FINANCIAL MANAGEMENT PRACTICES AND GROWTH OF THREE STAR HOTELS IN NAIROBI COUNTY, KENYA

The hospitality industry plays an important role in economic development through employment creation, tourism growth, and contribution to national income. In Kenya, three-star rated hotels represent a significant segment of the hospitality sector as they provide affordable accommodation and services to both domestic and international travelers. This study examined the influence of financial management practices on the growth of three-star rated hotels in Nairobi County, Kenya. The study focused on four key financial management practices: budgeting practices, cash flow management, financing decisions, and cost control practices. The research was guided by the Resource-Based View (RBV) theory and supported by Incremental Budgeting theory, Cash Conversion Cycle theory, Pecking Order theory, and Activity-Based Costing theory. A correlational research design was employed to examine the relationship between financial management practices and hotel growth measured using occupancy growth rate. The target population consisted of 134 registered three-star rated hotels in Nairobi County, from which a sample of 67 hotels was selected using simple random sampling. Data were collected using structured questionnaires administered to finance department heads and analyzed using descriptive statistics and multiple regression analysis. The findings indicate that financial management practices significantly influence hotel growth, with cash flow management emerging as the most influential predictor of hotel growth.