DALATA Hotel Group PLC Financial Analysis

The assignment provides a comprehensive analysis of Dalata Hotel Group PLC's financial performance by comparing its balance sheet between 2015 and 2016, highlighting a significant increase in tangible fixed assets and goodwill. Additionally, it presents the growth of the hotel group through investments in new hotels, refurbishments, and rebranding efforts. The report also includes references to relevant research studies on management accounting information and decision-making tools for businesses.

Finance and Funding in the
Travel and Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of costs and volume in financial management .............................................1
1.2 Pricing methods used in the travel and tourism sector.....................................................2
1.3 Factors influencing profit for travel and tourism businesses............................................4
TASK 2 COVERED IN PPT...........................................................................................................4
TASK 3............................................................................................................................................4
3.1 Interpret travel and tourism financial accounts................................................................4
TASK4...........................................................................................................................................10
4.1 Covered in Leaflets:......................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Finance is an essential aspects of any business which is required to manage and control
any business operation whether related with travel and tourism sectors. Funding is the amount of
capital provided by the government for a particular purpose. This report is based on Carnival
Corporation & plc is the world leading leisure travel organization along with the operations of
voyage brands in North America, Europe and Australia. This report covers valuable aspects of
finance which are required in travelling sectors. This would elaborates the diverse pricing
techniques which could be applied in travel and tourism sector.
Along with different components affects the profitability of tourism sectors (Gibson,
Kaplanidou and Kang, 2012). Additionally, this report covers the presentation which elaborates
diverse kinds of data which is required in management of tourism sectors. Such kind of
management information can contribute for decision making process. This report also covers
Dalata Hotel Group Plc in which this would demonstrates use of the financial report of the firm
and interrelate with coming accounting years (Social and Economic Aspects, 2015). At the end
of the report, this report features with the leaflets which evaluates the sources of funding required
at the time of planning the tour packages for the individuals.
TASK 1
1.1 Importance of costs and volume in financial management
Carnival corporation and plc: This company is the world's largest leisure travel
company. Which have a plenty of journey brands in many parts of the nation. The company's
portfolio of 10 global cruise line brands. In addition to this, cited organization owns a tour firm
which complements its cruise operations:
Cost: The costs refers to the money which is required for managing the plan of trip and various
resources. Costs is termed as an important component in tourism sectors (Murphy, 2013).
Volume: It refers as the total quantity of expenses which denote in the financial terms and are
related with travelling.
Significance of costs: It is crucial for firm development. The costs plays a vital role for
the firm success of failure. If the costs of the product or service of the cited firm is higher than
their contenders then the company can not meet its desired sales outcomes. On the other hand, if
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the costs of the company is reasonable and cheap then the the firm can get the sustainable
development (Song and Lin, 2010).
 Cost reduction: Cost refers to the critical component in the firm which is used by the
company in order to reduce the costs and increase maximum chances of profitability. It is
mainly relies on the company's services and product offering. The cost could be lower or
higher according to the requirement of business.
 Decision making: In order to manage and control the excess use of cost management
need to make a well organised plan which can benefits to the organisation or individual at
the same time.
 Designing financial structure: In order to make smooth running of travel and tourism
sectors a perfect structure should be followed. It will help to complete the target in very
quick time.
 Enhancing management performance: It has been seen that finance can protect and
increase the performance of the travelling sector. Cost of project should always be
managed so that any situation can be handled at the right time.
Importance of Volume:
 Break even analysis: This is the techniques of identifying outcomes which indicated that
total expenses and profit generated by the company during the year. For this concern, it is
essential to assess the BEP to realize the costs covering period (Morrison, 2013).
 Economies of scale: These are the additional costs saving with the increment under the
production level. Travel and tourism sector can save the costs by implementing this
particular costs.
 Diseconomies of scale: It is known as the situation under which it is no longer operate
for a particular firm or sector. It occurs when a firm increases marginal costs per extra
units of outputs. As far as tourism business is concerned, analysis of this volume is
required to be done about the business operations.
1.2 Pricing methods used in the travel and tourism sector
Diverse pricing tools applied in the travel and tourism sector:
Rack rates:- The rack rates are total rates elaborated by the firm without discounts or
offers. They are the rates for the full season written on the Brochures (Vanhove, 2011).
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Seasonal pricing: In a year, there are several seasons for the optimum tourist visits. The
seasonal rates are based on the tourists' visits within that specific season and changes as per the
seasons.
Last minute pricing: The last minute pricing are the diverse prices of the travel and
tourism business which vary as per the last minutes deals. There is a need to fix the price as per
the bookings.
