Capacity Management And Service Industry Performance, A Case Of Sunset Hotel-Kisumu

Abstract

Effective capacity management in an industry leads to improved performance in the operations within the organization and good relationships with its stakeholders. The service industries in Kenya are going through profound changes. Customers‟ needs have changed overtime which have put a strain on the provider‟s ability to effectively provide service to its customers. The main objective of the study was to find out the impact of capacity management on service industry performance. Specific objectives were to: establish capacity management practices used in SunSet Hotel - Kisumu; and assess the impact of capacity management practices on service industry performance. The study adopted cross-sectional survey on 60 employees of SunSet Hotel-Kisumu. The researcher used questionnaires to collect primary data from the respondents using closed ended questions. Descriptive statistics and regression and Correlation analysis was used to analyse data. The study found that inventory management practices, price management practices, capacity outsourcing practices and capacity forecasting practices had a strong positive relationship with Service Industry Performance. These Capacity management practices therefore had a positive influence on service industry performance at Sunset Hotel-Kisumu. The study found that price management practices that influenced service industry performance included price discounting and regular customer pricing as well as product bundling and price discrimination. The study recommended that Sunset Hotel – Kisumu should employ effective capacity management practices to ensure that they meet the customers demand. The hotel can have flexible practices that allow them to reduce and increase capacity in relation to demand. It also recommended that Sunset Hotel – Kisumu should invest more in market research where it should work with experts to come up with expected demand charts in its stations to curb problems of shortages in some stations while there is surplus in others. This will ensure that they serve their customers better hence better service quality.