THE EFFECT OF TECHNOLOGICAL INNOVATIONS ON MANAGING ENERGY COSTS IN STAR-RATED HOTELS IN NAIROBI CITY COUNTY, KENYA

Abstract

The hotel sector is a heavy energy user, with energy costs being the second-largest expense, after labor. In Nairobi City County, high occupancy levels and high electricity tariffs have compounded energy costs for star-rated hotels. This research examined the effect of technological innovations on managing energy costs in star rated hotels in Nairobi City County, Kenya. In particular, it explored the effects of energy monitoring, energy management, energy-efficient, and solar energy technologies on managing energy costs. A convergent parallel mixed methods approach was used. A census of the 54 star-rated hotels in Nairobi City County was performed. A sample of 246 was determined using the Yamane formula. Structured questionnaires were distributed to engineering staff, maintenance staff, and electricians (210 with a response rate of 77.2%), and unstructured interviews were held with general managers and accountants (30 with an interview response rate of 83.3%). The quantitative data were analyzed using descriptive statistics (percentages, means, and standard deviations) and inferential statistics (Pearson correlation, simple and multiple regression, and ANOVA). The qualitative data were analyzed thematically. Findings showed that the four types of technological innovations had a positive effect on managing energy costs (p < 0.01). Energy-efficient technologies were most correlated with managing energy costs (r = 0.857, R² = 0.735) and LED lighting had the highest adoption rate (82.6%). Energy management technologies had a strong association with managing energy costs (r = 0.804, R² = 0.647). Solar energy technologies had a strong effect on managing energy costs (r = 0.787, R² = 0.620), but low adoption (39.5% for electricity generation) because of their high initial cost (80.0% agreement). Energy monitoring technologies allowed real-time monitoring of energy anomalies, especially in higher-star rated hotels (5-Star-rated). The multiple regression analysis revealed that the combined use of all four technologies explained 71.4% of variance in managing energy costs (R² = 0.714, F = 115.58, p < 0.01) with the strongest effect of solar energy technologies (β = 0.348). The qualitative results revealed that the high initial technology investment cost, lack of technical know-how, infrastructure deficiencies, and difficulty integrating with existing systems were the key barriers, particularly in two-star and three-star hotels. The research findings suggest that all four types of technologies have positive effect on managing energy costs in star-rated hotels. The Diffusion of Innovation theory explains the pattern of adoption with higher-star hotels (5-Star and 4-Star) as innovators and lower-star hotels (2-Star) as laggards. From a Resource-Based View, the technologies serve as valuable, rare and inimitable resources that offer cost competitive advantage. The study advises hotel practitioners to adopt low-cost, high-return technologies initially (LED lighting, smart thermostats), to audit energy needs before investment, to train staff and to investigate financing options for solar technologies. Government should provide tax incentives, offer subsidized loans for lower-star hotels, set up energy consumption standards according to star ratings, mandate energy audits for higher-star hotels, and promote technical training. Future research should engage in longitudinal studies, undertake comparative studies across Kenyan counties, measure return on investment for each technology category.