Finance and Funding in Travel and Tourism

This assignment discusses the importance of cost and volume in financial management in the travel and tourism industry. It analyzes the pricing methods used in the industry and the factors that influence profit. It also interprets the financial accounts of a company and explores the various sources of funding for capital projects. The assignment is relevant to the subject of finance and funding in travel and tourism.

Finance and funding in travel
and tourism

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of cost and volume in financial management...................................................1
1.2 Analyse pricing methods used in travel and tourism............................................................2
1.3 Analyse factors that influence profit for travel and tourism.................................................3
TASK 2............................................................................................................................................4
Covered in powerpoint ...............................................................................................................4
TASK 3............................................................................................................................................4
3.1 Interpret financial accounts of a company............................................................................4
..........................................................................................................................................................6
TASK 4............................................................................................................................................8
Covered in poster........................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance is consider as a backbone of every business and management have to use this
concept through which they can attain their targets in an effective manner. For every business it
is very important for them to arrange some amount of money to operate all task in an effective
way (Evans, Stonehouse and Campbell, 2012). Travel and tourism industry is one of a largest
sector which aid an economy to grow in an appropriate manner. This assignment includes two
organisation who deal in hospitality industry: Merlin entertainment plc, Restaurant group plc.
For this report it get identified that for any decision it is very necessary to identified the cost,
volume and [profit which is associated with that. As with the help of management accounting
approach it become easy for taking any helpful decision. It is very necessary to interpret the data
for taking any beneficial decision. There are different sources through which an organisation can
arrange fund for operating all activities in an appropriate manner.
TASK 1
1.1 Importance of cost and volume in financial management
For every business it is necessary for them to inspect their final accounts so that they can
take an appropriate decision which is beneficial for the long term purpose of a business. By
analysing the records it become easy for an organisation to invest all of their funds on
appropriate places (Heung, Kucukusta and Song, 2011). As with the help of these books,
management become capable to take any decision which is related with their price or production.
Marlin entertainment plc have three operation aspects in which they deal at midway attraction ,
LEGOLAND park and resort theme park. As at operating them in an effective manner
management have to work on aspects of cost which incur in their services and identify the
volume of production so that entity can manage their working operations. Three are different
factors are identified in the cost which are as follow:
 Direct cost: It is a cost which lead to get directly incur on the object or product of a
company. Marlin management have to take this factor in account on three of their
segments so that they can maintain a appropriate range of their goods.
 Indirect cost: These said to be as the cost which is not directly incur on the project but
treated as a expenses I:e material, labour etc. Management have to measure this so that
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they can minimise the unnecessary cost which leads to incur on project and they can save
their users for extra pay.
 Fixed cost: If there is change in production this cost remain fixed and do not get fluctuate
as per variations in production or unit. At Marlin Plc their fixed cost is nothing because
they always try to deal with unique things (Jucan and Jucan, 2013).
 Variable cost: Few of the times it get measure that some unusual cost may incur in
project which is consider as variable cost and thus affect the business most. Marlin Plc
deal with many new things through which they can create their user satisfaction more and
more appropriate.
Volume is consider as the unit which have to produce by a company. This is as per the
requirement which is demanded by the number of user. Marlin Plc have to take this thing in their
account so that they can provide only such amount of quality at their segments which is
demanded. For this they have to take their production unit in account and apply various volume
methods into business.
 Break even analysis: It is a situation when business become able to cover all of their
expenses and start gaining profit. It is used to determine the level of profitability. Marlin
Plc have to use this approach through which they can measure the things and produce
only such amount of quantity which is required.
1.2 Analyse pricing methods used in travel and tourism
There are various forms of pricing methods are used by a company to settle a price which
is appropriate for business. Management have to maintain appropriate selling price for their
product so that they can attain a huge customer base (Kimbu and Ngoasong, 2013). Marlin Plc
have to analyse various pricing methods which are helpful for them in generate more and more
profit and make their business sustainable for long term. They are already dealing with three
different segments and authority have to settle such price which is appropriate for them in taking
long term decision. Cost led: For calculating the selling price of a product, company add some value in their
fixed cost to the cost of production. This is helpful for measure that how the break even
point affect the price of good. Market led: This method is a combination of two major pricing strategies penetration
pricing and skimming pricing. Marlin Plc have to use this approach under which they
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have to set appropriate prices in market for their product because they are already a set up
brand and their services are also adequate in nature (Nielsen and Spenceley, 2011).
 Cost plus pricing: It is a cost based method for setting the price of goods and services
which deliver by a company. In this all the cost which is associated with a project have to
get determine and its percentage get calculated. Once this process get done, management
set that percentage price as final cost of a product.
These above mention method have to analyse by the Marlin Plc through which they can take
appropriate decision for their business. In travel and tourism all the users have different
perspective and management have to consider them at the time for taking any beneficial decision
for long term.
1.3 Analyse factors that influence profit for travel and tourism
Marlin Plc always deliver quality services to their users. Quality is a key element through
which they can generate more and more amount of profit and maintain balance in their operation.
