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Finance and Funding in Travel and Tourism - Report

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Added on  2020-01-21

Finance and Funding in Travel and Tourism - Report

   Added on 2020-01-21

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FINANACE ANDFUNDING INTRAVEL ANDTOURISMSECTOR
Finance and Funding in Travel and Tourism - Report_1
Table of ContentsINTRODUCTION ...............................................................................................................................3TASK 1.................................................................................................................................................3A Concept of CVP analysis and its importance in the financial management of CHTC.................3B Analysis of pricing methods that are adopted by CHTC for determining the price to charge from tourists ....................................................................................................................................3C Analysis of factors that gives influence on the profit earned by CHTC .....................................4TASK 2 ................................................................................................................................................4A Different type of management accounting information that is used by CHTC ..........................4B Use of investment appraisal techniques as a decision making tool ............................................5TASK 3 ...............................................................................................................................................6A Main financial investments of CHTC travel and tourism company ..........................................6TASK 4.................................................................................................................................................7A Analysis of source of funding both internally and externally that can be obtained for developing new hotel ......................................................................................................................7CONCLUSION ...................................................................................................................................8REFERENCES.....................................................................................................................................9
Finance and Funding in Travel and Tourism - Report_2
INTRODUCTION Travel and tourism sector is the largest growing industry which renders hospitality servicesto people. Millions of people travel across globe to explore new places, for business purpose, studytrips and for the recreational purpose (Mitchell, Basch and Dusetzina, 2016). Lodging operationsare the significant part of travel sector and Hotels, Motels, Resorts, Conferences centres and Resortsprovide travel facilities and amenities to people. It is vital that appropriate strategies should beformed for executing the functions in travel and tourism industry. Present report describes about theconcept of CVP analysis and its importance for financial management of travel and tourismbusiness is mentioned as well. In addition to this, analysis of pricing methods to determine chargesand cost for tourism activities is described in the report. Moreover, evaluation of factors that put aninfluence on profit earned by enterprise is mentioned here. TASK 1A Concept of CVP analysis and its importance in the financial management of CHTCCarib Happy Tours Company (CHTC) is a tour operating service provider that offerssummer holiday trips to consumers. CVP analysis method provides an effective medium forfinancial management of travel and tourism sector (Pratt and Hutton, 2013). This techniqueprovides a medium for assessing the impact of changes in cost and volume on the operatingactivities of enterprise. It is a management accounting tool that provides details about the impact ofsales volume and operational cost on final profit of business (CHTC. 2016). There are some basicassumptions that are included under CVP analysis method. It is critical that all the costs will beincluded in the category of variable or fixed.Some price needs to be constant and it consists of variable cost per unit and sales price perunit. A formula is used in CVP cost analysis method and it is as described:-Price per unit * Total number of units that are sold = Variable cost per unit + Total fixed cost+ProfitManagement of CHTC can take long term and short term decisions for carrying out businessfunctions (Vandoros and Avendano, 2013). A critical point is determined under this method and atthis point, total cost becomes equal to the total revenue earned by the enterprise. For providing tourservices, it is vital that the cost of each package of travel firm should be determined. Total revenue = Sales Price*Number of unitsThis equation is used for calculating total profit and losses that are earned by the enterprise.It also provides a method for identifying break-even point. Effect of variables such as sales volume,price and fixed and variable cost on overall profit is evaluated (Becker, Chen and Greenberg,2013). Operating income that is earned by company is calculated by making use of this formula -Operating income = Total sales- Total variable costs -Total fixed costB Analysis of pricing methods that are adopted by CHTC for determining the price to charge fromtourists Pricing methods are used for setting a suitable price of the products and services that areoffered by CHTC limited. It is assertive that appropriate pricing methods should be used for settingthe prices of services that are offered by an enterprise (Bender, 2013). It is also needed that facts,figures and data should be gathered from proper and reliable sources so that effective decisionsshould be taken related to determine pricing methods for CHTC limited. Various types of pricingmethods that can be used in the business are as described:-Market oriented pricing methods: - Analysis of market conditions is done under thismethod as well as price is also determined. Various prices that have been set by the competitor firmsfor selling their services are considered under this method. Data and facts are collected from market
Finance and Funding in Travel and Tourism - Report_3

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