CASH MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF STAR RATED HOTELS IN NAIROBI CITY COUNTY, KENYA
CASH MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF STAR RATED HOTELS IN NAIROBI CITY COUNTY, KENYA
Beryl Akinyi Nyangaga - Master of Business Administration, Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Moses Odhiambo Aluoch (PhD) - Lecturer, Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
Cash management is a key determinant of the sustainability and financial performance of firms, especially in the hospitality sector that faces particular challenges. Star-rated hotels must implement customized cash management solutions due to sector-specific issues such as high operational costs, volatile revenue streams, and competitive pressures. Even though cash management is becoming more and more important in Kenya, star-rated hotels in Nairobi City County still exhibit uneven compliance and financial difficulties. Through empirical data, this current knowledge gap was addressed by probing into cash management practices impacts (cash budgeting, liquidity management and centralized banking) on financial performance of star-rated hotels in Nairobi City County, proxied by Return on Assets. The study employed descriptive survey research design and the population targeted was 38 star-rated hotels in Nairobi County, Kenya. The stratified random sampling approach was utilized, and the sample of 35 star-rated hotels was determined via the Yamane (1967) formula. Data was gathered via self-administered semi-structured questionnaires. Diagnostic tests of multicollinearity, normality and heteroscedasticity were undertaken. Cronbach Alpha statistical test was utilized to estimate the reliability of the study instrument with a coefficient value of 0.82 which is above the cut-off of 0.70 and hence acceptable. Results were presented by tables. Ethical considerations were upheld throughout the examination. Utilizing Pearson correlation and multiple regression model, the study established that cash budgeting, liquidity management, and centralized banking jointly explained 69.5% of the variation in financial performance (R² = 0.695; R = 0.834; p < 0.05). Liquidity management uncovered the strongest correlation (r = 0.706), followed by centralized banking (r = 0.689) and cash budgeting (r = 0.672). The study concluded that effective cash management significantly enhances financial performance. It recommends strengthening liquidity control, improving budgeting practices, and adopting centralized banking systems for better financial outcomes. The research would be meaningful to managers and policy makers in the hotel sector to embrace the practices of cash management that drives the most optimal monetary performance.
