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Over the last five years, demand for hotel rooms in Cenopolis has incr

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Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post Updated on: 23 Jan 2019, 04:37
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Over the last five years, demand for hotel rooms in Cenopolis has increased significantly, as has the average price Cenopolis hotels charge for rooms. These trends are projected to continue for the next several years. In response to this economic forecast, Centennial Commerical, a real state developer, is considering a plan to convert several unoccupied office buildings it owns in Cenopolis into hotels in order to maximize it's revenue from these properties.

Which of the following would it be most useful for Cenennial Commerical to know in evaluating the plan it is considering ?


(A) Whether the population of Cenopolis is expected to grow in the next several years.

(B) Whether demand for office space in Cenopolis is projected to increase in the near future.

(C) Whether the increased demand for hotel rooms, if met, is likely to lead to an increase in the demand for other travel-related services.

(D) Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings

(E) Whether, on average, hotels that have been created by converting office buildings have fewer guest rooms than do hotels that were built as hotels.

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Originally posted by alimad on 11 Jun 2008, 07:53.
Last edited by Bunuel on 23 Jan 2019, 04:37, edited 3 times in total.
Renamed the topic and edited the question.
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 11 Jun 2008, 09:40
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alimad wrote:
Over the last five years, demand for hotel rooms in Cenopolis has increased significantly, as has the average price Cenopolis hotels charge for rooms. These trends are projected to continue for the next several years. In response to this economic forecast, Centennial Commerical, a real state developer, is considering a plan to convert several unoccupied office buildings it owns in Cenopolis inot hotels in order to maximize it's revenue from these properties.


Which of the following would it be most useful for Cenennial Commerical to know in evaluating the plan it is considering ?

Whether the population of Cenopolis is expected to grow in the next several years.
Whether demand for office space in Cenopolis is projected to increase in the near future.
Whether the increased demand for hotel rooms, if met, is likely to lead to an increase in the demand for other travel-related services.
Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings
Whether, on average, hotels that have been created by converting office buildings have fewer guest rooms than do hotels that were built as hotels.


I think it is E. Although not the best, E is the only answer choice that talks about 'conerverting office buildings'. We're not so much concerned about 'office space' - even if the demand for office space increased, who know what the revenue is like for office space.
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 11 Jun 2008, 10:16
B for me

The offices are vacant due to no or low demand. If demand increased then the offices will not be vacant.

I used POE too
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 13 Dec 2010, 00:55
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This is a GMAT Prep question and the OA is B.

If the demand for office space goes up - it may generate more revenue than hotel rooms. If the demand for office space space doesnt rise - a hotel is the viable option.

Hence 2 opposing answers to option B change the overall answer.
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 13 Dec 2010, 22:00
I will go for - B

In Argument, its mentioned "Un occupied " office space... nowhere its mentioned that cenpolis will convert all his occupied offices also into hotels.... So defintly office demands are not more and revenues generating through occupied offices is also OK. So, before converting their unoccupied office space into hotel....demand of office in future should be checked by the business.....
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 01 Aug 2011, 01:11
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I will go for - B

The aim of the plan is to maximize its revenues.

If the demand for office space in Cenopolis is projected to increase in the near future, Centennial Commercial needs not to spend its money to convert its office buildings into hotels.

Converting into hotel costs a lot(purchasing furniture, hiring employees, promoting hotel, renovating, and so on.)

Compare to the situations.

Just lenting Office facilities without further investment(in the near future, the demand for office space in Cenopolis would increase) or converting into hotel.

What if you are a CEO of Centennial Commercial, which way would you choose to maximize its revenues?

e) it's too complicate to calculate. we need lots of information to know e) is correct or not.
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 24 Sep 2016, 04:35
Over the last five years, demand for hotel rooms in Cenopolis has increased significantly, as has the average price Cenopolis hotels charge for rooms. These trends are projected to continue for the next several years. In response to this economic forecast, Centennial Commerical, a real state developer, is considering a plan to convert several unoccupied office buildings it owns in Cenopolis into hotels in order to maximize it's revenue from these properties.

Type -Evaluate
Boil it down - Plan to convert several unoccupied office buildings it owns in Cenopolis into hotels in order to maximize it's revenue from these properties.
Pre-Thinking - Whether these office buildings are likely to remain unoccupied in the near future

Which of the following would it be most useful for Cenennial Commerical to know in evaluating the plan it is considering ?

A.Whether the population of Cenopolis is expected to grow in the next several years. Irrelevant
B.Whether demand for office space in Cenopolis is projected to increase in the near future. Correct
C.Whether the increased demand for hotel rooms, if met, is likely to lead to an increase in the demand for other travel-related services. Out of scope
D.Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings. Irrelevant
E.Whether, on average, hotels that have been created by converting office buildings have fewer guest rooms than do hotels that were built as hotels. Out of scope

Answer B
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 03 Jan 2017, 15:44
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Over the last five years, demand for hotel rooms in Cenopolis has increased significantly, as has the average price Cenopolis hotels charge for rooms. These trends are projected to continue for the next several years. In response to this economic forecast, Centennial Commerical, a real state developer, is considering a plan to convert several unoccupied office buildings it owns in Cenopolis inot hotels in order to maximize it's revenue from these properties.


Which of the following would it be most useful for Cenennial Commerical to know in evaluating the plan it is considering ?

