Effect of Revenue Enhancement Measures on Financial Performance of Selected Hotels in Eldoret Town, Kenya

Financial performance of hotels is as important and critical to the overall thriving of the firms in the industry. Failure to meet the required level of revenues by the hotels in terms of incomes earned, profitability and returns on investment may jeopardize the running of the hotel activities. This may lead to the collapse or closure of the hotels. The purpose of the study was to establish the effect of revenue enhancement measures on the financial performance of selected hotels in Eldoret Town, Kenya. The study looked at the effect of cost management measures, payment option measures, revenue automation measures and internal control measures on the financial performance of selected hotels. The study adopted transaction cost theory, the state theory of money, rational expectations theory of technology adoption and Control theory of performance management system. This study used a descriptive survey research design. The target population was 70 employees comprising of managers, accountants and cashiers from 10 selected hotels in Eldoret town. The study used a census survey. A pilot study was conducted to test for the validity and reliability of the research instruments. Content validity was used as a validity test while reliability was tested using Cronbach's alpha coefficient. Descriptive statistics including mean, percentages and frequencies were used while inferential statistics that are multiple regression model and product-moment correlation were used to make inferences of the population using data drawn from the population. The study results revealed that there was a significant relationship between cost management measures and financial performance of selected hotels (β=0.170, p≤0.05); there was a significant relationship between payment option measures and financial performance of selected hotels (β=0.263, p≤0.05); there was a significant relationship between revenue automation measures and financial performance of selected hotels (β=0.231, p≤0.05) and that there was a significant relationship between internal control measures and financial performance of selected hotels (β=0.213, p≤0.05). The study concluded that cost management measures, payment option measures, revenue automation measures, and internal control measures have a significant effect on the financial performance of selected hotels in Eldoret town. This study recommended that hotel managers should institute cost budgeting in their respective hotels. The hotels should develop more robust systems that minimize the risk of losing money. The study also recommended that the hotels' industry introduce an intuitive comparison system and that in order to provide appropriate access to information and systems and to prevent unauthorized access, safeguards based on business and legal requirements must be identified and applied.