The decline in hotel capacity, due to local and international crises, is a critical problem in the hospitality industry. Consequently, the aim of this research is to investigate the existing and potential hotel capacity in all Egyptian destinations for managing hotel capacity effectively. So, the descriptive approach was adopted in this research. Primary data collection involved the official data of the ministry of tourism in Egypt (The 34th edition of Egyptian hotel guide 2015-2016). The analysis included all fixed hotels (898) in all Egyptian destinations (41 cities). The results reveal that the growth rate of hotels, rooms, and beds is negative, as it is decreased by 24.79, 5.48, and 7.65 % respectively. The lack of one fixed hotel leads to a shortage of 19 rooms and 50 beds. Also, the research stated that the distribution of hotels and rooms (Sig. 0.00) is not normal across the categories of tourist destinations using the test of Kolmogorov-Smirnov Z. The distribution of hotels (Sig. 0.003) and rooms (Sig. 0.007) is not the same across the categories of hotel stars using the test of Kruskal–Wallis. In addition, there is a statistically significant relationship between hotels and rooms in tourist destinations (r = 0.963, Sig. 0.00) at the 0.01 level (2-tailed). There is a significance regression model between hotels (X) and rooms (Y) (r = 0.864, Sig. 0.004) at the 0.05 level, which the model is Ŷ = -268.403+ 273.075X. Most hotels are distributed in the cities of Sharm El Sheikh 20.04 % (180 hotels), Cairo 17.26 % (155), Hurghada 16.26 % (146), Marsa Alam 5.46 % (49) and Alexandria 4.9 % (44). Finally, this research has presented some recommendations for investors and decision-makers in the ministry of tourism for suitable investment in the Egyptian tourism industry.