Several studies have highlighted Combine Heat and Power (CHP) systems to be one of the proven and reliable technologies that can improve the efficiency of heat and electricity generation. The extensive adoption of this type of technology is crucial in reducing building emissions globally and in the U.K. This work uses a dynamic simulation software to evaluate the effect of CHP on the energy performance of an existing U.K. hotel and subsequently an approach to aid in the selection of optimum CHP size. The outcome of the study indicated that CHP systems in hotel buildings can provide considerable economic and environmental benefits with either maximally-sized CHP founded on the building’s base heat demand or with reduced CHP size of more than 50% smaller than the estimated maximum size. The optimum size design can be obtained through evaluation of the relationship between the main performance parameters and their variation with CHP sizes.