Customer Relationship Management and Firm Profitability in Hotels in the Greater Kampala Metropolitan Area, Uganda

Abstract

Customer Relationship Management (CRM) seeks to improve customer satisfaction, retention, and loyalty, and eventually enhance firm profitability This study examined the effect of Customer Relationship Management on firm profitability in hotels within the Greater Kampala Metropolitan Area (GKMA), Uganda. The study was motivated by the growing need for hotels to strengthen customer relationships in order to improve firm profitability amidst increasing competition in the hospitality industry. Guided by the Resource-Based View Theory and the Service Profit Chain Theory, the study adopted an explanatory sequential mixed-methods design grounded in the pragmatist paradigm. Quantitative data were collected from 340 frontline employees and qualitative insights from hotel managers and customers. Quantitative data were analyzed using descriptive statistics, Pearson correlation, and regression analysis, while qualitative data were analyzed thematically. CRM was assessed through dimensions of people, technology, and processes, while profitability was measured using ROI, ROE, and Net Profit indicators. Findings indicated high CRM implementation, with a strong positive correlation between CRM and profitability (r = 0.8777, p < .001). Regression analysis confirmed CRM as a significant predictor of profitability (β = 1.0109, p < .001), explaining 77.04% of profitability variation. The study concludes that effective CRM practices can enhance customer retention and financial performance, recommending further investment in integrated CRM systems and employee training, and customer-focused strategies to strengthen profitability and competitiveness within Uganda's hospitality sector.