• NEW! FREE Beat The GMAT Quizzes
Hundreds of Questions Highly Detailed Reporting Expert Explanations
• 7 CATs FREE!
If you earn 100 Forum Points

Engage in the Beat The GMAT forums to earn
100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## Over the last five years, demand for hotel rooms in Cenopoli ##### This topic has 1 expert reply and 0 member replies ### Top Member ## Over the last five years, demand for hotel rooms in Cenopoli ## Timer 00:00 ## Your Answer A B C D E ## Global Stats Difficult 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. OA B Source: GMAT Prep ### GMAT/MBA Expert GMAT Instructor Joined 04 Dec 2012 Posted: 1996 messages Followed by: 237 members Upvotes: 1443 If we want to EVALUATE an argument, we need to establish the conclusion of the argument and its supporting premises. We then need to determine what information is MISSING. Premises: - demand for hotel rooms in Cenopolis has increased significantly - so has the average price Cenopolis hotels charge for rooms. - These trends are projected to continue for the next several years. Conclusion: Centennial Commerical is considering a plan to convert several unoccupied office buildings into hotels in order to maximize its revenue from these properties Missing Information: If a conclusion is about PROFIT, we need information about both REVENUE and COSTS. We're given that demand & price for hotel rooms are both high, so that suggests that revenue will be high. But there is missing information: - will the revenue increases exceed the costs of converting these buildings? - will the converted office buildings be as appealing to customers as the other hotels are? - will this MAXIMIZE profit? In other words, are there other ways to maximize revenue and/or minimize costs? Before we look at the answer choices, a note about EVALUATE question strategy: each answer choice on an evaluate question will be posed as a QUESTION. If we want to determine whether that question helps us to evaluate the validity of the argument, we should ask ourselves: What would a "yes" answer do to the conclusion? What would a "no" answer do? We're looking for a question for which a YES answer would WEAKEN the argument, and a NO answer would STRENGTHEN (or vice versa): (A) Whether the population of Cenopolis is expected to grow in the next several years. - if yes... maybe demand for hotels would increase? But maybe not, since hotels might be used primarily by out-of-towners. This doesn't address any of our questions. (B) Whether demand for office space in Cenopolis is projected to increase in the near future. - if yes... developers could get revenue from from these buildings without the additional cost of converting them to hotels. This would weaken the argument, since it suggests that converting to hotels might not maximize costs. - if no... this strengthens the plan: hotels are likely to bring in more 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. - if yes... this has no impact on the revenue or costs associated with converting office buildings to hotels. - if no... it also has no impact on the argument. (D) Whether demand for hotel rooms has also increased in other cities where Centennial owns office buildings - if yes... this has no impact on the argument, which is only concerned with Cenopolis. - if no... no impact either. (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. - if yes... it's tempting to think that this could be lower revenue than traditional hotels. But that's not the point - our conclusion is not that Centennial will make more money than traditional hotels will. The conclusion is that converting will maximize the company's profits. That could certainly still be true even if the hotels are small. This doesn't give any additional information about the revenue v. cost comparison of office buildings --> hotels. - if no... no change to the argument. The only answer that helps us to answer one of our outstanding questions is B. _________________ Ceilidh Erickson Manhattan Prep GMAT & GRE instructor EdM in Mind, Brain, and Education Harvard Graduate School of Education Manhattan Prep instructors all have 99th+ percentile scores and expert teaching experience. Sign up for a FREE TRIAL, and learn why we have the highest ratings in the GMAT industry! Free Manhattan Prep online events - The first class of every online Manhattan Prep course is free. Classes start every week. • Get 300+ Practice Questions 25 Video lessons and 6 Webinars for FREE Available with Beat the GMAT members only code • 5 Day FREE Trial Study Smarter, Not Harder Available with Beat the GMAT members only code • 1 Hour Free BEAT THE GMAT EXCLUSIVE Available with Beat the GMAT members only code • Free Veritas GMAT Class Experience Lesson 1 Live Free Available with Beat the GMAT members only code • Free Practice Test & Review How would you score if you took the GMAT Available with Beat the GMAT members only code • Award-winning private GMAT tutoring Register now and save up to$200

Available with Beat the GMAT members only code

• 5-Day Free Trial
5-day free, full-access trial TTP Quant

Available with Beat the GMAT members only code

• Magoosh
Study with Magoosh GMAT prep

Available with Beat the GMAT members only code

• Free Trial & Practice Exam
BEAT THE GMAT EXCLUSIVE

Available with Beat the GMAT members only code

• FREE GMAT Exam
Know how you'd score today for \$0

Available with Beat the GMAT members only code

### Top First Responders*

1 Jay@ManhattanReview 70 first replies
2 fskilnik@GMATH 50 first replies
3 Brent@GMATPrepNow 50 first replies
4 GMATGuruNY 33 first replies
5 Rich.C@EMPOWERgma... 27 first replies
* Only counts replies to topics started in last 30 days
See More Top Beat The GMAT Members

### Most Active Experts

1 fskilnik@GMATH

GMATH Teacher

106 posts
2 Brent@GMATPrepNow

GMAT Prep Now Teacher

94 posts
3 Max@Math Revolution

Math Revolution

93 posts
4 Jay@ManhattanReview

Manhattan Review

82 posts
5 GMATGuruNY

The Princeton Review Teacher

77 posts
See More Top Beat The GMAT Experts