Asian Journal of Economics, Business and Accounting

The dynamic changes of globalization especially in hospitality industry, joined by the changing competitive circumstances on the world markets, innovative progressions in addition to the changing client tastes and inclinations have established a powerful business climate practically in almost all sectors including hotels. Therefore, the significance of competitive strategies in hotel sector cannot be overemphasized. This research assessed the effects of differentiation strategy on the performance of selected hotels in Garissa County. This research was based on Market Segmentation Theory. The study target population was 402 staff members from ten hotels operating within Garissa County. The study applied purposive sampling to select the study sample size. Primary data was collected using a questionnaire. Data was analysed using descriptive and inferential statistics. Study findings indicated that a unit increase in differentiation strategy resulted in 31.6% increase in performance hence improving performance. A unit increase in focus strategy resulted in 28.7% increase in hotels performance. The study recommended hotels need to enhance their web ranking as well as improve their market share using the competitive strategies. These recommendations underscore that strategic policy and operational focus on differentiation and segmentation are key drivers of sustainable growth and competitive advantage in the hotel industry.