Whether the population of Cenopolis is expected to grow in the next several years.
(Out Of Scope) since we are not considering the factors that have led to the rise in the demand.
Whether demand for office space in Cenopolis is projected to increase in the near future.
Most appropriate answer since if the demand for the office space also rises then ther is n need for additional investment for converting the building to hotel.Although the statistics are not provided to make it a concrete choice ,it is still the most appropriate answer choice.
Whether the increased demand for hotel rooms, if met, is likely to lead to an increase in the demand for other travel-related services.
(Out Of Scope of the arguments)
Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings
(Out Of Scope as only Cenopils hotel demands are discussed)
Whether, on average, hotels that have been created by converting office buildings have fewer guest rooms than do hotels that were built as hotels.
The choice provides a valid arument but it is irrelevant in the current scenario as the builder will anyway save money in converting the already existing building rather than building new ones as Hotels
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 06 Jun 2017, 20:53
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IMO B
Option B gives us additional reason from which we can evaluate the argument to convert office space into hotels .
If office space is going to rise then the plan to convert office to space will not be successful .


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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 18 Feb 2019, 18:56
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Hi Expert.

Why E is incorrect?

In my opinion, choice E , if yes , then fewer guest lead to fewer revenue so it weakens.
On the other hand, if no , then more guest lead to more revenue so it strengthens.


Expert please explain.
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 18 Feb 2019, 19:27
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ballest127 wrote:
Hi Expert.

Why E is incorrect?

In my opinion, choice E , if yes , then fewer guest lead to fewer revenue so it weakens.
On the other hand, if no , then more guest lead to more revenue so it strengthens.


Expert please explain.


Yeah, good question. And here's a question always worth asking with comparisons - in Sentence Correction, in Critical Reasoning, and in business - where you say "fewer revenue" and "more revenue," what are you comparing that revenue to? More revenue than...what?

The stimulus is making that comparison between revenue if we convert this office building to a hotel and revenue if we keep this building as an office building. Those are the two logical options.

E is trying to reframe the comparison and make it between revenue if we convert this office building to a hotel and revenue of other hotels that weren't converted from office buildings. But Centennial Commercial doesn't have that option - it currently has an office building and has to determine what to do with it, but it's not deciding on whether to invest in a separate, new-construction plan. Choice E hijacks the comparison, and that's why it's incorrect.
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New post 03 Mar 2019, 03:03
Option B is correct.

If there was an answer choice like:

Whether, on average, hotels that have been created by converting office buildings have fewer *guest* than do hotels that were built as hotels.
or
whether on average newer hotels had fewer guest than do the older hotels?

Can these be the right answer as well?
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New post 03 Mar 2019, 09:45
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mallya12 wrote:
Option B is correct.

If there was an answer choice like:

Whether, on average, hotels that have been created by converting office buildings have fewer *guest* than do hotels that were built as hotels.
or
whether on average newer hotels had fewer guest than do the older hotels?

Can these be the right answer as well?


No, your proposals still make the same mistake as choice (E), comparing this building to other hotels. But that's not the comparison we're looking for. We need to determine whether the current office buildings would earn more revenue if they stayed as office buildings vs. if they were converted to hotels. We're looking to compare office space to hotel space, not one type of hotel to another type of hotel.

Consider this - let's say that these office buildings are 5 floors tall whereas the hotels built as hotels are all at least 10 floors tall. Your proposals will always then mean that the hotels built as hotels will have more rooms and probably more guests. But as long as the office converted to a hotel is making more money than it used to, it doesn't matter if it's less full than or not making as much money as other hotels.

Where a "converted buildings to hotels" vs. "hotels that started as hotels" comparison might work is if you had percentage (as opposed to actual number) evidence suggesting that people would not be inclined to stay at a converted building. I think that's pretty tough to write as an answer choice in this "which question would be best to ask" kind of format because you'd need compelling evidence (in a weaken context something like "because of consumer preferences, converted hotels have on average less than half the occupancy rate of actual hotels," then you may have some evidence that this is a bad idea. In this format, maybe something like "are travelers willing to stay at hotels that were converted for such a purpose, as opposed to being initially built for that purpose" could be written to have a chance...
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr  [#permalink]

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New post 05 Mar 2019, 05:58
VeritasPrepBrian wrote:
mallya12 wrote:
Option B is correct.

If there was an answer choice like:

Whether, on average, hotels that have been created by converting office buildings have fewer *guest* than do hotels that were built as hotels.
or
whether on average newer hotels had fewer guest than do the older hotels?

Can these be the right answer as well?


No, your proposals still make the same mistake as choice (E), comparing this building to other hotels. But that's not the comparison we're looking for. We need to determine whether the current office buildings would earn more revenue if they stayed as office buildings vs. if they were converted to hotels. We're looking to compare office space to hotel space, not one type of hotel to another type of hotel.

Consider this - let's say that these office buildings are 5 floors tall whereas the hotels built as hotels are all at least 10 floors tall. Your proposals will always then mean that the hotels built as hotels will have more rooms and probably more guests. But as long as the office converted to a hotel is making more money than it used to, it doesn't matter if it's less full than or not making as much money as other hotels.

Where a "converted buildings to hotels" vs. "hotels that started as hotels" comparison might work is if you had percentage (as opposed to actual number) evidence suggesting that people would not be inclined to stay at a converted building. I think that's pretty tough to write as an answer choice in this "which question would be best to ask" kind of format because you'd need compelling evidence (in a weaken context something like "because of consumer preferences, converted hotels have on average less than half the occupancy rate of actual hotels," then you may have some evidence that this is a bad idea. In this format, maybe something like "are travelers willing to stay at hotels that were converted for such a purpose, as opposed to being initially built for that purpose" could be written to have a chance...


I was thinking fewer guest meant less money, ignoring the possibility of "converted buildings to hotels" could charge more and still make more money.

Thanks VeritasPrepBrian. Very Nicely explained :)
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Re: Over the last five years, demand for hotel rooms in Cenopolis has incr   [#permalink] 05 Mar 2019, 05:58
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