.6% of the hotels surveyed did not have business plans, strategic plans or marketing plans. Owing to the findings, the study recommends a more deliberate and intentional approach to the use of strategic management tools such as strategic plans, business plans as well as marketing plans that were found to be conspicuously missing in the surveyed hotels. The use of such tools would appropriately guide the management in the appropriate selection and use of competitive strategies to meet organizational objectives.