Tourism Economics and Industry Trends

This assignment delves into the economic aspects of the tourism industry, analyzing current trends and future implications. It explores topics such as sustainable tourism, medical tourism, technology's influence on the sector (e.g., Airbnb), and the impact of globalization. The provided reading list consists of academic articles and online resources covering various facets of tourism economics.

Finance and Funding in the
Travel and Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Significance of cost and volume in financial management of T&T business..................1
1.2 Pricing techniques which are implemented in travel and tourism sector.........................2
1.3 Analysis of factors influencing profit for travel and tourism business............................4
TASK 2 ...........................................................................................................................................6
Covered in PPT.......................................................................................................................6
TASK 3..........................................................................................................................................13
3.1 Interpretation of financial statements and accounts of Dalata hotel group....................13
TASK 4..........................................................................................................................................15
4.1 Sources and allocation of funds for the development of capital projects.......................15
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Finance is a major concern of every business which need to understand by managers and
other individual in an appropriate frame. Although, for every project, there is a need of fund
which constitutes better and effective working as well as accomplishment of targets (Guttentag,
2015). Finance and funding in travel and tourism is a major aspect of every business which need
to understand by every association whom working under such consent. This project is based on
Carnival Corporation Plc and Dalata Hotel Group plc which need some fund in order to improve
their working and operations. In such aspect, management need to understand the importance of
cost, volume and profit for management decision making. Along with this, there is a need to
understand the management accounting system as a decision making tool for both association so
that appropriate and effective funding lead to take place. Moreover business need to interpret
financial accounts properly which facilitate suitable judgement as well in order to gain
appropriate opportunities.
TASK 1
1.1 Significance of cost and volume in financial management of T&T business
Carnival corporation Plc: It is biggest travel association which is operating their
business in many locations (Tribe, 2015). For example: Europe, North America and so on. Along
with, they are dealing with more than ten global cruise line brands. They cater financial help to
those individuals who wants to travel distinctive destination. Additionally, they use many
marketing activities so that they will be able to get attention of numerous persons. In modern era,
sector of travel and tourist is very advantageous because now day many individuals want to visit
other places with distinctive aims. Henceforth, there are certain facets associated with finance
according to business of travel and tourism:
Cost: It is that amount which will incur at the time of booking of package. This is
foremost elements which has to be taken into under consideration by individual so that they will
plan their tour in an appropriate and efficient way. Therefore, firm will provide suitable trip
which comes under their budget. As a result, they will make their trip memorable and
experienced (Vanhove, 2017).
Volume: This is related to service quantity as well as expenditures which will present in
financial terms, need to be considered under this. It is basically connected to overall quantity of
those tickets which is purchased by people from Carnival association.
1

Importance of costs: This is considered as main factor in the sector of travel and tourism.
If cost of company is much high then, this will provide impact to success as well as growth of an
organisation either in a direct or indirect manner (Veal, 2017). Entire things need to managed in
an appropriate manner; therefore, unnecessary mistakes will get decreased. Fundamental aim of
tour firm is to enhance their profits. For above stated purpose, they need to formulate some
strategies as well as policies so that they will be able to sell maximum packages to customers at
the time of season. Cost reduction: This is considered as the foremost element for each kind of company. By
reducing or eliminating unwanted cost from business process company will maintain
their revenues. This aids to improve image and market share of an enterprise at
marketplace (Castaño-Isaza and et. al., 2015). Decision making: It is must for an organisation to take best judgement for business as this
will assist them to cater advantage for longer period of time. As a result, they will
maintain their position at marketplace for longer period of time. Increasing performance of managers: If extra cost is saved by firm then, they will easily
save fund, which will help them to enlarge business operations. Thus, they will provide
their services at many other countries effectively (Adiyia and et. al., 2015).
Importance of volume: BEP analysis: This sort of process is utilized by company if their recent place at
marketplace is much effective as well as efficient. This is basically associated with entire
expenditures and in addition cost. It can occur operational balance; thus, Carnival firm is
trying to make an appropriate plan so that they will cover extra cost. Economical of scale: If sales of items and services get enhanced then, this will cater cost
advantages to company. Therefore, they will be easily overcome from variable cost per
unit due to synergies and operational efficiencies (Sawyer, 2015).
 Diseconomies of scale: As indicated by this phase, there is a circumstance under which
economic of scale is not operating by firm in an effective manner. This will occur
because of business size.
1.2 Pricing techniques which are implemented in travel and tourism sector
Each type of company needs to identify needs and wants of their customers so that they
will accomplish it within limited period of time. Therefore, there are many tour packages which
2

