system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How does a Hotel determine how large or how many rooms to build when constructing a new building?

I live in the suburbs near a major american city and my job requires me to travel often thru the entire regional area.  I have notice a lot of new hotel construction in the suburbs, particularly among the large chain hotel (ie. Embassy suites, Best Western, Courtyard, etc.)  I often think, how does the hotel know what is the optimum number of rooms to provide so the hotel stays profitable?

It seems like most hotel developments plan on having their building stay in operation for many decades, but at the rate they seem to be building, hotels locations seem to be on almost every corner.  When the economy is good there is always new hotel construction, so it makes me believe the hotel companies think their is some need for them to build another location only a few minutes away from a current operating location.  Their must be a formula or process the hotel brands use to analysis the need for another hotel in an area.  And once they determine a location how do they determine how many rooms to provide?
gpt
Marketing folks analyze the likely travelers to an area, what they are likely to spend, and what there expectations are.  Investors bet money that those assessments are right by building a property.  The failure rate is pretty high, so this is a known risky venture.  Your expectation of "optimum number of rooms to provide so the hotel stays profitable" is unlikely.