EFFECTS OF STRATEGIC ALLIANCE ON GROWTH OF HOTEL INDUSTRY IN ELDORET TOWN

Abstract

Strategic alliance enables firms to remain competitive and thus survive, grow and prosper. In order for enterprises to survive in a rapidly changing business environment, they are increasingly forming strategic alliances with other firms. This study assessed the influence of strategic alliances on growth of hotel industry in Eldoret town. The specific objectives of the study were: to determine the effects of outsourcing on growth of hotel industry; to evaluate the influence of distribution alliance on hotel industry; to determine the relationship between technological alliance and growth of hotel industry; and to assess the effect of product development on hotel industry. The study applied the Resource Dependency theory and the Resource Based theory and adopted a descriptive survey research design on a target population of 220 in the hotel industry in Eldoret town. A sample of 112 respondents was drawn proportionately from four categories of hotels using stratified random sampling technique. A semi-structured questionnaire was administered to collect the required data. Data was analyzed using both descriptive and inferential statistical techniques with the aid of a computer software known as Statistical Package for Social Sciences (SPSS) version 20. Multiple regression analysis was used to analyze the data. Findings were presented in frequency Tables. The study established that outsourcing, distribution alliance, technological alliances and product development had increased the hotel sales, profits, product/service quality and reduction of costs. Further, strategic alliance had increased market share and gained competitive advantage. The study also established that the hotels have improved proximity to customers and faster and easier market penetration due to strategic alliance. The findings of the study will be of benefit to hotels with limited resources and exposed to growth opportunities as they will be able to appreciate the role of strategic alliances in leveraging on large firms‟ resources for profitability, growth and expansion