Impact of mobile phone financial services on growth of hotel industry in Kisumu Town, Kenya

Abstract

Mobile financial services have witnessed tremendous growth. This can be attributed to the ease of using these services and growth of telecommunication industry. The advantages offered by these financial services have had an impact to various business sectors. Hotels and restaurants have also benefited in many ways, be it in the ease of paying bills, making reservations or purchasing goods and services and more. The objectives guiding this research include the impact of mobile financial services on the customer base of hotels and restaurants in Kisumu, impact of mobile financial services on the revenue growth of hotels and restaurants in Kisumu, challenges encountered by the users of mobile financial services and ways in which mobile financial services can be improved.

The target population of the study consists of 236 hotels and restaurants in Kisumu town. For purposes of the study a total of 147 hotels were sampled and their responses gathered by means of a questionnaire. Proportionate sampling technique was applied to ensure that all categories of hotels and restaurants are fairly represented in the study. To enhance validity, pre-testing of the questionnaires was done on a randomly selected pilot sample of eight hotels within Lake Market in Kisumu town. The research also made use of the supervisors as experts to scrutinize the questionnaire so as to enhance content validity. The obtained data was assessed for anomalies and sorted. Ambiguous questions were deleted and difficult questions reframed. To ensure reliability, test-retest technique was used and the results were then assessed.

Analysis was performed by use of descriptive statistics and presented visually using tables and reports. A number of related literatures have been reviewed to show the use and impact of mobile financial services in different countries and its contribution to growth of an economy. Examples have been drawn from USA, India, Philippines, Brazil, Tanzania and Kenya. The development and technological advances of mobile financial services both globally and locally has also been reviewed. The study is anchored on new technology adaption theory. The conceptual framework showing relationship between the Dependent and Independent variables have also been discussed. Data was collected and analyzed using descriptive statistics and presented using SPSS and Microsoft excel package.

The findings of study established that mobile phone financial services were adopted by 70.9% of the hotels and restaurants in Kisumu town. It was adopted for payments, purchases, for paying bills and for receiving payments. The adoption of mobile phone financial services improved customer base according to 79.85% of the hotels and restaurants that had adopted MFS. An increase in revenue generation is also reported by the users .. Use of MFS comes with an increase in customer base and revenue generation of hotels and restaurants. Challenges like high cost of transaction, difficulty in accessing customer care and delays in transaction have posed as barriers to adoption of MFS. The study recommends subsidizing or waiving of the fees charged by mobile phone service providers and formulating of policies by CCK to ensure penetration of the services to the left out areas.