I guess going from the demand side will be quite challenging so I'm trying to find a supply-side approach but I'm not very satisfied with what I've come up so far.
Many thanks !
How would you approach a market sizing of the hotel industry in any given country (US or France for instance)
1 answer
Hi,
I would try to make an estimation from demand side:
- We cant split market value into two components: $ spent by citizens of given country and $ spent by people from abroad. I think that we can make a decent estimation of percentage of reservations from abroad. I guess that for US it is less than 10% and for European countries slightly more (10-20%?). Not sure about that, but certainly it is not more than 20-30%, so we are not making huge mistake.
- Now we need to calculate how much $ do citizens of, let's say, US spend annualy. In order to calcualate that, I would split it into business travels and holidays.
- For business travels: x% of people 18-65 y.o. do business travels y times a year. Each travel is on average z nights and one night costs u.
- The same for holidays, but I would look at families
- edit: I forgot to mention that for 3. and 4. we need to include % of travels within given country
I checked numbers for US and it seems that this approach has passed sanity check. What do you think?
(edited)
Many thanks for your answser! I like your approach which is clear and MECE. I fear though that there may be a lot of estimates that would be hard for me to make precisely. I would have to guess for instance what is the % of Hotel stays vs Airbnb stays for leisure vacations etc. My first guess was to begin with supply ie #hotel x #rooms/hotel x occupation rate x average price /room x 365, but then estimating the number of hotels is quite challenging …. Anyway thank you for your answer, I think both approaches can work depending on which set of hypothesis you feel more secure dealing with ! — on Jan 22, 2018
Related BootCamp article(s)
Market Sizing
Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.
1 Q&AImportant Facts
It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.
1 Q&ARelated case(s)
Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case
You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case
Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case
Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in ... Open whole case
Our client Pharma Finance just finalized its first investment round and received $ 40m to invest in the build-up of a pharmaceutical manufacturing company. The CEO is mainly interested in high margins and profitable markets, with a sustainable and green production. This is why he wants you to find o ... Open whole case