developed by manager so that they will make experience of clients more effective (Hjalager,
2015). As persons are much sensitive; therefore, the choose those items which is benefits for
them for maximum period of time. Along with, employer has to divide market to satisfy each
kind of users appropriately. Policy of price will altered as per circumstance and time.
Organisation needs to provide effective packages to their customers so that they will be able to
make their journey more experienced or rememberable. Cost for some routes are fixed by
Carnival firm which is providing by them to their customers (Airey and et. al., 2015).
Thus, there are certain pricing methodologies which are mentioned as beneath:
Cost based pricing: This is much easier manner to evaluate price in an appropriate way.
This will be classified into some parts, which are stated as beneath:
Full cost pricing: This is collaboration of fixed as well as variable cost.
Direct cost pricing: It is related to cost of variable plus overall percentage of markup.
Cost plus pricing: This is considered as an effective pricing which is using by Carnival
firm so that they will easily improve their profits.
Skimming pricing: According to this, manager of company charge higher value from
clients at beginning of tour. This is basically adopted for those
individuals who belong to high class. For instance: International
stay.
Penetration pricing: As per this, company offers less price to clients as comparison to
rivals. Like: discounts.
Demand based pricing: According to this price of package is much associated with the
demand of clients. This is considered as more real in nature (Lunt, Horsfall and Hanefeld, 2016).
Competition oriented pricing: This is also called as market oriented pricing and it
includes some basic value which is charged by contenders from customers. This will comprise
Parity, premium and discounted pricing.
Product line pricing: This is basically related to the provided package which is much
associated with one another. Along with, planning cost of these trips are not much similar. This
will be high so that sufficient revenues will be gained by firm (Hingtgen and et. al., 2015). For
instance:
3

Destination Cost (in Pounds)
Domestic location 90
National 285
International 550
Seasonal pricing: As indicated by this, price is charged by the Carnival organisation as
per season, for example: Summer pricing: At this duration, there are maximum number of individuals who visit to
other places with different aims. Thus, firm will alter prices of services which are
providing by them. Along with, they will enhance trip cost by giving some sort of
discount offers as it attracts many people towards them (Shahbaz and et. al., 2017).
 Winter pricing: According to this, many persons do not want to visit different
destinations due to high temperature. Thus, association has to choose price accordingly.
1.3 Analysis of factors influencing profit for travel and tourism business
Revenues of an organisation are basically associated with marketing activities as well as
trends. With assistance of this, they will gain attention of numerous individuals towards them.
Main income source of nation is tourist or traveller (Loh, 2015). They will get attracted towards
heritage and cultural places of country. It has been evaluated that activities and trends of
marketing very much changed the sector of travel or tourism.
Henceforth, there are certain components which will provide impact on the profits of
travel as well as tourism section:
Currency rates: Sector of travel and tourism is linked economy of country with other
nations. It has been seen that each nation is having their own currency. Along with, foreign
traveller's criteria is much high in industry of travel and tourism (Tourism information centre of
Paris, 2018). This get evaluated that rate of currency is highly depend on various factors, such as
rate of employment, fiscal deficit and GDP. In US, there is an enterprise named, Carnival
corporation and plc which is cruise based association. Dollar is utilized over there so that people
will do their financial transactions. Currency rate will fluctuate according to time; therefore, it is
not easy for firm to set revenues priorly (Tolkach and King, 2015).
4

Development: If production as well as profits of company get improved then, this will
provide success and growth to them. This assists to render positive outcomes to them which will
help to be competent in marketplace. It has been evaluated that Carnival Cruise is collaboration
of two associations; one is Carnival Corporation and another is Carnival plc. They both are very
much capable to improve the quality of items and services. Along with this, they are having
some partnership agreements with many service companies as well as cruise control ships.
Enterprise is utilizing the latest and new tools as well as methods which help them to capture
attention of number of travellers towards them (Buckley and et. al., 2015).
Government support: Success and improvement of any country is highly associated with
regulatory bodies and authorities. With assistance of these, components aid to decrease the
complexity ratio and in addition, assist travellers to comprehend laws and regulations related to
tourist places. Thus, travel industry is linked with country's economy. In many aspects, ministry
body is running tourist boards which support finance and funding and thus, sustainability as well
as profits of travel and tourism sector will get enhanced. There are many sorts of session is
organised by regulatory body which will include, awareness programmes, marketing campaign
and many others. Additionally, some bills and budget are passed by government so that tourist
segment will get developed (Guttentag, 2015).
Travelling trends: Fundamentally, three elements are much helpful in determining trend
of tourism, such as tradition, customer and in addition culture. Each nation is having their own
culture and trends which are following by them. But, US is known for combination of multiple
customs as well as trends. Along with this, it is also popular for its western culture which helps
to pull attention of large number of travellers. This assists to improve the revenues of country
and promote industry of travel and tourism. In the United States, structure and theme of Carnival
Corporation Plc is designed according to their tradition and culture. Best and royal experience is
provided to tourists through cruise as well as deluxe ships. It has been evaluated that marketing
activities are affecting the trends of travel and tourism which will render a direct impact on
profits either in a direct or indirect manner (Tribe, 2015).
Locations and destinations: This factor plays a significant role to generate maximum
revenues as well as sustainability. There are various attractive destinations which capture the
attention of numerous individuals towards them such as Hollywood industry, luxurious hotels,
infrastructures, museums, Casinos and many others. It has been noticed that tourists select
5

