How would you approach estimating the number of hotels in a given country (UK or US for example)?

Market sizing
Recent activity on Jun 18, 2018
2 Answers
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Anonymous A asked on Jun 17, 2018

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Anonymous B replied on Jun 18, 2018

Let's consider the example of UK:

Total population of UK - 10 million

Number of tourists visiting UK per year - 36 million (fact)

Tourists could be visiting for work or exploring places. Let domestic tourism for work, medical, family, holiday be 30% of total population - 3 milion.

Total visitors per year - 39 million

For work, visitors must be staying alone in a room, whereas since most of the hotels cater to tourists from outside, they will be residing in pairs of 2 or 3. Let it be 2 persons per room. So that makes it roughly 20 million rooms per year.

On a daily basis, about 55,000 rooms.

An average UK hotel can be assumed to have 3 floors, each floor having 10 rooms. So 30 rooms per hotel.

Assuming that year round occupancy be 60% ( UK being prefered travel destination), so 18 rooms per hotel. (we can also break it seasonly)

so, 91666 / 18 = 5000 hotels in UK

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tasya on Dec 12, 2019

I think you dont have to multiply 55,000 with 100/60 = 91666 if you already multiply 60%*30. Choose either 55000/18 or 91666/30. the result should be the same 3055 hotels.

Guennael
Expert
replied on Jun 17, 2018
Ex-MBB, Experienced Hire; I will teach you not only the how, but also the why of case interviews

I see 2 main approaches to this:

1. Top down: How many hotels are there in my city + how big is my city? -> how many times more population is there in the US/UK? -> multiply one by the other.

One obvious weakness here is that some cities are much more business / tourism / travel intensive than others

2. Bottom's up: Make assumption about how many people travel for leisure, how many travel for business -> how many nights do they stay every time, how much spare capacity do hotels have to plan (10%? 20%?), how big the average hotel is...

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