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In a mature tourist market such as Bellaria there are only

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VP
Joined: 16 Jul 2009
Posts: 1065
Schools: CBS
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In a mature tourist market such as Bellaria there are only  [#permalink]

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07 Jun 2010, 13:44
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In a mature tourist market such as Bellaria there are only two ways hotel owners can increase profits: by building more rooms or by improving what is already there. Rigid land-use laws in Bellaria rule out construction of new hotels or, indeed, any expansion of hotel capacity. It follows that hotel owners cannot increase their profits in Bellaria since Bellarian hotels______
Which one of the following logically completes the argument?
(A) are already operating at an occupancy rate approaching 100 percent year-round
(B) could not have been sited any more attractively than they are even in the absence of land-use laws
(C) have to contend with upward pressures on the cost of labor which stem from an incipient shortage of trained personnel
(D) already provide a level of luxury that is at the limits of what even wealthy patrons are prepared to pay for
(E) have shifted from serving mainly Bellarian tourists to serving foreign tourists traveling in organized tour groups

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Intern
Joined: 24 Mar 2010
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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07 Jun 2010, 20:11
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I would say the answer is D.

The only two ways you can increase profits is to build more rooms or improve existing rooms, but you can't build more hotels or increase current capacity. So hotels would have make existing rooms better.

D says why the hotels wont be able to increase profits. If the hotels already provide the peak of luxury then you can't make the rooms better by themselves and, thus, you can't increase revenue by making existing rooms nicer or more luxurious.

Hope that helps.

What is the OA?

Thanks,

Jared
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Schools: IU, UT Dallas, Univ of Georgia, Univ of Arkansas, Miami University
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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08 Jun 2010, 01:48
IMO D. Thanks for the nice explanation sk818020.
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Joined: 12 Jun 2010
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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12 Jun 2010, 02:20
Another one for D. What is the OA?
Manager
Joined: 24 Dec 2009
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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16 Jun 2010, 11:04
Its D.

The question stem ends with since, hence what next is going to follow it will be premise to the argument. So what can be the possible premises or reasons for hotels in Bellaria for not getting the increased profits.
As mentioned in the argument, 2 possible reasons to increase the profits are -

1. expand the hotels by increasing number of rooms ( not a possible option in Bellaria due to laws)
2. make the hotel more attractive.

So if the hotels in Bellaria are already attractive, there can be no other possible options to increase the profits. Hence D.

It's not B because, option B is not suggesting any reason for not getting the increased profits.

I hope your doubt is clear.

Thanks,
Akhil M.Parekh
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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20 Jun 2010, 07:40
Was in b/w A and D but chose A. What's OA?

A - since approx 100% occupancy rate already exists so whatever facilities along with pricing are available is sufficient to pool the tourists and only way to extend that facility is either to extend the hotel or build another hotel of same standard

B - Irrelevant

C- It applies even if another hotel is built. Infact it will worsen the situation in that case.

D- It gives an indication of the service and standard the Hotel provides. Just catering to wealthy people doesn't ensure higher profitability because proportion of the wealthy tourists is not known. Middle class people can be majority.

E - Too many assumptions are required to choose this as an option.
VP
Joined: 15 Jul 2004
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Schools: Wharton (R2 - submitted); HBS (R2 - submitted); IIMA (admitted for 1 year PGPX)
Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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20 Jun 2010, 10:38
I chose C because due to rising costs even renovations are not possible. D of course is a very good choice but I feel it's a trap because while wealthy patrons may have been stretched to the limit it does not mean that if better facilities are created - these wealthy people may not revise their limits; alternatively new wealthy folks may come in than those already there... this still leaves scope for proceeding with renovations. But if as C says there is upward pressure on costs due to shortage of skilled labor then the hotel does not have an option to upgrade...
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Re: In a mature tourist market such as Bellaria there are only  [#permalink]

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18 Jul 2018, 10:52
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Re: In a mature tourist market such as Bellaria there are only &nbs [#permalink] 18 Jul 2018, 10:52
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