adventurous places and western culture on the priority basis. Instead of this, some spots are
popular due to royal weddings, events, meetings and so on. Therefore, government is supporting
country to maintain these destinations and heritage effectually (Vanhove, 2017).
TASK 2
Covered in PPT
6

7

8

9

10

11

12

13

TASK 3
3.1 Interpretation of financial statements and accounts of Dalata hotel group
Leased and owned portfolio is given as below which is showing the performance of two
subsequent years i.e. 2016 and 2017:
BALANCE SHEET 2015 2016
Fiscal Year Ends 31/12/15 31/12/16
Assets
Non-Current Assets
Intangible 34.5 46.32
Tangible 476.17 704.81
Investments 0.02 0.01
Other 4.53 5.67
Total 515.22 756.81
Current Assets
Stock 1 1.55
Debtors 8.68 13.55
Cash and Securities 109.93 69.21
Total 119.6 84.31
Held for Disposal 0 0
Total Assets 634.82 841.12
Liabilities and Equity
Liabilities
Current 41.45 58.75
Non-Current 197.38 252.81
Total 238.82 311.56
Equity
Share Capital 372.15 431.02
Reserves 23.85 98.54
Shareholders’ Funds 396 529.56
Minorities 0 0
14

Total 396 529.56
Total Liabilities and
Equity 634.82 841.12
Net Borrowings 177.58 197.02
Investment Ratios
Net Tangible Asset
Value Per Share 196.03 259.95
ROCE 6.77 7.23
ROE 6.7 7.28
Net Gearing 44.84 37.21
Gross Gearing 49.53 45.2
Cash 4.69 8
Interest Cover x 6.12 8.75
Quick Ratio r 2.86 1.41
Current Ratio r 2.89 1.44
Particulars 2015 2016 Percentage of
growth
Revenue € 225 Million €290 Million 29%
Adjusted EBITDA €62 Million €85 Million 36%
Diluted EPS €0.23 €0.27 7%
From above, it can be clearly noted that the revenue of Dalata Hotel Group in 2015 was
225 million which increases to 290 million which together represent a return of 29%. whereas
EBITDA is increased to the rate of 36% which is much more than the revenue growth. Diluted
EPS has rises to 7% growth in diluted EPS.
Profitability Ratio 2015 2016
Profitability % 23.28 22.47
15

Operating Margin
Profit Margin % 19.7 20.1
ROE % 6.7 7.28
ROCE % 6.77 7.23
According to the above ratio, it has been identified that Dalata group operating margin
was 23.28% in 2015 which starts decreasing and come to 220.47 in 2016. Whereas profit margin
has rises from 19.7 to 20.1 in 2016. The return on capital employed and return on capital
employed has also increased from 2015 to 2016.
Particulars 2015 2016
Quick Ratio 2.86 1.41
Current Ratio 2.89 1.44
Quick ratio: This is the ratio which show the liquidity position of company. From above
table, it has been noted that liquid asset of company in 2015 was 2.86 which is too good but in
2016 is was decreases to 1.41 which is not good sign for the firm.
Quick assets: current assets-stock/current liabilities
Current ratio: This ratio shows the relationship between the current assets and current
liabilities. The ideal ratio is 2 which means the asset must be double of the liabilities. For above
table, the current ratio of the Dalata group in 2016 was 2.89 which falls to 1.44 in 2016.
Current ratio: Current ratio/Current liabilities
Particulars 2015 2016
Financial Health
Net Gearing
44.84 37.21
Gross Gearing 49.53 45.2
As concerned about net gearing of company, it falls to 37.21 from 44.84 in 2016. Apart from this
the gross gearing is also goes in the same direction.
16

