In some countries there are well-enforced laws on how many people may occupy a room. Part of this is due to fire codes. There cannot be more people staying in the hotel than allowed by that. Part of it is to protect tourism at other properties in the region. I once stayed at a rather large castle in Italy that probably could have comfortably slept 50. They were licensed for 12 or 14 (I forget) to protect the occupancy at nearby hotels and going over that could result in steep fines for the owner.