Finance and Funding in the Travel and Tourism Sector

Finance and Funding in the
Travel and Tourism Sector

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P 1.1 Explain the importance of costs and volume in finance management of travel and
tourism business.....................................................................................................................1
P 1.2 Explain pricing methods used in travel and tourism sector..........................................2
P 1.3 Analyse the factors influencing profit for travel and tourism business Merlin
Entertainments Plc..................................................................................................................4
Task 2...............................................................................................................................................5
P2.1 Discussing types of management accounting information in travel business................5
P2.2 Use of management accounting information for decision-making................................6
Task 3...............................................................................................................................................8
3.1 Interpretation of financial accounts of The Restaurant Group (TRG) Plc.......................8
Task 4.............................................................................................................................................10
4.1 Sources and distribution of funds for capital projects....................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In this documentation, this assignment describe about to importance of cost and volume
in financial management of travel and tourism using Merlin Entertainments Plc cases. Moreover,
this study define that analysis of pricing method in the travelling sector which could be
beneficial for the organisation and also analyse some elements which make impact on the
profitability of the organisation in efficient form. Apart from it, this assignment define that
variety of management accounting information that can be utilised in Merlin Entertainments in
order to profitable decision making process within the organisation effectively. Moreover, this
study also defines that, interpretation of financial accounts to assist decision making process in
travelling and tourism business in the organisation effectively and assessment of sources and
distribution of funding for the development of capital projection associated with tourism
effectively.
TASK 1
P 1.1 Explain the importance of costs and volume in finance management of travel and tourism
business
Importance of Costs:
Direct cost: Direct cost are concerned to those costs in the organisation which is
straightly associated to the all those prices which is generated from those manufacturing and
services process of particular product and services in the organisation which come in the
expenses of the company (Airey and Chong, 2010). In case of Merlin Entertainments Plc firm,
they also have direct cost generation within their organisational environment effectively as they
providing travelling and tourism services.
Fixed costs: Fixed costs of the company are concerned about to those costs which is
remain constraints at the workplace and never get changes. These costs assist reduction volume
of manufacturing of goods and services at the workplace. Fixed cost values remain same and
these must be paid by the organisation while services travelling and tourism services to their
clients effectively.
Variable costs: Variable cots are concerned with the costs in the organisation which is
related proportion of production output at the workplace. Its value frequently changing in the
company while manufacturing process is being done in the company (Sheldon, P. and Dwyer, L.,
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2010). In case of Merlin Entertainments Plc enterprise, they provide various kind of travelling
and entertainments services within the industry so that variable costs often occur in the firm,
which manager of the company needed to manage it in effective manner.
Importance of Volume:
Break even-analysis: Break-even analysis could be used where the company can get
appropriate margin in the company effectively. A break-even analysis is a calculation point
where the company can get figure of revenue equal to expenses of the organisation. In this
process various kinds of prices level associating to several levels of demands, this might be
helpful for travelling business in order to examine that level at which the business entity is
needed to cover total fixed costs of their total sales in the company effectively (Tribe, 2011).
Economies of scale: Economies of scale refer to the process to minimise the costs of per
unit hat occur from raising total outputs of a product and services. This is defined that each
product in travelling and tourism sector, they need to manufacture their product and services at
large scales to per unit costing can be reduced at the workplace which will productive and
profitable advantage for the organisation within the industry effectively. Professional employees
at the workplace and integrated technological equipments can boost the production volume of the
company effectively. The pricing and volume is most appropriate for the organisation in order to
identify those areas by which is making negative impact on the organisational performance in the
industry effectively. In terms of getting positive outcome in the business entity, they need to find
out the best aggregation between fixed and variable costs which could be cost effective for the
organisation efficiently (Evans, Stonehouse and Campbell, 2012). Cost and volume control could
be more beneficial for the organisation because they can reduce the production and service
provision cost at the workplace and an appropriate costing method could be applied on the
business in terms of reduction of costing of overall operational process of the company.
P 1.2 Explain pricing methods used in travel and tourism sector
In case of Merlin Entertainments Plc organisation, they are needed to proper pricing
analysis of their product and services in the organisation in order to identify their expenses and
available volume of the fund in the organisation. So proper profitability could be identified
within the business environment efficiently. Pricing is directly concerned to the profitability of
the business in the industry and these process must be done carefully by their professionals at the
workplace in order to identify their appropriate margin in the company after selling their existing
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