EFFECT OF DIFFERENTIATION STRATEGIES ON SUSTAINABLE COMPETITIVE ADVANTAGE OF FIVE STAR HOTELS IN NAIROBI, KENYA

Abstract

The present corporate climate is one marked by continual change, bureaucratic procedures, and competition across all sectors, a scenario that has forced the use of various strategies as one of the mitigating elements toward achieving long-term competitive advantage. This study interrogated the effect of differentiation strategies namely service, pricing, brand image difference and personnel differentiation on the competitive advantage of Kenyan Five-Star hotels based in Nairobi, County. The research was founded on four theoretical frameworks: resource-based perspective, dynamic capability theory, strategic balance theory, and Porter's Five Forces Model. A descriptive study approach was used in this research. The target population for the study was a total of 469 senior management workers from the 22 hotels based in Nairobi, County. A structured questionnaire was used to gather data which was analyzed through descriptive and regression methods. The study findings established that in majority of five-star hotels in the country, differentiation strategy had been implemented to a moderate extent. The study findings further demonstrated that service differentiation, price differentiation, brand image differentiation and personnel differentiation both had a positive and significant effect on competitive advantage of the Five-Star hotels investigated (P-value < 0.05). This implies that pursuing differentiation strategy had a significant effect on competitive advantage of the hotels. Based on the findings, the study recommended that five-star hotels in the country should focus on devoting more resources research and development with an aim of establishing the best differentiation strategies that will boost competitive advantage of the hotel. The study also recommended a need to have more efforts inclined towards personnel differentiation since human capital is responsible for implementing all the differentiation strategies. The management of the five-star hotels should consider recruiting a team of staff that is differentiated in regard to skills, level of education, personality and experience level.

Keywords: Differentiation strategies, Sustainable competitive advantage, Service differentiation, Price differentiation, Brand image differentiation, Personnel differentiation