Virtual value chain and competitive advantage of five-star hotels in Kenya

Abstract

The stiff competition among the Kenyan five star hotels has forced the managers to look for alternative and cost effective ways of getting extra revenue. One of the strategies is to use Information and Communication Technology and incorporate ebusiness, which brings more business at a lower cost. Furthermore, the information captured on the computer systems is a great source of information that helps the hotel management to understand their business, their market and, their customers' needs and thereby come up with innovative products. The ability to anticipate and satisfy customer needs leads to customer loyalty and hence incremental business and revenue. The adoption of Internet marketing enables the hotels to reach a global market at a relatively lower cost compared to any other channel of marketing. The research was centered on the two concepts; competitive advantage and the virtual value chain. Literature was gathered on these concepts while paying close attention to the practice in the hotel industry. Findings from closely related studies were also considered before embarking on the actual research. The information about the adoption of Information and Communication Technology and e-business in and the performance of the five star hotels in Kenya was gathered through a questionnaire. The questionnaires were sent through both soft and hard copies and responses were available within three weeks. Data was collected in a suitable manner for ease of statistical analysis. All the pertinent information relating to the virtual value chain, competitive advantage and performance of the hotels were analyzed. A comparison was drawn between the number of computer systems used by the hotels, the number of online travel agencies, the use of Internet marketing, the rate of use of the hotel websites and the revenues from the online channels of business. The findings showed that the five star hotels that participate in Internet marketing and are in partnership with many online travel agents and make use of their websites received higher revenues from online sales and had low transaction costs.