Differentiation strategies and tourism performance interplay

Abstract

Tour operators have ensured the success of the Kenyan tourism sector, poised to contribute to achieving key government economic policies like the Tourism Agenda 2018-2022, the National Tourism Blueprint 2030, and the Big-Four Agenda. However, due to the volatility of the tourism industry, stiff competition, rigid tourism policies, and pandemics, tour operators’ performance has recorded a 2% steady decline since 2011. Therefore, this paper explores the upscaling of performance using a differentiation strategy among tour operator companies in Nairobi City County. The study followed a descriptive design approach, with the balanced scorecard and Porter’s generic strategies forming the theoretical basis. Fifteen (15) company owners and 210 managers participated in the study. Data were collected using structured questionnaires and interviews. Stratified simple random sampling was used to sample respondents from the companies while purposive sampling was used to select company owners. Data collected were analyzed in SPSS (Ver.26) using descriptive statistics to infer variable characteristics. Inferential statistics; Pearson correlation, ANOVA, and simple linear regression were used to detect the strength of the relationship and test the hypothesis. Correlation analysis revealed a strong positive relationship between differentiation strategy and organizational performance (r=0.77, P=0.000), leading to the rejection of the null hypothesis. Regression analysis revealed an adjusted R2(0.602) indicating that differentiation strategy explains 60.2% of organizational performance’s variation (b=0.594, P=.000). The study recommends that tour operator companies should develop innovative packages based on place and price and significantly invest in R&D to enhance a strong brand for optimal performance. This study provides policymakers with an avenue to scrutinize levels of organizational performance using a strategic management approach.