Finance and Funding in Travel and Tourism Sector

Finance and funding in travel and tourism sector
Sources of funding for the development of capital projects
INTRODUCTION
Tourism sector require the needs of sufficient funds or finances in
order improve the quality of their products and services. For the
development of the industry funds are required which can generated
from various sources. Capital projects are the high cost projects that
involves the huge budge in order to complete the projects in an
effective manner. In order to improve capital projects, appropriate
funds are required to travel and tourism business so as to gain high
market growth and share. Distribution of capital projects should be
done as per the percentage provided or approved by the government.
In UK, these two main regulatory bodies which provides finance to
travelling industry, such are described as under: -
Department of cultural, media and sport - (DCMS) helps
to drive growth, enrich lives and promote Britain abroad. We protect
and promote our cultural and artistic heritage and help businesses and
communities to grow by investing in innovation and highlighting
Britain as a fantastic place to visit. It gives a unique advantage to
tourism sector of UK at the global stage, striving for economic
success. It also has responsibility for the tourism, leisure and creative
industries. The department was also responsible for the delivery of
the 2012 Olympic Games and Paralympic Games and the building of
a Digital Economy.
Office deputy of prime minister - DPM is a senior member
of the Cabinet of the United Kingdom. The office of the Deputy
Prime Minister is not a permanent position, existing only at the
discretion of the Prime Minister, who may appoint to other offices –
such as First Secretary of State– to give seniority to a particular
cabinet minister. The cabinet is also liable to provide funds and
charities to travelling business of UK regarding improving the
infrastructure of the country.
Apart from this, there are several public and private sources are also
include in this list so as to provide best funding facilities to tourism
sector.
Sources of capital funding from private sector: -
Seed capital - Seed capital is the funding required to get a new
business started. This initial funding, which usually comes from the
business owner(s) and perhaps friends and family, supports
preliminary activities such as market research, product research and
development (R&D) and business plan development.
Venture capital - Start up travelling companies with a potential to
grow need a certain amount of investment. Wealthy investors like
to invest their capital in such businesses with a long-term growth
perspective. This capital is known as venture capital and the
investors are called venture capitalists.
Angel investors – An angel investor is a person who invests in a
business venture, providing capital for start up or expansion. Angel
investors are typically individuals who have spare cash available
and are looking for a higher rate of return than would be given by
more traditional investments.
Sources of funds from public sector
Bank loans - A loan is simply a sum of money which is borrowed
and has to be paid back, usually with interest. Loan finance is
potentially useful for a range of non –profits. They are a flexible
form of funding that can be quicker and easier to secure than
grant funding. However they have to be repaid and may require
assets to be offered as security. Loans are often ‘secured’ against
an asset but may sometimes be ‘unsecured’. Lenders usually look
for a successful track record of operations and income generation.
In UK, there are several government banks which provides credit
facility to travelling business on lower interest rates.
Grants funding - Grants are typically made by the public sector or
by charitable trusts and foundations. The money does not have to
be repaid and is usually exempt from tax. Many grant funders will
only fund organisations with charitable status. Some grant makers
prefer not to fund organisations that have built up significant
reserves or generate cash surpluses. This can disadvantage those
with a business-like approach to running a sustainable social
enterprise.
Debt equity - Equity capital is provided by external investors in
return for a stake in the organisation and if the organisation is
successful, the investors share in the rewards. It does not have to
be repaid and does not require security. An equity investor tends
to take a long-term view of the organisation and may also want to
contribute expertise. Their money is at risk if the organisation fails.
Equity finance is most likely to be used by social enterprises.