Discounting: This is the pricing method that is relied on the discounts rendered to the
tourists.
Package deals: The package deals are the pricing method of tour and travel business that
are elaborated as per the diverse facilities rendered in the package to the tourists. However, this
is the most efficient tool for pricing method (Tribe, 2015).
Commissions: This is charged on the basis of booking done by the third party. The
commissions are the pricing method that are going to charge higher amount from the tourists.
Examples of diverse businesses : Tourism Victoria is controlled under local tourism
authorities that charges seasonal price in normal day that could vary as per the travel and tourism
industry's requirement. Carnival corporation is delivering tours operations in many parts which
selects dynamic pricing method for their operations. While, Cape tour is an another company
which provides tours packages for South Africa and adopt seasonal and package pricing
methods.
While on the other hand, some other pricing methods are also there. Which are:
Cost oriented pricing methods: Under this pricing method fix margin is added to the
costs so that the higher profits can be gained from the business operation. This is a simple and
easy way for identifying the profits as method of pricing is easy (Heung, Kucukusta and Song,
2011).
Market oriented pricing method: Under this method, price is identified according to the
competition which prevails in the market. Because, prices are low or high which depends on the
prices that is going to prevails in the market by competitors. Cost oriented pricing method is
applied in this sector because, this method helps to enable to adjust the best margin for the
business which will help out to gain for the profits. Although. this method is easy and convenient
to use to whole party. In addition to this, market oriented pricing method can also be applied by
the firm to compare price with its leading competitors which could survive in the long run.
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1.3 Factors influencing profit for travel and tourism businesses
Effective management strategy is one of the most important tool which influence the
profits of firms. If the planning is made in an adequate manner then there are chances which can
be implemented in an appropriate manner.
Advertising and promotion activities likewise plays a crucial role which affects the
profits of the firm. As, under competitive market, marketing planning is crucial to enhance the
profits of the firm. Under this, expenses is also need to identify because, on the basis of this, the
company can evaluate the profits effectively (Evans, Stonehouse and Campbell, 2012). Apart
from this, there are various factors or components that affects the profit of the travel and tourism
sector businesses, some of them are discussed as under:
Events- These influences the travel and tourism sector profits as events could vary the
pricing methods and diverse events could invite tourists to come forward and enjoy which
ultimately enhance the profits level of the cited business. The event of Carnival Corporation &
plc invite the visitors so that they can earn optimum profits.
Seasons: Diverse seasons affects the profits of the travel and tourism business as these
elaborates the peak season and normal one. At the time of peak season, the profits can be
maximised in an effective manner. While on the other hand, the profits goes down or normal in a
common season. Carnival Corporation & plc invites the visitors in peak season the most that
enhance the profits effectively.
Currency rates: Different nations have diverse currencies. Currency rate differs the
profits as per the business needs. Because, Carnival Corporation & plc has so many tourists from
various countries enables the impacts on the profits (von der Weppen and Cochrane,2012).
Government: The government components likewise affects the profits like petrol prices
and so on
Natural calamities: The natural disasters are those which affects the profits as the
tourists neglects such place to travel in such areas.
Terrorism: Terrorists attacks on the areas influences the profits of the business.
TASK 2 COVERED IN PPT
TASK 3
3.1 Interpret travel and tourism financial accounts
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DALATA hotel group was established in 2007. It is is the largest hotel brand in Ireland.
DALATA hotel group further launch Maldron hotels brand on 1st September 2008 which
includes three stars and four star hotels in key locations of Ireland. The main strategy is to
develop Maldron brand in both Ireland and UK. They have almost 19 hotels in Ireland with 3000
bedrooms and 1500 employees. The main aim of the hotel is to expand their business activities to
all over the world with the helps of their partners. From its establishment this hotel group is
growing year to year (Nielsen and Spenceley., 2011). This shows that the financial performance
of company is good. To understand about the financial performance there is need to compare the
financial accounts of company of 2016 and 2015. This comparison helps to understand about the
growth of company and the activities where need to improvement.
