INVESTMENT APPRAISAL AND FINANCIAL PERFORMANCE OF THREE-STAR RATED HOTELS IN NAIROBI COUNTY

Investment appraisal techniques are drivers of financial performance by supporting informed capital allocation, profitability assessment, liquidity planning, and risk evaluation. This study examined the influence of investment appraisal techniques on the financial performance of three-star rated hotels in Nairobi County, Kenya. The study used an explanatory sequential research design that targeted 65 three-star-rated hotels. For the study,the finance officers from these hotels were used in the collection of quantitative data. The data was collected using structured questionnaires. Instrument validity, reliability, and pilot testing were carried out before data collection. For the data analysis, SPSS was used to carry out descriptive statistics, Pearson correlation, and multiple regression analysis. The results from the analysis showed that the Internal Rate of Return (β = 0.468) had a significant influence on the financial performance of three-star-rated hotels in Nairobi County, Kenya. From this study, it was concluded that appraisal techniques enhance the financial performance and sustainable growth of hotels.Based on the findings, it is recommended that three-star rated hotels in Nairobi County should adopt IRR as a primary tool for evaluating long-term investments.