Finance and Funding in the Travel and Tourism Sector

Finance and Funding in the Travel and Tourism
Sector
1

Table of Contents
Introduction....................................................................................................................................................3
TASK 1..........................................................................................................................................................4
LO1- Understand the importance of costs, volume and profit for management decision making in travel
and tourism.....................................................................................................................................................4
P1.1 explain the importance of costs and volume in financial management of travel and tourism
businesses using Carnival Corporation &plc as your case study...............................................................4
P1.2 analyse pricing methods used in the travel and tourism sector. You should use relevant examples
from different cruise brands of Carnival Corporation & plc.....................................................................6
P1.3 analyze factors influencing profit for travel and tourism businesses using Carnival Corporation
&plc cruise brands as your case study.......................................................................................................7
Task2..............................................................................................................................................................8
LO2- Understand the use of management accounting information as a decision making tool in travel and
tourism businesses.........................................................................................................................................8
P2.1 explain different types of management accounting information that could be used in travel and
tourism businesses using Dalata Hotel Group plc as your case study.......................................................8
P2.2 assess the use of management accounting information as a decision-making tool for Dalata Hotel
Group plc.................................................................................................................................................15
Task3............................................................................................................................................................20
LO3 Be able to interpret financial accounts to assist decision making in travel and tourism businesses...20
3.1 interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December 2016
showing at least two years performance (for example comparing 2016 to 2015)...................................20
Task 4...........................................................................................................................................................23
LO4 – Understand sources and distribution of funding for public and non-public tourism development. .23
4.1 analyse sources and distribution of funding for the development of capital projects associated with
tourism.....................................................................................................................................................23
Conclusion...................................................................................................................................................29
References....................................................................................................................................................30
2

Introduction
Finance is the major requirement of any business and it is necessary that it shall be managed in
the best possible manner. For that various analyses regarding the sources and the manner in
which allocation shall be made is to be done. In this report use of cost and profit in decision
making process. Also the manner in which management accounting information will be taken as
decision making tool. Financial statement will be analysed for all the company so that
performance can be evaluated. In this report presentation will be made and also leaflet will be
prepared for the better understanding.
3

TASK 1
LO1- Understand the importance of costs, volume and profit for management
decision making in travel and tourism
Report:
Introduction:
Under this report the aspects related to cost, profit and volume will be discussed in respect of
Carnival Corporation &plc. That is one of the best travel companies. It is dealing in cruise brands
in various parts of world which includes Australia, North America and Europe. Also the pricing
methods and actors by which profits are affected will be discussed.
P1.1 explains the importance of costs and volume in financial management of travel
and tourism businesses using Carnival Corporation &plc. as your case study.
Carnival Corporation is one of the largest companies in terms of travel sector and is operating in
various parts. The main aim of this is to provide its customers with the best services. For this it is
needed that cost shall be spend so that all the operations are carried out in an effective manner. It
can be said that for the growth of business, cost is the main factor that shall be taken into
consideration (Macve, 2015). Whereas volume defines the amount that is needed in business so
finance measurement will be covered in this. In the given case cruise facility is provided by
carnival so the cost related to accommodation, food and other facilities will have to be incurred
by it. For the management of finance in proper manner it is required that proper cost and volume
analysis shall be carried out so that all the needs are met on time.
There are various tools which can be used for this purpose and they include:
 Break even analysis: this is required as breakeven is the point where the company will be
in no loss and no profit situation. It means at this point the cost that is incurred will be
recovered and profits will start to flow. So Carnival will have to do this in order to know
the amount that shall be spent and time in which it will be recovered (Bushman, 2014).
4

 Economies of scale: This is the process by the help of which cost can be saved by
attaining an increment in the volume. So it can be said that if Carnival focuses on the
maximization of volume then its cost will be saved which is beneficial in long run.
So it can be said that with the help of all this cost and volume analysis Carnival Corporation can
attain various advantages in terms of financial management. This is because cost will be reduced
and y this profits will be increased and this will lead to opportunity for the business to grow
further (Seyidov and Adomaitiene, 2016). Also the decisions can be taken by the use of the data
related to cost which will be useful in investment management as comparison can be made and
can identify what will be trend in coming future for tourism sector.
5

P1.2 analyse pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brands of Carnival Corporation & plc.
As the Carnival corporation is dealing in cruises so there will be price that will be charged from
the visitors and it is very important that it shall be fixed by use of appropriate method. Under that
it shall be noted that all the cost that have incurred whether they are variable or fixed shall be
taken into consideration. Some of the methods are as follows:
 Cost plus pricing: This is the model in which all the expenses or can say cost are added
and then the profit which is expected to it. By this the total amount to be charged is
determined. Under these factors such as status of visitors, market position will be evaluated.
 Seasonal pricing: This is the method which is most important in travel business because
seasons play relevant role in it. If the cruise is used by visitors in summers then the price at
that time will be fixed at higher rate than the one to be charged in non-peak seasons.
 Market-led pricing: under this market conditions, customer’s opinions and other factors
are considered for fixation of price. If there are other competitors whose services are taken by
customers then the price will be decided by taking all of that under consideration (Macve,
2015).
6