Influence of financial sustainability strategies on the financial performance of classified hotels in Mombasa county.

Abstract

The hotel industry is considered a crucial economic driver for both developed and underdeveloped nations. The strategic orientation that hotels employ in their daily operations often leads to many establishments closing within a short period if efficiency is not achieved. This study aimed to examine the influence of financial sustainability strategies on the financial performance of hotels in Mombasa County. The specific objectives were to determine the influence of internal control strategies, financial planning strategies, operating expenses management strategies, and working capital strategies on the financial performance of classified hotels in Mombasa County. The study was based on four theories: Absorptive Capacity Theory, Contingency Theory, Resource-Based View Theory (RBV), and Path-Goal Leadership Theory (PGT). The research employed a descriptive survey design. A systematic review of financial sustainability strategies used in hotels formed the basis of data collection. The unit of observation was determined through the analysis of previous studies conducted on the financial performance of hotels in Mombasa County. Data analysis was carried out using the Statistical Package for Social Sciences (SPSS) version 26. Simple descriptive statistics, such as frequencies and percentages, were used for data analysis. The study found that internal control strategies had a positive and significant effect on financial performance. Similarly, financial planning strategies, operating expenses management strategies, and working capital strategies also showed positive and significant effects on financial performance. The study concludes that effective implementation of internal control strategies, including robust accounting management systems and well-implemented audit practices, contributes to improved financial performance. Additionally, the study emphasizes the importance of proper implementation of financial planning factors and operating expenses management strategies in enhancing a hotel's market share and overall financial performance. Based on the findings, the study recommends that hotels address challenges in their internal control systems by establishing effective audit committees and ensuring collective decision-making. Additionally, policies and procedures should be put in place to strengthen internal control mechanisms. Moreover, the study suggests that hotels need to manage their receivables effectively to avoid adverse effects on their performance. Balancing between credit sales and cash sales is advised to prevent potential cash flow constraints.