The Management
Dalata Group
Dated: 27th March 2018
Subject: Financial analysis for better decision making
According to the above described record, it has been examined that presenting figures are
providing favourable outcomes. In the year 2015, data is showing 82.10% as rate of occupancy
and in addition, almost 82.30% in 2018. It has been determined that rate of return in 2015 was
nearly 111.92%. After investing some amount in Dublin tourism, return rate will be 142.89% in
2018. In October’ 2017, rate per variance was identified approximately 7.7%.
It has been evaluated that decision making procedure of an enterprise is basically linked
with books of accounts which has to comprehend effectively as well as efficiently. By doing
this, manager will be able to acquire best decision for firm which is beneficial for them.
Henceforth, there are some sorts of financial statement which will be utilized by superior of
Dalata hotel group and these are stated as beneath: Cash flow statement: It is must to make an estimation regarding cash outflow and
inflow in business; therefore, they will do their work in an appropriate way. This will
assist them to take an appropriate judgement for company. With assistance of this
statement, management will be able to know about fund which they are having.
Therefore, it is required by superior to manage it in a proper manner so that unwanted
cost will get reduced.
 Balance Sheet: Data and information which is related to assets as well as liabilities has
to include into this kinds of statement. By evaluating it, employer of an affiliation will
be able to take an appropriate judgement. With help of balance sheet, management will
be able to know about their creditors, debtors, loans and many others.
On the basis of define aspects, a major comparison between two years performance easily get
predict which enable Dalata Group to derive better and supportive judgement so that effective
and efficient gain suppose to underpin properly. In this consideration, current ratio of a
company is 1.9 during the 2016 but it slightly get modify during next year and become 2. This
17

signify that company is in good position where chances of deriving best suited gains become
possible so that effective and absolute things lead to derive properly. This will support Dalata
Group to manage and maintain appropriate occupancy at their room services facility.
Thank You
XYZ
TASK 4
4.1 Sources and allocation of funds for the development of capital projects
Finance as well as funding is much related with those functions and administration which
are connected to need of finance. It has been examined that capital projects require maximum
cost but this assists to render maximum success and enhancement to an enterprise (Veal, 2017).
With assistance of this project firm will enlarge their operational areas and activities. If expense
incurred then this will be considered under the deferred expenditure. Basic aim behind
development of these project is, enhancement in building plan and infrastructure. Criteria of
financial necessity remain high in growth and in addition development of firm.
Sector or travel and tourism helps country to gain high profits. Along with, it assists to
improve organisational framework in an effective as well as efficient way. At the time of
allocation of resources, it is required for firm to considered each and every department.
Government of nation will proposed some capital projects. This will assist company to recover
from any sort of taxes on business which is related to travel as well as tourist sector (Castaño-
Isaza and et. al., 2015). Therefore, there are many capital projects which will describe growth
and improvement in the segment of travel and tourism: Cross railway projects: This kind of project is basically formulated to make path more
approachable as well as convenient to travellers. It takes high cost or investment and this
needs to be allocate to different segments. This project will be classified into three parts,
material, labour and along with operations. Tourism information points: With assistance of tourist companies adequate data as well
as information will convey to customers. Their main task is to provide proper guidelines
regarding any place or spots efficiently (Adiyia and et. al., 2015). Small scale Tourism projects: This report is developed so that they will motivate small
tourist sectors in an appropriate manner. This will not contains maximum cost as well as
18

management. It assists to make better connection with other groups which aid them to
into their long term survival at marketplace. Integrated bridleways development and improvements: Many sectors as well as wide
roads are developed by government so that they will go to other destinations without any
hurdles. It supports those tourist who comes from distinctive nations (Sawyer, 2015). Cycle route development and improvement programs: The fundamental aim of this
assignment is to promote hill stations as well as adventurous places. Therefore, they will
render best experience to visitors as routes are much enjoyable. Along with, cycles will
be provide to them so that they will make their experience more effective.
 Theme parks and infrastructures: There are various things aid to provide healthy
environment to tourist as well as traveller. For example: gardens, theme parks,
infrastructures and many more (Hjalager, 2015).
Dalata group of hotel is going to begin a capital project so that they will provide
maximum level of satisfaction to their clients. For above stated aim, they require sufficient
amount or fund. Henceforth, there are many types of sources which will be used by them to gain
more finance and these are described as below: Department of culture, media and support: This division help to manage overall types of
heritage as well as culture; therefore, they will provide maximum level of satisfaction to
tourist. Thus, it is must for manager of Dalata group to define them about project so that
they will easily manager accessible cash for completion of project.
 Regional development fund: This is like a government agency which promote regional
enhancement through loans, counselling and in addition subsidies. With help of this,
company will acquire some fund so that they will be able to manage their project in an
appropriate manner.
There are various capital projects get underpin which enable and facilitate effective facilities to
all group individuals. Visitors need high standard services so that effective and absolute gain
become possible in nature. In this consideration, several projects on which government required
to make their focus are: Small projects: These are such projects which operated within a certain area. These
projects not required huge fund investment as get done for managing local host as well as
some external visitors as well. In this aspect, in London, small train project is train from
19

