Hi guys, I recently had a first round interview and the case focused on the hotel industry. In the first parte I got asked to calculate the market size for hotels in Spain and I would like to check if you guys agree with my approach:
1. I asked the interviewer if he had any data on number of tourists that go to Spain per year. He did not provide me with this information. Therefore I assumed 20 million tourists. I explained the reason for this number was due to a recent article I had read on # of passengers going through Barcelona/Madrid airports. I also explained Spain was particularly popular summer destination for the Brits and Germans (Barcelona, Ibiza, Seville, etc..)
2. I then explained not all of these 20m stay in hotels especially with the growth of platforms such as AirBnB and assumed 3/4 stayed (15m) in hotels and the remainder in other forms of accomodation
3. Then assumed on average poeple stay in rooms of 2 (hence 7.5m groups of 2 need rooms= and assumed the average stay is of 3 days and explained why. Hence 22.5 million nights a year.
3. Then assumed that on average hotels have 100 rooms
4. By dividing the 22.5m/100, this gave me 225k hotels which I thought was a very large number.
I went on to explain that my approach focussed on calculating demand and see how many hotels there are to serve this demand, and that the approach assumed these 225k hotels were operating at full capacity.
The interviewer seemed happy with my approach and liked my explanations to assumptions. I still haven't heard back and would like to know if you guys agree with the approach?
Thanks a lot