INFLUENCE OF BOARD DIVERSITY ON PERFORMANCE OF FIVE STAR HOTELS IN KENYA

Abstract

Hospitality industry plays a critical role in a country‟s economic development. In Kenya, even
though the sector is the second largest foreign exchange earner the industry faces a myriad of
challenges. The purpose of the study was to assess the relationship between board diversity and
performance of five star hotels in Kenya. The study was hinged to Stewardship Theory. The
study adopted descriptive research designs and used quantitative approach. The unit of analysis
was five star rated hotels and hence the study targeted all the fifteen five start hotels operating in
Kenya, while the unit of observation was 198 (head of departments, managers and board
members). The respondents were sought through census. Structured questionnaires were the
main tool to collect primary data from the targeted respondents. The study used regression
analysis and the findings revealed that there is significant relationship between board diversity
and performance of five star hotels. The study concluded that board diversity had a significant
effect on performance of five star hotels. It was also concluded that firm size had a significant
moderating effect on the relationship between corporate governance and performance of five star
hotels in Kenya. The study recommends that board composition, ownership concentration, board
diversity need to be facilitated to improve performance of five star hotels in Kenya. This could
go a long way in ensuring there is improved performance of five star hotels in Kenya.