The Moderating Effect of Location on the Relationship Between Product Diversification and Performance of Star-Rated Hotels in Kisumu City, Kenya
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Keywords
product diversification, location, hotel performance, moderation, star-rated hotels, Kisumu City, Kenya
Abstract
The hospitality industry is highly competitive, and although product diversification is widely promoted as a strategy for improving hotel performance, its effectiveness may depend on contextual factors such as location. This study examined the effect of product diversification on the performance of star-rated hotels in Kisumu City, Kenya, and tested whether location moderates this relationship. Grounded in the resource-based view and central place theory, the study adopted a descriptive cross-sectional survey design. A census of 88 hotel managers in 11 registered star-rated hotels was undertaken, and 75 usable questionnaires were returned, yielding an 85.23% response rate. Data were collected using a five-point Likert-scale questionnaire whose reliability was confirmed (Cronbach's α = .757 for the product diversification scale). Data were analyzed using descriptive statistics, Pearson correlation, multiple regression, and hierarchical moderated regression. Product diversification was positively and significantly associated with hotel performance (r = .590, p < .01) and positively and significantly predicted performance (β = .215, p = .002). Location significantly moderated the relationship beween product diversification and hotel performance (β = .059, p = .048; final model β = .066, p = .024), with the interaction explaining an additional 1.5% of variance in performance. The findings demonstrate that the performance benefits of product diversification are contingent on a hotel's location. Hotel managers should therefore align diversification decisions with location-specific market characteristics, while policymakers should invest in accessibility and surrounding amenities that strengthen hotels' locational advantages.
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Judith Anyango Misango, School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya
School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya
Julie Makomere , School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya
School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya
Catherine Sempele , School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya
School of Business, Economics and Management Sciences, University of Eldoret, P.O. Box 1125- 30100, Eldoret, Kenya