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Estimate the total number of nights (nuitées) spent in hotels in France

Anonymous A asked on Oct 21, 2018

Hi everyone,

I was asked this question by a Principal at an MBB and I'm not sure I got the right methodology. Here's an idea of what I did:

1) Estimate the number of hotel guests:

  • 3 segments (local tourists, foreign tourists, business travellers).
  • For locals, I assumed that X number of those aged 18-70 ever go on holidays, of which Y number of them decided to visit France, and Z of them didn't have friends/family/secondary residence.
  • For tourists, I told him from what I read recently, there were ~90M tourists visiting last year (really not sure about bringing a personal knowledge in that case..)
  • For the business travellers, I just assumed they represented a fraction of foreign tourists - 5%. Why 5%?

2) Multiply by their respective average hotel stay: assumption was that foreign tourists stayed longer, then business travellers and then locals.

Needless to say he was neither please by my methodology nor my answer. If anyone can help me figure out/understand how I could have better answered this question, it would be appreciated.

Thanks!

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Guennael replied on Oct 22, 2018
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By definition, your final answer is wrong, but the beauty of these exercises is, neither you nor the interviewer know the right answer. As long as your logic was sound and the final is believable, you would be fine.

In your example, I think the logic is sound indeed. Ok to bring in some outside knowledge; ok as well to make assumptions of course (cf. '5%'). What you might want to do is do a soft check witth the interviewer to confirm he/she agrees with these numbers. For example, "is it fair to assume ...", or "I will estimate that this number is 5%; does that sound right?", or "if that is ok with you, I will ..."

Do you have any update on the outcome of your interview? Let us know!

Elias
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replied on Oct 22, 2018
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Anonymous,

your approach is pretty solid, no major flaws there.

I would, however, challenge your business sense:

If I would have to attack something, I would first challenge you on the business travel assumption.

  1. First of all, most business travel is domestic, so why should they be a percentage of a totally unrelated number?
  2. Also, why would you assume that foreign tourists spend more nights per person? An average foreign tourist spends maybe a week in France (remember, you're counting people doing an overnight trip to Paris as well as those spending a month on the Côte d'Azure).
  3. Most people who travel for business travel far more than that. So I would assume that business travellers make up most of the nuitées.

Hope this helps,

Elias

Francesco replied on Oct 23, 2018
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Hi Anonymous,

I would comment as follows on your structure:

  • Good idea to divide in channels
  • Business travellers could indeed be locals as well as mentioned by Elias, this seems to be the biggest issue with your structure
  • There is no explanation why foreign business travellers stay longer than locals

Given your structure was ok besides minor refinements, it could be that communication was the main issue in this case. Whether you present an overall structure, or you go through each point in an unstructured fashion could indeed make quite a difference in the interviewer perception.

Best,

Francesco

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