Factors influencing financial performance of small hotels in Tanzania

Abstract

PurposeThe purpose of this paper was to investigate the factors influencing financial performance of small hotels, particularly in developing countries like Tanzania.Design/methodology/approachThis investigation used financial ratio analysis on business performance data collected from small hotels in Tanzania through face‐to‐face interviews. Currently there is no existing data on such aspects of the hotel industry in Tanzania. As a consequence, Arusha region was selected as the sample for this study due to a significant amount of hospitality industry activity in this area.FindingsFindings of this investigation suggest that operating factors in small hotels such as inefficiencies due to lack of employee training, low investments in fixed assets and technology may be equally responsible for low profitability as are government policies that ignore appropriate emphasis on ensuring safety and security, and quick processing of licenses and permits.Research limitations/implicationsEven though this is one of the few studies that has investigated the profitability of small hotels in a developing country, its findings are based on the analysis of one (even though a prominent) tourist area of East Africa.Practical implicationsNevertheless, findings provide preliminary evidence for professionals and policy makers to critically evaluate factors that would ensure profitability of small hotels in countries such as Tanzania.Originality/valueAs this paper highlights, this is critical because such businesses are locally owned and may truly and positively influence economic development.

The impact of industry force factors on resource competitive strategies and hotel performance

“…Meanwhile, financial performance is appropriate and acceptable in comprehending organizational effectiveness, citing the many benefits that profitable and well-run companies provided for the society and for their relevant stakeholders (Randolph and Dess, 1984;Snow and Hambrick, 1980). Sharma and Upneja (2005) found that hotel performance is influenced by internal factors (i.e., employee training, investments in equipment, and availability of financing options) and external factors (i.e., institutional environments and product service standardization systems). Moreover, organizational assets (i.e., organizational structure and human resource management and policy) and reputational assets (i.e., company reputation, customer service reputation, and product reputation) are significantly and positively associated with hotel performance.…”

“…The attitudes and actions of employees affect the success of a hotel service encounter. Sharma and Upneja (2005) indicated that the financial performance of hotel operations is crucially dependent on formal education and technical training of front-line employees. In the other words, hotel employees are the main factors driving the differentiating services to customers, which lead to superior performance (Bowen and Chen, 2001).…”

Entrepreneurship in the tourism industry: Issues in developing countries

“…In Australia, respondents with university education form only 34% (Getz and Carlsen, 2000) and 31.8% (Sharma and Upneja, 2005) of the total. However, Glancey and Pettigrew (1997) find that there is an equal balance between respondents with secondary education and those with universitylevel education in Scotland.…”

“…The most popular components of the profile of the owners/managers are age and sex (Ateljevic et al, 1999;Szivas, 2001;Ahmad, 2005;Sharma and Upneja, 2005), education (Glancey and Pettigrew, 1997;Avcikurt, 2003;Sharma and Upneja, 2005), work experience (Ateljevic et al, 1999;Szivas, 2001), and marital status (Getz and Carlsen, 2000). The dominant age of small business owners/managers is in the category of middle-age and older, that is, 25-50 (Avcikurt, 2003), 30-45 (Ahmad, 2005), and 45 and older (Szivas, 2001;Getz and Carlsen, 2000).…”

International Alliance of Green Hotels to Reach Sustainable Competitive Advantages

“…Four performance indicators were chosen: financial, internal business, customer perspective, and learning perspective for green hotels [39,[41][42][43]. Financial performance includes financial ratios, stock prices and/or risk, market sales, and financial margins.…”