Leveraging Financial and Non-financial Strategies for Shareholder Value Growth: A Study of Selected Hotels in Zimbabwe

Abstract

This study used a combination of quantitative and qualitative designs so as to gain a deeper insight on strategies used to achieve performance goals (shareholder value growth) in selected hotels in Zimbabwe. A self administered questionnaire was used to gather primary research data which was analyzed by the Statistical Package of Social Sciences (SPSS). The research findings were that all hotels use the financial, customer satisfaction, internal business processes, and innovation and learning strategies in order to achieve shareholder value growth. Apart from customer satisfaction, in which Hotel Group 3 recorded the highest mean of 4.5714 and Hotel Group 4 the lowest mean of 3.6667, the research has proved that generally all hotels apply the financial ad non-financial strategies in the same measure. The PE ratio was perceived to have performed superior with a mean of 3.7333 and standard deviation of 1.07146. EPS and dividend yield ratios also performed well with means of 3.7167 and 3.6500 respectively and standard deviations of 1.02662 and 1.03866 respectively. EPS is mostly driven by internal business process strategy as indicated by a significant correlation of .689 and to a lesser extent by financial strategy which had a correlation of .413. PE ratio had a significant correlation of .599 with internal business process strategy and a weaker correlation of .313 was recorded in financial strategy. Dividend yield growth, on the other hand, recorded a strong correlation of .553 with customer satisfaction strategy and a weaker correlation of .460 was noted with innovation and learning strategy. On the whole, the strongest correlation was found to be with internal business process strategy with an average mean of .611, followed by customer satisfaction strategy with a mean of .567, innovation and learning strategy .499 and finally financial strategy with the least average correlation of .407. EPS was affected by international business process strategy (46.5%) and customer satisfaction strategy (10.3%). Internal business process strategy had a 34.8% effect on PE ratio growth and dividend yield growth was affected by two factors, customer satisfaction strategy and financial strategy which contributed 29.4% and 12.2% respectively. The study revealed that, there is a relationship between hotel performance and strategies employed. Internal business process and customer satisfaction strategy had a bearing on the performance of the Earnings per Share (EPS), while dividend yield growth ratio was affected by customer satisfaction and financial strategies. On the other hand the Price Earnings ratio (PE) was affected by one factor only: internal business process strategy. Overall, internal business process strategy has been proven to have the strongest relationship while financial strategy has the weakest relationship.