Critical Reasoning

Last year, the Innside Holiday group of hotels recently underwent a major transformation from being an upmarket hotel to an eco-hotel with environmentalism being its core driver as well as unique selling proposition. One year after the transformation, Innside Holiday revealed that its average occupancy rate is down from 80% to 60% but revenues have increased by nearly 20%.

All of the following, if true, explain the rise in revenues of Innside Holiday, EXCEPT:

A. The Innside Holiday Group has increased tariffs for its rooms by more than 50%.

B. The Innside Holiday Group's revenues from its restaurant and spa increased after its transformation to an eco-hotel and compensate for the decrease in occupancy rate.

C. The Innside Holiday Group reduced the cost of its operations by 40%.

D. The Innside Holiday Group generated significant revenues from the sale of products made from its recycled waste.

E. The Innside Holiday Group has increased the number of rooms available at its hotels by more than 50%.

Source pls ??

[spoiler]my take A/D ...go with D ![/spoiler]

IMO B.
All of the following, if true, explain the rise in revenues of Innside Holiday, EXCEPT:
B. The Innside Holiday Group's revenues from its restaurant and spa increased after its transformation to an eco-hotel and compensate for the decrease in occupancy rate.

"Compensate" doesn' explain the "rise".

I am confused between two options :

B. The Innside Holiday Group's revenues from its restaurant and spa increased after its transformation to an eco-hotel and compensate for the decrease in occupancy rate.
B seems to be correct because of the word : compensate.

E. The Innside Holiday Group has increased the number of rooms available at its hotels by more than 50%.
E seems to be correct because it says the number of rooms has increased by 50%, but it is already told to us that occupancy rate is down from 80% to 60% which means increasing the number of rooms will not help to increase the revenue.

EXPERTS Please Help.

The question stem is asking: what does NOT explain a reason for rise in revenues (not rise in profits - note that there's a difference between revenue and profits). I think all the options except C explain why revenues are higher. C explains why profits are higher - due to decline in operating costs. It does not explain a reason for any increase in revenues.
So I think it should be C.

I think it is E.

I would also like to know the source of this question.

Here is why: the current definition of a "tariff" is a tax. There is an older definition of "tariff" which means a "book of rates" or a "list of prices." This definition might be used in other countries, but on the GMAT a tariff would mean a tax - or if the definition is different in different places it would be considered unfair and not used.

Now assuming that the authors mean to use "tariffs" to mean "rates" then the correct answer will be C.

srcc25anu is right. Choice C does explain why profits would be higher (since expenses are lower). And we are looking at revenues so C does NOT explain increased revenues.

So I think that choice C is meant to be the correct answer for this one. Assuming that tariff is not a government tax.

Hello All,
Thanks for the replies.

Source of the question is local test prep company.
Explanation:

All options, EXCEPT (C), explain the increase in revenues despite the fall in occupancy rates.

(A) Decrease in occupancy compensated by an increase in price leads to an increase in turnover.

(B) Increased revenues from other services accounts for the rise in revenues.

(C) Correct. Decrease in costs does not explain the rise in revenues. If it were profits that rose instead of revenues then a decrease in costs would definitely explain it.

(D) Increased revenues from other services accounts for the rise in revenues.

(E) Despite decrease in occupancy rates, increase in the total number of rooms by more than 50% means that more rooms were rented out and, hence, revenues increased.

psm12e -

Just curious, in common usage, where this question was written, does "tariff" mean "a list of prices" or perhaps "the published rate"?