Finance and Funding in the Travel and Tourism Sector Assignment - Carnival plc

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FINANCE AND FUNDINGIN THE TRAVEL ANDTOURISM SECTOR
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Importance of costs and volume in financial management of travel and tourism............11.2 Analysis of pricing methods used in travel and tourism sector of Carnival.....................21.3 Analysis of factors influencing profit for travel and tourism of Carnival corporation andplc...........................................................................................................................................3TASK 2............................................................................................................................................52.1 Different types of management accounting information used by Dalata group...............52.2 Use of management accounting information as decision making tool.............................6TASK 3............................................................................................................................................7P3.1 Interpretation of financial accounts of Dalata groups of Hotel Plc................................7TASK 4..........................................................................................................................................14P4.1 Sources of funding for development of capital projects..............................................14CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONFinance and funding is essential in tourism and travel business. This helps to know ifoperations of business are profitable or not. Prices in this sector are planned according torequirements of customer and best priced business will help to cover overall cost and earn profitswhich is required. Carnival plc is an American cruise operator headquartered in England withcombined fleet of 100 vessels across 10 cruise line brands. Dalata group are among the largesthotel operators with most of their hotels in Ireland and UK.The objective of this report is to interpret financial accounts of Carnival and Dalata groupwhich will help in decision making. This report covers about pricing methods used. This reportidentifies various factors which affects profits.TASK 11.1 Importance of costs and volume in financial management of travel and tourismCVP (Cost, Volume, Profit) gives an insight picture of organization and shows relationshipbetween factors which affect profits. It is an important tool for profit planning andbudgeting (Seetanah and Sannassee, 2015). It helps to know quantity of sales required toavoid losses and operations of business which are profitable.Cost- Fixed cost are those which remains same, it does not vary. No matter how manypeople are traveling cruise the cost for everyone will remain same. The prices will notchange if there is a single passenger or more, charges will be same for everyone.Variable cost is one which does not remain fixed and varies according to number ofpassengers. Cost for a single passenger will be different as compared with that charged toa group. At Carnival, prices of cruise are charged according to season and their costs varyas per passengers.For eg: for a cruise odder 100 people per person charge is $100 but fora couple it is $170 and for a group of 5 persons it is 400 only. The over all cost cruisetrip is $1500 which remain same retrospective of number of tourist but the rate dochanges with change in number of persons.Volume-Break even cost is that which is required for covering overall price in businessand reaches break-even point. It is a situation of no profit and loss. At Carnival, breakeven depends on number of tourists and prices charged from them for a day to covercomplete cost. More customers get attracted to their attractive services which enhanceseconomies of scale. When company bundles all its services into a package then economy1
of scale can be achieved more easily.For eg: the company charges differs with thechange in number of consumers and with lower number prices are high with highernumber prices are low.Profits-Profits of Carnival plc can be calculated by subtracting total cost from revenuesincurred. Company tries to reach needs and wants of its passengers by providing luxuryservices. There are various factors which affect profits of company. If there is a situationof recession in any economy then people will prefer to spend less and save more which iscondition of few profits (Baker and et.al., 2016). When it is holiday season and suitableclimatic conditions people will travel more which is beneficial for them. Advertisementshelps in giving broad picture of country and more people will visit that place which isprofitable for similar type of industries as they will use their services.For eg: changes inthe pricing strategy with change in season the profits of the organization are kept intact.1.2 Analysis of pricing methods used in travel and tourism sector of CarnivalPrices varies for different countries. Various pricing methods which can be followed byCarnival plc are as follows:Market led-Market led is a situation where company focuses on customer’s need andwants and make efforts to meet them. Carnival relies on market research and tries to findout its customers in order to fulfill their demands.This directly impact the consumerrelation of the company with its present and potential consumers which in turn enhancethe customer satisfactions.Seasonal price- Carnival charges their customers according to seasons. In off seasonthey keep prices of their service low. They have a mixture of pricing strategies andcharges according to time of traveling.This strategy helps in maintaining the profits levelas well consumers attraction in a balance. This is mix of price high and low with changein season so as to keep the consumer engaged every season with keeping its profts intact.Last minute pricing- These are last minute pricing strategies in which company chargestheir customers to fill the gaps at last time. These are type of instant charging methods.Carnival offers last minute discount to its customers on their websites.This is the bestmethod to cover the profits and safety margin of the organization as with the firm neverget low on its revenues.2
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