But there are always some factors are identified which affect the profitability of business. Some
number of elements which affect the revenue generation capacity of business are as follow:
1. Planning: Marlin Plc have to prepare a plan under which all the activities which are
associated with their users have to measure. Management have to prepare their policies as
per the requirement of time and operation. This factor is helpful for them in managing
their business. Thus, if Marlin do not use appropriate planning strategy for cost and
volume then they have to suffer heavy loss and it impact negatively on business.
2. Seasonal variation: As per user demand is getting changed with course and season of
weather. This lead to affect the business most and for any travel and tourism comp[any
change in season always impact upon business. Marlin Plc have to make their changes as
per demand of season and users so that it affect a positive impact on business. But if
organisation do not adopt such seasonal change then it impact on business become
negative and loss have to bear by a company (Pike, 2012).
3. Current trends: As a discussion on modern world technologies are getting change very
frequently and thus it directly made a impact on current trends of users and business also.
Hence, management have to aware about this aspects so that they can take appropriate
decision which is concerning with that. Marlin Plc have to provide new slides and use
modern technology through which they can attract many new user for their business.
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4. Environmental: If the environment of a particular place is not god then it leads to affect
the business and its growth. Marlin management have to make healthy and safe
environment at their location which aid them in making their customer more and more
satisfied and not affect their business badly (Pocock and Phua, 2011).
These are some number of factors which organisation have to take in their account and take
appropriate action against such thing. These factors are not appropriate at all for the
sustainability of business and thus management have to frame adequate strategies which are
helpful for them to remove such thing from their organisation profitability.
TASK 2
Covered in powerpoint
TASK 3
3.1 Interpret financial accounts of a company
Financial accounts are consider as the best tool for taking any beneficial decision for a
business (Spenceley, 2012). Management have to analyse their financial reports and take
appropriate decision for such purpose. The Restaurant Group Plc operating their business at large
level and they are one of a largest profit generation company of UK. Company performance for
the last two years have to be measure so that appropriate decision can be carried down for
attaining the targets in an effective manner. The last two years financial statement of a company
are as follow:
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This is a income statement of a company through which it get identified the key areas from
where they can arrange appropriate amount of fund for their long term attainment of objectives.
Along with that they become able to measure all the income and expenses of a company so that
they can maintain appropriate growth (Tribe, 2015).
Cash Flow: Statement which provides a data in which the inflow and outflow from various
activities of business is termed as cash flow statement. This is helpful to measure the inflow and
outflow of the cash (Vanhove, 2011).
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Quick ratio: This ratio signifies the liquidity of an organisation so that company can
measure that feasible they are to met with their obligations (Vellas, 2011).
Particulars 2015 2016
Current ratio 0.28 0.36
Quick ratio 0.23 0.32
As per this, it get identified that company ratio get rises as compared to last year. This
signifies that they are in good position top met with their obligation as thus they are generating
more and more profit (Wong, Mistilis and Dwyer, 2011).
Gearing ratio: As if a company have good condition which identified that their equity is
more as compared to their debts. This help in gearing a company to attain their targets.
Particulars 2015 2016
Net Gearing
ratio 11.18% 15.12%
Company gearing ratio also get rises which signifies that they have more equity as
compared to debt so they do not require to arrange more and more funds for executing their
business in an appropriate manner (Zapata and Hall, 2012).
Return on capital employed: One of a major aspect which is associated with a business is
investment. Management have to measure that how much the project return as compared to
investment. By applying this technique company can raise more and more capital for their own
will.
Particulars 2015 2016
Return on
capital
employed 32.44% 111.84%
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In 2015, Return on capital employed= 32.44%* 99.60=307.21
In 2016, Return on capital employed= 111.84%*286.89=256.52
As by analysing these ratios, it get identified that company is in appropriate position
through which they can maximise their business. These ratios are helpful for them in managing
their business so properly.
TASK 4
Covered in poster
CONCLUSION
Management have to use various cost concept through which they can maintain
appropriate price of all such services which deliver by an organisation. Along with that by
applying various pricing method management become able to manage their cost so that they can
work properly. Moreover by analysing the financial statement, management become able to take
appropriate decision which is beneficial for their project as well as for their service user. There
are majorly some number of sources are also found out through which they can maintain
appropriate investment in capital projects.
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REFERENCES
Books and Journals
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor & Francis.
Heung, V.C., Kucukusta, D. and Song, H., 2011. Medical tourism development in Hong Kong:
An assessment of the barriers. Tourism Management. 32(5). pp.995-1005.
Jucan, C.N. and Jucan, M.S., 2013. Travel and tourism as a driver of economic recovery.
Procedia Economics and Finance. 6. pp.81-88.
Kimbu, A.N. and Ngoasong, M.Z., 2013. Centralised decentralisation of tourism development: a
network perspective. Annals of Tourism Research. 40. pp.235-259.
Nielsen, H. and Spenceley, A., 2011. The success of tourism in Rwanda: Gorillas and more. Yes
Africa Can: Success Stories from a Dynamic Continent. pp.231-249.
Pike, S., 2012. Destination marketing. Routledge.
Pocock, N.S. and Phua, K.H., 2011. Medical tourism and policy implications for health systems:
a conceptual framework from a comparative study of Thailand, Singapore and
Malaysia. Globalization and health. 7(1). p.12.
Spenceley, A. ed., 2012. Responsible tourism: Critical issues for conservation and development.
Routledge.
Tribe, J., 2015. The economics of recreation, leisure and tourism. Routledge.
Vanhove, N., 2011. The economics of tourism destinations. Routledge.
Vellas, F., 2011, October. The indirect impact of tourism: an economic analysis. In Third
Meeting of T20 Tourism Ministers.
Wong, E.P., Mistilis, N. and Dwyer, L., 2011. A framework for analyzing intergovernmental
collaboration–the case of ASEAN tourism. Tourism Management. 32(2). pp.367-376.
Zapata, M.J. and Hall, C.M., 2012. Public–private collaboration in the tourism sector: balancing
legitimacy and effectiveness in local tourism partnerships. The Spanish case. Journal of
Policy Research in Tourism, Leisure and Events. 4(1). pp.61-83.
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