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
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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
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
2015 2016
Fiscal Year
Ends 31/12/15 31/12/16
Net Tangible
Asset Value
Per Share p 196.03 259.95
Profitability
Operating % 23.28 22.47
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Margin
Profit Margin % 19.7 20.1
ROE % 6.7 7.28
ROCE % 6.77 7.23
Financial
Health
Net Gearing % 44.84 37.21
Gross
Gearing % 49.53 45.2
Dividend
Cover x 0 0
Interest
Cover x 6.12 8.75
Quick Ratio r 2.86 1.41
Current
Ratio r 2.89 1.44
Growth
DPS Growth % - -
Norm EPS
Growth % 247.31 19.42
Reported
EPS Growth % 262.82 47.48
Cash Flow
Cash Flow
Per Share p 19.87 30.36
CAPEX PS p 13.96 48.61
The revenue of DALATA hotel group in 2016 is € 290 million which shows that the
earning of hotel is too good. The growth can be measured thorough compare the revenue in year
2015. The total revenue earned by company in 2015 is € 225 million. The difference between the
revenue of two years is € 65 million. This shows 29% growth of hotel in terms of revenue. The
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adjusted EBITDA of DALATA hotel group in 2016 is € 85 million. In 2015 the adjusted
EBITDA of hotel is €62 million. This shows that there is 36 % growth in adjusted EBITDA of
hotel. The adjusted EBITDA has more growth than the revenue. The diluted EPS of cited hotel in
2016 is € 0.27 and in 2015 diluted EPS is €0.23. This shows that there is 7% growth in diluted
EPS. From comparison of above all three areas shows that DALATA hotel group has increased
in all prospectives. DALATA group has 3 major business segments through which they conduct
their business activities in large market.
 In Dublin this group has 14 hotels in which total number of rooms are 3699. The revenue
earned in 2016 from such hotels is € 91.83 million. If compared to last year the revenue
of this group in Dublin is increased by 20%.
 DALATA hotel group also have their business activities in regional Ireland. The number
of hotels operating their business in Ireland are 12. The total number of rooms in all 12
hotels are 1637. The revenue of this group in 2016 is € 63.68 million in Ireland. From
compared to revenue of 2015 there is increase of 12 % in revenue in 2016. This shows
that there is also the growth of the operations of hotel in Ireland (Pike, 2012).
 DALATA hotel group also have there hotels in UK. As compared to Dublin and Ireland
they have least number of hotels in UK. They have only 8 hotels in which total number of
rooms are 1768. The revenue generated from the operation of hotel in UK in 2016 is €
59.70 million. From comparison to last year revenue of this group in UK, only 4%
growth is happened. This is the least growth of this hotel group in UK as compared to
Dublin and Ireland.
The main activities of growth which are happen in DALATA group of hotels in 2016,
shows that from past years there is huge development in their functions. Large number of hotels
and and rooms are added and large number of investment has made by them in diversified
activities thorough which there revenue increases (Wong, Mistilis and Dwyer, 2011). This
growth and their quality services helps the cited hotel group to attract the large number of
customers and capture large market share. The main activities which shows growth of company
as compared to last year in 2016 are defined below:
 They added 7 new hotels in which they have almost 1600 rooms. This helps the
DALATA group of hotel to expand their business operations and increase their revenues
as compared to last year.
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 Around € 8.2 million they have invested to refurbish 750 existing rooms of their hotel.
This helps to maintain the quality of their services and satisfied the demands of their
customers who wants luxurious services. This enables the company to improve their
brand image between their customers.
 They also decided to open new 1200 rooms across Ireland and UK.
 They completely do rebranding of their four hotels to Clayton.
 The management of this group of hotel has to make continuous investment in their
infrastructures. This provides the opportunity to become the largest group of hotel with
large number of facilities under one roof.
The growth of DALATA group of hotel is also measured through comparison of the
balance sheet of two years 2015 and 2016. It can be easily visible from the difference between
the asset of hotel in two different year. Tangible fixed assets of DALATA group of hotel in 2016
is €825.7 million, similarly in 2015 this figure is € 646.1 million. This hows that there is huge
difference between the net tangible fixed assets of this hotel group. Tangible fixed assets are
increased by €179.6 million. The ability of this group of hotel to attract the customers towards
their services can be understand by the comparison of the goodwill. In 2015, Goodwill of hotel is
€46.8 million and in 2016 the goodwill of this hotel is € 54.3 million. The net difference between
goodwill amount is €7.5 million. This shows that in one year there is hue increase in the
goodwill and popularity of DALATA group of hotel (Papatheodorou, Rosselló, and Xiao., 2010).
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TASK4
4.1 Covered in Leaflets:
CONCLUSION
From the above mentioned report, this has been concluded that the cited research report is
based on the two organisations. This is made to assess the importance of cost and volume under
the firm of travel and tourism and diverse pricing methods that the Carnival Corporation & plc
uses. This report likewise presents the management accounting information which are used as the
decision making tool for this business. By conducting such research, this can be concluded that
there are diverse factors or components which affects the profits of the business of the Carnival
Corporation & plc. Under this research report, Dalata hotel group plc's financial performance is
analysed by using firm's financial statements.
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