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 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.
SolutionPassage Analysis• Over the last five years, demand for hotel rooms in Cenopolis has increased significantly,
o During the last five years, demand for hotel rooms has increased a lot in Cenopolis.• as has the average price Cenopolis hotels charge for rooms.
o The average amount charged per room has also increased there.• These trends are projected to continue for the next several years.
o This increase is expected to keep going for the upcoming many years.• In response to this economic forecast, Centennial Commerical, a real estate developer, is considering a plan to convert several unoccupied office buildings it owns in Cenopolis into hotels
o A real estate developer called Centennial Commercial responded to this prediction with a plan.
o The plan is to convert many unused office buildings they have in the city into hotels.• in order to maximize it's revenue from these properties.
o The purpose is to maximize Centennial’s revenue from these buildings.Question Stem analysisWhich of the following would it be most useful for Cenennial Commerical to know in evaluating the plan it is considering?
We need to find which new information will help to evaluate this plan of Centennial commercial.Prethinking.Since the purpose is to maximize revenues, we need to see if converting the office spaces into hotels is the best method to do this. A number of things could be considered.
For example
What if there is some other business for which CC could use the unused office space which will yield higher revenue than hotel business in the upcoming years?
What if renting out office spaces commands higher revenue than hotels in the present and upcoming years?
With this Prethinking in mind let us explore the options.
Answer choice Analysis(A) Whether the population of Cenopolis is expected to grow in the next several years.
INCORRECT
Whether the population of Cenopolis grows or not has no relevance to our conclusion because we have no idea if it is the Cenoplis population that uses the hotel rooms. Plus, it has no say in identifying whether the office buildings can maximize the profit as hotels. (B) Whether demand for office space in Cenopolis is projected to increase in the near future.
CORRECTIf the demand for office space is also increasing , then they can rent the buildings out as such with no extra expense and get higher revenues from the buildings as it is. There is a question of whether hotels or office spaces give maximum profits, but the option only needs to strengthen and weaken the conclusion at both ends. Let us see:
Variance Analysis
YES- Demand for office space is projected to increase in the near future. - This weakens the conclusion that converting to hotels can maximize revenue.
NO- Demand for office space is not projected to increase in the near future-This strengthens the conclusion that says converting office space to hotel rooms is a good idea to maximize revenue.
(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.
INCORRECT
Other travel-related services are out of the scope of this question. Hence the answer choice is incorrect.(D) Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings
INCORRECT
Other cities and what happens there is out of the scope of this question. Hence this answer choice is incorrect.(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.
INCORRECT
This question compares the revenue made by office spaces to hotel rooms. This option wrongly compares the guest rooms in converted hotel rooms to hotels built for the same purpose. _________________