Case Question - What are the drivers for the accomodation market?

Hi there,

I'm going to take a step back and answer the question you're really asking: How do I use frameworks in a case?

If there's anything to remember in this process, is that cases don't exist just because. They have come about because of a real need to simulate the world you will be in when you are hopefully hired. As such, remember that they are a simplified version of what we do, and they test you in those areas.

As such, remember that a framework is a guide, not a mandate. In the real-world, we do not go into a client and say "right, we have a framework that says we need to look at x, y, and z and that's exactly what we're going to do". Rather, we come in with a view, a hypothesis, a plan of attack. The moment this view is created, it's wrong! Same with your framework. The point is that it gives us and you a starting point. We can say "right, part 1 of framework is around this. Let's dig around and see if it helps us get to the answer". If it does, great, we go further (but specific elements of it will certainly be wrong). If it doesn't, we move on.

So, in summary, learn your frameworks, use the ones you like, add/remove to them if the specific case calls for it, and always be prepared to be wrong. Focus rather on having a view, referring back to the initial view to see what is still there and where you need to dive into next to solve the problem.

Hi there, 

coming from the hospitality field prior consulting, happy to answer it. 

Accommodation is driven by mostly 2 factors (and you can plot it as a matrix)

1. the tourist 

• Size of the source market (domestic, international)
• GDP per capita/disposable income/income brackets
• Demographic, preferences 
•  Population, GDP growth

2. destination:

• Relative Attractiveness (why to visit)
• Accessibility
• Value/price
• Safety
• Closeness

Then each destination would be different, let's see example:

Apartments in Barcelona will be driven mostly by:

• Size of the youngsters in Western European tourists (UK, France, Nordics)
• Cheap flights 
• Events & weather in Barcelona

Apartments in Jeddah (KSA) will be driven mostly by:

• Size of the families in the Arabia Saudi
• Growth of middle class travelers in Saudi
• Curious, independent, young foreign travelers coming to visit Saudi
• Events & weather in Jeddah

Lucie

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With a question that focuses on drivers for a market, they are trying to assess your approach to understanding new industries. Specifically, can you quickly narrow down what drives demand for the industry from consumers. 

If you look at the vacation apartment market (I assume you mean Airbnb, VRBO etc.), a good approach here is to see what are some factors you would consider when renting one. For example, when I am looking at where I want to book an Airbnb rental, I look at the following criteria

• Location -
  • First - is it a popular and trendy vacation spot like Berlin or a less trendy spot like Frankfurt) and
  • Second - how easy is it to get there - for example many direct flights means a lot more traffic vs multiple modes of transport will make it dependent on other factors
• Weather/Seasonality  - Many sports do great during one season and not so great during other seasons. For example summer in Europe vs Winter. Other spots are great year round like the Caribbean
• Affordability - Some places like Norway are more expensive than others like Portugal which impacts demand as not everyone can afford to pay a lot for a holiday
• Availability of alternate accommodation - if there are many hotels around that are quite cheap then it may not always make sense to rent an apartment for a few days

Now these are all factors that can easily be extracted from a macro perspective as well and all drive demand for vacation rental

Now you can also add additional elements that impact any industry

• Regulation - every industry including vacation rentals are impacted by laws that can help proliferate or limit availability
• Supply limitations - there can be zoning laws or just limited availability of land to create vacation housing

Those would be some of the biggest factors that impact vacation rental markets. 

Best,

Udayan

(edited)

This is a very classical Brainstorming question. Nothing “unconventional” at all!

The big mistake that people make is to just wildly throw out random buckets. That's NOT how a good Consultant works! 

So you have to first start by aligning on the focus metric which the client is concerned about. “The market” is not a proper starting point! For example, here I could imagine it could be something like “Number of yearly customers who book accommodation”. THIS is a metric that can be worked with.

The following steps are very standard: break the metric down into logical drivers and sub-drivers, and then develop ideas about which factors are influencing each sub-driver. And that's it. Logic-based problem solving, instead of immature bucket throwing.

Cheers, Sidi

A way to think about this is how you would estimate the market size of the accomodation market, and then what are the drivers impacting each of the factors that you considered to estimate the market size.