SERVICE TIPPING AS A COMPETITIVE ADVANTAGE STRATEGY FOR PERFORMANCE OF HOTELS IN KENYA: A BALANCED SCORE CARD PERSPECTIVE

Abstract

Attainment of competitive advantage is an ultimate goal of any organization. Further, the hotel industry remains extremely competitive world over; not to mention its significance as a major foreign exchange earner in Kenya. In view of this, many hotels have adopted a variety of strategies to keep their customers happy which has been found to be contingent upon a happy workforce. Service tipping historically has taken many forms including voluntary tips by customers and systematic service charge or gratuity to appreciate hotel staff for their service. The question of whether to formalize this practice and develop formal system or best practices for it as a strategy in the hotel industry in Kenya has not received scholarly attention especially on its influence to hotel performance yet it is casually very rampant. This study therefore, aimed at determining the effect of Service Tipping as a competitive advantage strategy on performance of hotels in Kenya using the Balanced Score Card four main performance indicator perspectives namely financial, customer, internal business processes and learning and growth. The four perspectives formed specific evaluation criteria on indicators for performance to the model analysis against the independent variable of service tipping in different characteristics and moderated by the hotel rating. A part from empirical literature, the theories used in the study include Resource Dependency Policy, Reciprocity and Equity Theory, Tipping Motives Framework (TMF) and Balanced Scorecard Framework. The study adopted a mixed method including descriptive survey and predictive correlation research designs targeting 183 star rated hotels in Kenya. The study used a sampling formula by Yamane (1967) to arrive at a sample size of n=126 of the star rated hotels in Kenya obtained from the Ministry of Tourism and Wildlife classification. Data collection was mainly done through physical dropping of the questionnaires by research assistants to hotels around towns and by mail especially to those hotels that were inaccessible either in towns or away from towns. The study was conducted in a period of three months using structured questionnaires. The study used drop and pick procedure for data collection for the required data. Due to wide distribution of Tourism Circuits where hotels are located in Kenya, some of the questionnaires were mailed to the respondents. The study used descriptive statistics such as means, standard deviation and percentages and inferential statistics using Regression Analysis. The study established that service tipping affected financial, customers satisfaction, internal business process, and learning and growth performance of hotels in Kenya. The study established that when star rating was introduced as a moderating variable, the relationship between service tipping and hotels performance remained statistically significant, although the value of the regression coefficient reduced slightly (r=1.089-1.088 = 0.001). This slight change in the coefficient is the statistical proof that when star rating was introduced, it slightly reduced the regression coefficient although the relationship between service tipping and hotels performance remained statistically significant. The study recommends that Tourism Regulatory Authority which is the policy body of Hotels in Kenya should develop Service Tipping Policy to guide in service operations in the Star Rated Hotels in Kenya to further improve the Star Rated Hotels performance since the study established that service tipping positively affected Balanced Score Card performance indicators of the hotels.