Performance Analysis of Small Hotels in Tanzania

Summary

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The purpose of this research was to analyze performance of small hotels in three major cities in Tanzania - Dar es Salaam, Arusha, and Mwanza - using unit-level financial data. Results showed that small hotel efficiency in these three cities is being impacted by scale and location effects, and an inefficient use of labour input. Continued focus on increasing capacity utilization and allocating resources to develop human resources are the challenges facing industry practitioners and government policy makers. This study contributed to literature through a comparative spatial analysis of small hotels' performance using novel data collection methods.

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Extract

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Performance Analysis of Small Hotels in Tanzania

INTRODUCTION

Tanzania is amongst the few African nations allocating resources to develop entrepreneurial activity, especially in hospitality industry. Amongst the primary source of this entrepreneurial activity are small hotels, restaurants, tour operators, and travel agencies. A recent study showed that small hotels have the potential to contribute significantly to Tanzania's economic development (Sharma, 2006). Government officials in Tanzania are aware of these opportunities and are attempting to develop a conducive environment so that these businesses can be successful. Recent descriptive studies also have shown that operating efficiencies in Tanzania's small hotels may not be at their optimum levels (Sharma & Upneja, 2005). In view of these recent industry developments and previous studies, this paper is not only timely but fills a critical gap of spatially evaluating performance in the small hotel sector. It goes further to compare these efficiencies in the three largest cities in Tanzania. The purpose of this study was to provide a comparative analysis that would lead to suggestions for industry action and policy development.

LITERATURE REVIEW

Evidence shows that small businesses are an important source of economic development and an important link to entrepreneurial activity, innovation, and j...

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