THE ROLE OF INTERNAL CONTROL IN ENHANCING THE PERFORMANCE CAPITAL HOTEL AND SPA

Abstract

The hospitality industry covers a range of services and activities. The industry has shown massive expansion owning to the growth of the tourism industry in Ethiopia. Five star hotels take the lion share in enhancing the conference tourism held in Addis Ababa. This study aimed at assessing the importance of internal controls in enhancing the financial performance of the five star hotel, Capital Hotel and Spa. The population for the study was employees of Capital Hotel and Spa, 318 employees, and by scientific sampling method one hundred seventy seven (177) were sampled and purposive sampling technique has been followed to select sampled employees based on the position of the respondent in the hotel. The number of respondents from each department of the hotel was in the ratio of the number of employees they have. The tool for the data collection was a self-constructed questionnaire. The research was focused on the five components of Internal Control occurring throughout the organization, at all levels, and in all functions. The data was analyzed using statistical package for social scientists (SPSS) computer software to generate cumulative frequencies and percentages. The study found a positive significant effect of internal control system on the financial performance (R = 0.938), and R2 = 0.88, thus internal control components accounts for 88% variance in performance. Hence there is need for Capital Hotel and Spa to improve on its internal control system. The response of the employees of Capital Hotel and Spa shows the feedback given by the managerial line staffs and the risk assessment process in the company is not satisfactory. Therefore, that needs the attention of the hotel top management. The findings are expected to be of value to the Capital Hotel and Spa stakeholders and form a basis for improving financial performance of the hotel.