Official Explanation
1. For each of the following sponsors, select Yes if an attendee of the sponsor's conference would spend less money by employing the ROB strategy -- paying the lowest possible room rate in the host hotel and paying the nondiscounted registration fee -- than by reserving a room in the block. Otherwise, select No.
An attendee of the conference sponsored by CC would pay, for registration and a room in the conference block,
$620 + 2($110) = $840
By employing the ROB strategy, an attendee would pay
$720 + 2($70) = $860.
Therefore the attendee would not save money by employing the ROB strategy.
The correct answer is No.
An attendee of the conference sponsored by FFNA would pay, for registration and a room in the conference block,
$275 + 2($140) = $555.
By employing the ROB strategy, an attendee would pay
$325 + 2($70) = $465.
Therefore the attendee would save money by employing the ROB strategy.
The correct answer is Yes.
An attendee of the conference sponsored by HMHPA would pay, for registration and a room in the conference block,
$575 + 2($104) = $783.
By employing the ROB strategy, an attendee would pay
$600 + 2($79) = $758.
Therefore the attendee would save money by employing the ROB strategy.
The correct answer is Yes.
2. For each of the following sponsors, select Yes if an attendee of the sponsor's conference would spend less money by employing the ROHH strategy—paying the lowest possible room rate outside the host hotel and paying the nondiscounted registration fee—than by reserving a room in the block at the host hotel. Otherwise, select No.
CC
For the conference sponsored by CC, an attendee applying the ROHH strategy would save 2($110 − $65) = $90 in room charges and would pay an additional $720 − $620 = $100 on the registration fee. Therefore the attendee would spend an additional $10 by employing the ROHH strategy.
The correct answer is No.
FFNA
For the conference sponsored by FFNA, an attendee applying the ROHH strategy would save 2($140 − $65) = $150 in room charges and would pay an additional $325 − $275 = $50 on the registration fee. Therefore the attendee would spend $100 less by employing the ROHH strategy.
The correct answer is Yes.
PPOA
For the conference sponsored by CC, an attendee applying the ROHH strategy would save 2($105 − $65) = $80 in room charges and would pay an additional $550 − $400 = $150 on the registration fee. Therefore, the attendee would spend an additional $70 by employing the ROHH strategy.
The correct answer is No.
3. Assume that host hotels receive a reimbursement from the conference organizers for 25% of the block rate per night for each unoccupied room in the conference block. For each of the following hotels, select Yes if, for at least one conference on the weekend listed, the hotel would lose room revenue if a room in the block is vacant because an attendee employed the ROB strategy. Otherwise, select No.
Asiawest Center
For a hotel to lose room revenue in this scenario, the lowest rate must be less than 75% of the block rate. This will occur when the ratio of the lowest rate to the block rate is less than 0.75.
For the conferences hosted by the Asiawest Center, the ratios are 185/190≈0.97 for the conference sponsored by CDA and 185195≈0.95 for the conferences sponsored by QRTA and RCD. Therefore the Asiawest Center would not lose room revenue.
The correct answer is No.
Bard Inn
For the one conference hosted by Bard Inn—sponsored by PNDA—the ratio is 125/125=1; thus the Bard Inn would not lose room revenue.
The correct answer is No.
Hilton
For the conference sponsored by CC, the ratio is 70/110≈0.64, which indicates that the host hotel, Hilton, would lose room revenue.
The correct answer is Yes.
4. Many individuals stand to benefit financially from attendees at conferences. For each of the following individuals, choose Loss if the individual would likely earn less money if rooms in the conference block are vacant because of attendees using ROHH strategies. Otherwise select No loss.
Speaker hired by a conference on education to speak about school reform
It is more likely that the speaker's compensation is a fixed cost for the sponsors of the conference. There is nothing in the information provided to suggest that the speaker would earn less as a result of attendees using ROHH strategies.
The correct answer is No loss.
Room service waiter at the conference hotel whose earnings are primarily from gratuities
If attendees are employing ROHH strategies, then necessarily they would not be staying in the conference hotel. If this contributes to vacancies in the host hotel as is suggested, then it is likely that fewer people would be ordering room service. Therefore, it is likely that the waiters would earn less.
The correct answer is Loss.
Salaried front desk manager at the conference hotel
Salaries are usually fixed amounts; thus, the front desk manager's salary most likely represents a fixed cost for the host hotel. There is nothing in the information provided to suggest that the front desk manager would earn less.
The correct answer is No loss.
5. Let X denote the block rate of the host hotel for a particular conference, and let Y denote the lowest room rate available in the host hotel outside of the conference block. For a conference that requires a two-night hotel stay, which one of the following expressions represents the least amount of discount on the conference registration fee that, according to the article, would be sufficient to deter conference attendees from employing the ROB strategy in choosing accommodations?
For an attendee employing the ROB strategy, the savings on room fees is $X − Y per night. Over two nights, then, the attendee would save $2(X − Y). According to the study cited in the article, a registration discount equal to half of the savings of an attendee’s cost-saving strategy would be sufficient to deter the use of that strategy. Therefore the registration discount should be set at
\(\frac{2(X−Y)}{2} = X−Y\)
The correct answer is C.