Finance & Funding in the Travel and Tourism Sector Assignment - Carnival Co & Dalata Hotel

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 travel and tourism ...............1
1.2 Evaluate different pricing methods used in travel and tourism sector .................................3
1.3 Factors influencing profit for travel and tourism businesses ...............................................4
TASK 2............................................................................................................................................5
2.1 Different types of management accounting information .....................................................5
2.2 Utilization of management accounting tool as a decision making tool................................7
TASK 3............................................................................................................................................8
3.1 Interpretation of financial account........................................................................................8
TASK 4..........................................................................................................................................11
Covered in Leaflet ....................................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES................................................................................................................................1
.........................................................................................................................................................1

INTRODUCTION
Finance is the basic and necessary requirement of each and every organisation that assist
in performing business activities and functions routinely. There are various sources available for
the enterprise that assist in acquiring accurate level of fund for long term as well as short term.
Further, in travel and tourism sector, finance is also most significant part for the development
and growth. In this business entity need appropriate amount of the capital to do their all activities
and functions in a planed manner (Buhalis and Darcy, 2011). This report is based on two
organisation namely Carnival Corporation & plc and Dalata Hotel Group plc. Both are the part of
travel and tourism industry and provide effective services to the visitors at affordable prices. This
report divided into different parts which includes importance of profit, volume and costs for
management decision making in tourism. Use of management accounting information as a
decision making technique is also included in this project. Along with this, financial accounts of
Dalata Hotel Group plc also determined in this assignment that support decision making in
tourism sector. There are different sources and distribution of funding for public and no-public
tourism development that also a main part of this assignment.
TASK 1
1.1 Significance of cost and volume in financial management of travel and tourism
Financial Management: Financial management could be described as process of
planing, organizing, directing and managing the procurement and utilization of funds of an
enterprise in proper manner. In case of travel and tout business there are several cost and
expenditures that are requisite to be incurred by a firm for the formulation and development of
tour packages for target customers. Carnival Corporation & Plc operates in travel and tourism
industry have to estimate various costs, business volume and profit margin in order to design and
formulate strategies to gain competitive edge and maintain its sustainability and market share in
the long run (Choi and Turk, 2011).
Cost: It forms one of the most prominent part in tout and travel business as it assists in
identifying total price of packages. It can be described as total of variety of expenses that are
incurred while undertaking several business operations and functions. For growth and success
of a firm, it is requisite to mange cost of products and services in most efficient manner. Various
types of cost that are utilize by Carnival Corporation & Plc are mentioned below:
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 Direct Cost: It involves expense incurred on direct expenditures on services that are
offered by firm in travel and tourism. It involves cost of business packages that are
provided to consumers such ad hotel, food, spa etc. These costs directly relates with unit. Indirect Cost: It is also known as overheads or indirect costs. It involves expense that
are incurred on peripheral activities like hiring, advertising, property rents , printing
brochures etc. Fixed Cost: This is fixed expense that is remains unchanged. It assists Carnival
Corporation Plc to decrease total costs of its tour and travel packages (Evans,
Stonehouse and Campbell, 2012). It generally involves contract payment to vendors or
suppliers, depreciation, lighting expenses etc. Variable cost: This cost is variable or fluctuating in its nature and changes as any
variation occurs in the number of consumers in Carnival Corporation & Plc. It involves
expense on hiring cabs , recruiting new employees, transportation charges etc. Allocation: This expense is related with definite business process, project or division. It
is incurred when indirect expense are allocated to cost objectives. For instance, sales
costs etc. Appointment: It is an accounting technique for attributing cost to a specific cost
objective. It is process of sharing expenditure incurred by team among individual funding
program being implemented.
Volume: Carnival Corporation & Plc is a global firm offering its services around the globe. The
firm make use of a number of tools and techniques to calculate ideal volume of travel and tour
package that produced higher profits like economic order quantity, break even points etc.
Break Even Analysis: It is used to determine level where in Carnival Corporation & Plc
can get return on their total cost incurred and level after which company is likeable to earn
profits. It is the point where total cost is equal top total profits of firm (Henderson, 2010).
Economies of Scale: It is achieved when more units of services are offered by firm which
reduces its cost per unit. Thus, with an increase in its production, firm gets chance to decrease it
overall cost.
Diseconomies of Scale: It involves cost disadvantages that are accrue by firms and
governments because of enhancement in firm's output or size that results in increment in
production of goods and services at enhanced per cost per unit.
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