Edmonton to Liverpool street. These Trains taking place on continuous basis so that
individual could reach to other destination on time. Medium Projects: These are such projects which used to take place between two differ
regions so that chances of inconvenience to other individuals lead to reduce. These
projects need some more investment rather than little one. One of a famous medium
project in UK is Elizabeth Train which now stretch more than 60 miles from Reading and
Heathrow in the west through central tunnels across to Shenfield and Abbey Wood in the
east (Elizabeth line, 2018).
 Large projects: These are such projects which need heavy investment in their work as
well as their facilities are also top class. Although, they provide a sense of relief to all
individuals so that effective and efficient gains could become possible in nature. There
are many trains get evaluated which connect England to France where many holiday kind
of places lead to take place like under water tunnel etc. (How to Get From London,
England, to Paris, France, by Train, 2018).
CONCLUSION
It get concluded from this project that finance and funding in travel and tourism sector
support in order to provide quality features to guest. A major concern which associates with
business is to make every user satisfy so that better and effective outcome could be frame.
Although, a major task of business managers for appropriate management is concern with
estimation of volume, cost and profit so that better and effective working get supported with
optimum factors. Business managers have to use financial records properly as well as budget in
order to make effective financial judgement. Business is a composition of various decision and
thus management accounting support in such aspect. At last, interpret financial records as well of
whole financial year which enables in better and suitable gain. This interpretation always support
in growth and development concern.
20

REFERENCES
Books and Journals:
Adiyia, B. and et. al., 2015. Analysing governance in tourism value chains to reshape the tourist
bubble in developing countries: the case of cultural tourism in Uganda. Journal of
Ecotourism. 14(2-3). pp.113-129.
Airey, D. and et. al., 2015. The managerial gaze: The long tail of tourism education and
research. Journal of Travel Research. 54(2). pp.139-151.
Buckley, R. and et. al., 2015. Tourism megatrends. Tourism Recreation Research. 40(1). pp.59-
70.
Castaño-Isaza, J. and et. al., 2015. Valuing beaches to develop payment for ecosystem services
schemes in Colombia’s Seaflower marine protected area. Ecosystem Services. 11. pp.22-
31.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism. 18(12). pp.1192-1217.
Hingtgen, N. and et. al., 2015. Cuba in transition: Tourism industry perceptions of
entrepreneurial change. Tourism Management. 50. pp.184-193.
Hjalager, A. M., 2015. 100 innovations that transformed tourism. Journal of Travel
Research. 54(1). pp.3-21.
Loh, C. P. A., 2015. Trends and structural shifts in health tourism: evidence from seasonal time-
series data on health-related travel spending by Canada during 1970–2010. Social
Science & Medicine. 132. pp.173-180.
Lunt, N., Horsfall, D. and Hanefeld, J., 2016. Medical tourism: A snapshot of evidence on
treatment abroad. Maturitas. 88. pp.37-44.
Sawyer, D., 2015. Population and sustainable consumption in Brazil. Livros. pp.225-254.
Shahbaz, M. and et. al., 2017. The nexus between tourism demand and output per capita with the
relative importance of trade openness and financial development: A study of
Malaysia. Tourism Economics. 23(1). pp.168-186.
Tolkach, D. and King, B., 2015. Strengthening Community-Based Tourism in a new resource-
based island nation: Why and how?. Tourism Management. 48. pp.386-398.
Tribe, J., 2015. The economics of recreation, leisure and tourism. Routledge.
Vanhove, N., 2017. The Economics of Tourism Destinations: Theory and Practice. Routledge.
Veal, A. J., 2017. Research methods for leisure and tourism. Pearson UK.
Online:
Tourism information centre of Paris. 2018. [Online]. Available through: <https://www.travel-
wifi.com/blog/en/how-to-get-your-travel-wifi-package-from-tourism-information-
points-in-paris/>.
Elizabeth line. 2018. [Online]. Available
through :<https://tfl.gov.uk/travel-information/improvements-and-projects/elizabeth-
line>.
How to Get From London, England, to Paris, France, by Train. 2018. [Online]. Available
through :<http://traveltips.usatoday.com/london-england-paris-france-train-
105464.html>.
21