Finance and Funding in the Travel and Tourism Sector

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 of travel business.................1
1.2 Pricing methods used in the travel and tourism sector.....................................................2
1.3 Factors influencing profit for travel and tourism businesses............................................3
TASK 2............................................................................................................................................4
2.1 Different types of management accounting information that could be used in tourism
businesses...............................................................................................................................4
2.2 Use of management accounting information as a decision-making tool .........................5
TASK 3............................................................................................................................................6
3.1 Interpret travel and tourism financial accounts ...............................................................6
TASK 4..........................................................................................................................................10
Covered in Leaflet................................................................................................................10
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Finance is the basic need of an organisation that supports in performing business
activities routinely. There are various sources available for the enterprise that assist in getting
sufficient level of capital for short and long term. Along with this, travel and tourism sector is
largest civilian industry around the globe that provide tourism services to the visitors. So,
organisations need sufficient funds for carrying out their activities and functions in appropriate
manner. For this report, given tourism business is Carnival Corporation & plc and The Fulham
Shore plc that provide tourism facility to the travellers. This report is divided into different parts
which includes importance of volume, costs and profit for management decision making.
Application of management accounting information is also covered in this study. At last,
financial details of both organisation, and sources and distribution of funding for public and non-
public tourism development also consider in this project.
TASK 1
For this task given organisation is Carnival Corporation & plc, it is a British American
cruise tour operator. It was founded in 1972 by Ted Arison in Miami, Florida, United States. At
the management level in such organisation, manager play vital role by understanding financial
practices and systems. This task covered significance of costs, profit and volume for
management decision making in Carnival Corporation & plc.
1.1 Importance of costs and volume in financial management of travel business
Costs and volume both are important factor for the financial management of Carnival
Corporation & plc. There are different parts of cost and volume which is necessary for the travel
and tourism sector to make strong strategies or policies to stand in marketplace in long run.
Costs: It is defined as the expenses which are used by the firms for developing the tours
and travel packages. (Ambrose, 2012). There are various types of costs such as fixed, indirect,
direct, variable etc. which are important for the firms to do their business activities in appropriate
manner. Cost is very essential for businesses in order to perform their various operations and
functions.
Indirect cost: This cost in the travel and tourism sector includes, making arrangement of
tour guide, arrangement of local bus services etc. all this are essential for the company to attract
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large number of visitors easily. Carnival corporation can use this cost for marketing and
advertisement, hiring professionals etc.
Direct cost: This cost in such sector covers expenditure occurred regarding giving
services and facilities to their clients related with resort or accommodation and theme park.
Carnival corporation can use this cost for providing effective services to their customers.
Fixed cost: In this the cost is fix in nature. This cost is important for Carnival
Corporation to reduce the overall prices or cost of their tour and travel packages.
Variable cost: Such kind of cost is variable in nature and can be modified according to
the change in the number of customers. This cost is of very high significance for the Carnival
Corporation to utilise the cost in an effective manner for getting high profitability. It can be
utilised for recruiting new workers, accommodation services and hiring cabs.
Volume: Travel and tourism business is a seasonal type of business in which firms needs
to consider the volume of their business in peak seasons for taking important strategic decisions
(Beeton, 2016). It is very important for management to determine the volume in order to frame
suitable strategies for controlling the cost and activities of firm. Volume is of various types such
as break-even analysis, economies of scale etc.
Break-even analysis: This analysis is used for determining the point at which a business
can recover the total occurred cost and from where the firm can gain appropriate profit. It is very
effective for the Carnival corporation to determine the cost of their operations in order to meet
their expenses.
Economies of scale: It is the cost benefit which a firm obtain by the scale of their
operations in which the cost per unit of the output is decreasing along with the increase in scale.
It is measured by the amount of the produced output.
The food that is made for the purpose of recognition of direct, indirect, fixed and variable
cost and also to check volume BEP is Brunch platter. The food includes 15 ingredients that are
subject to a direct cost of $67.45 which only includes only the raw materials also the cost of
burner would be included in this.
Indirect cost includes the cost that is not associated directly with cooking of food. These
type of indirect cost includes the cost such as labour and utensils in which the food would be
cooked this would cost around $36.
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