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IR Explained: Q1-6: Conference Strategies
May 17, 2012
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This post is part of a series, "IR Explained," that walks through the sample Integrated Reasoning questions provided in the latest edition of the GMAT Official Guide.
Start by taking plenty of time to understand the information in the tabs. The first passage, "Article," explains that hotel rooms at conference hotels can be more expensive than the typical rates for those rooms.
It then describes two strategies conference-goers can use: staying elsewhere (ROHH) and staying at the hotel but not booking through the conference (ROB). Finally, we learn that conferences offer discounts to those who stay within the block of allotted rooms, and that "if the discount is equal to at least half" of the savings of staying elsewhere, the conference-goer will stay within the block at the host hotel.
And there's more, in the "Weekend Conferences" tab. This is Multi-Source Reasoning at its best: plenty more information, both in written and table form. Continue to work deliberately, since there is important data in the passage: "attendees will require two nights lodging." In other words, if an attendee saves $50 per night by staying elsewhere, that's $100 over two nights.
Before attacking the questions, make sure you understand the table, as well. The leftmost column lists conferences, while the next two columns list the registration fee and the registration fee if the attendee stays within the allotted block of rooms. The next columns name the host hotel, the rate within the block, and the rate outside of the block. The passage gives us another point of comparison, that the cheapest room for the ROHH strategy is $65--lower than almost all of the prices in the table.
Question 1 asks, for three conferences, whether staying outside the block at the host hotel (the ROB strategy) is cheaper than staying in the block (and getting the registration discount). To determine that, consider the savings from each strategy.
For CC, the savings from the registration discount is $100. The savings from using the ROB strategy is $80 ($40 per night, paying $70 instead of $110). Thus, 1A is NO, staying in the block is cheaper than employing the ROB strategy.
For FFNA, the registration discount is $50. The savings from ROB is $140 ($70 per night). 1B is YES, since staying outside the block is less expensive.
For HMHPA, the registration discount is $25. The savings from ROB is $50 ($25 per night). 1C is YES, since staying outisde the block is less expensive.
Question 2 provides additional data: If a room in the block is vacant, the conference organizers pay the hotel 25% of the block rate. Of course, if an attendee uses the ROB strategy, the hotel is still renting a room, but at a different rate.
Start with the Asiawest Center. Note that Asiawest is hosting three conferences, and the question is asking whether the hotel would lose revenue if an attendee of any of the conferences used the ROB strategy. For CDA, the block rate is $190 and the lowest rate is $185. If an attendee uses ROB, the hotel earns $185 from the attendee and a reimbursement of 25% of $190 (nearly $50) from the conference. That's better than renting the block room! The same math applies to QRTA and RCD, where the ROB-using guest pays $185 and the conference organizers pay nearly $50.
Thus, 2A is NO. Note that you didn't have to do much math--approximation was sufficient. While 25% of $190 or $195 isn't quite $50 (25% of $200), it doesn't matter whether the reimbursement is $40, $48.75, or $57--the answer is the same.
Only one conference, PNDA, is at the Bard Inn. There the block rate and the lowest rate in the hotel are the same, so if a guest uses the ROB strategy, the hotel doesn't lose money even if the conference doesn't reimburse it. 2B is NO.
Three conferences are at the Hilton: CC, FFNA, and PPOA. For CC, if an attendee uses the ROB strategy, they pay $70, and the conference reimburses 25% of $110, or a bit more than $25. Thus, for that guest, the hotel earns a bit more than $95--a loss compared to the block rate. There's no need to evaluate the other two conferences at the Hilton: 2C is YES.
Question 3 requires more abstract thinking. Recall from the article that if the registration discount is at least half of the possible savings of the ROB or ROHH strategies, attendees will stay within the block. Since X is the block rate and Y is the non-block rate, the savings per night from staying outside the block is X - Y. The savings for staying two nights outside the block is double that: 2(X-Y).
But the registration discount only needs to be half that. Divide by two, and the result is (X - Y), choice (C).
Question 4 is very similar to question 1, except it concerns the ROHH strategy, not the ROB strategy. This is the strategy by which a conference attendee stays at the cheapest room in town ($65, in this case) rather than a room within the block. Put more simply, the question asks: Is staying at the cheapest room a better deal than staying within the block and getting the registration discount?
For CC, the registration discount is $100 and the savings from ROHH is $45 per night, or $90 for the two nights of the conference. Staying within the block is less expensive, so 4A is NO.
For FFNA, the registration discount is $50 and the savings from ROHH is $75 per night, or $150 for the two nights. Using ROHH is less expensive, so 4B is YES.
For PPOA, the registration discount is $150 and the savings from ROHH is $35 per night, or $70 for the two nights. Staying within the block is less expensive, so 4C is NO.
Question 5 does not concern itself with the room rates in the table. Instead, it asks you to think about who is affected by the ROHH strategy--that is, conference attendees staying outside the host hotel.
A speaker hired by the conference and a salaried desk manager are not financially impacted by where conference attendees stay, so 5A and 5C are NO LOSS. However, a room service waiter who depends on tips is affected by the number of guests in the hotel, so 5B is LOSS.
Question 6 asks which conference is most likely to have attendees choosing ROB over ROHH. The article gives no reason why attendees might choose one strategy over the other, so we can only assume the reason would be financial. Thus, for which of the conferences is ROB the best deal, relative to ROHH?
Since an attendee using ROHH can stay anywhere in town, ROHH is, by definition, at least as inexpensive as ROB. But if the conference is held at the cheapest hotel in the city, then ROB is indistinguishable from ROHH. That is the case for AMG, choice (A), where the lowest rate in the hotel is $65. Thus, attendees have a financial incentive to stay at the host hotel, even if they do not stay within the block.
Stay tuned (or subscribe) for more Integrated Reasoning explanations!
About the author: Jeff Sackmann has written many GMAT preparation books, including the popular Total GMAT Math, Total GMAT Verbal, and GMAT 111. He has also created explanations for problems in The Official Guide, as well as 1,800 practice GMAT math questions.
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