[SOLVED] Analysis of Dalata Hotel Group plc

The assignment involves analyzing the financial performance of Dalata Hotel Group plc using various management accounting and financial analysis tools. It suggests adopting suitable techniques and strategies to increase working efficiency in the organization.

Finance and Funding in the
Travel and Tourism sector

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................3
1.1 Explaining the significance of cost volume as well as profit in financial management of
travel and tourism businesses.................................................................................................3
1.2 Pricing methods utilised in travel and Tourism sector....................................................6
1.3 Analysing the factor effecting the profit for travel and tourism sector............................7
TASK 2...................................................................................................................................8
2.1 Different types of management accounting information which can be utilised by tourism
industry...................................................................................................................................8
2.2 Assessing the utilisation of management accounting information system as decision
making tool ............................................................................................................................9
TASK 3..........................................................................................................................................10
3.1 Interpretation of Financial accounts of Dalata Hotel Group plc....................................10
Interpretation :................................................................................................................................12
TASK 4..........................................................................................................................................12
4.1 Analysing the sources and distribution of funding for the development of capital projects
..............................................................................................................................................12
associated with tourism........................................................................................................12
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Finance is considered to be as an essential resource which is required by each and every
organisation for facilitating business operations in a systematic manner .It is very important for
manager in an organisation to gain knowledge about the several tools and techniques of
managing finance .As management of funds as well as financial resources is necessary, as it has
direct as well as significant impact on the financial performance of an enterprise. The lack of
financial resource's have major effect on the buying power of firm which might lead to the
compromise in quality of products or services. It is required by finance manager in an enterprise
to determine the need of funds. As this activity will help manager in fulfilling the business needs.
There are three main elements such as volume, cost and profit which are considered by
companies operating in tourism sector.
The report focuses on identifying the different tools as well as techniques which can be
used for financial analysis. It also emphasizes on analysis the significance of the three factors
such as cost , price and volume when determining the price of goods or services in tourism sector
in context of Carnival Corporation & Plc. and Dalata Hotel Group.
TASK 1
1.1 Explaining the significance of cost volume as well as profit in financial management of travel
and tourism businesses
There are several tools as well as techniques used by the Carnival Corporation for
managing the funds as well as for financial analysis. These financial tools assist business entity
in measuring their financial performance and identifying the way to improve the same. It also
enables an organisation to recognise the new as well as cheap source of raising funds. There are
various factors to be considered by an enterprise and methods to be used. Financial analysis
techniques also help manager in allocating the funds and ensuring the effective as well as
efficient utilisation of financial resources. It also assists management team in making suitable
business decisions and analysing the ways to reduce the costs. Effect accounting as well as
financial management system helps firm in controlling the flow of funds as well as support in
maintaining the financial performance of company.

The various factors which are considered to be are:
Cost, Volume and Profit-It is considered to be an important part to be considered when
conducting financial analysis. As this constituent assist management in making suitable business
decision and provide manager an ease in determining the prices of goods or services. Cost,
Volume and Profit analysis also support manager in recognising the fluctuation in costs and
profit. It also helps the management team in ascertaining the reason for major fluctuation and
analysis the way to increase profits and sales. In context of Carnival Corporation & Plc, finance
manager in an organisation should plan appropriate strategies for reducing the operational
expenses. As this plan or technique swill help a business entity in increasing profitability. It will
also assist an enterprise in fostering growth. Financial or cost, volume and profit analysis is
based on the several assumptions which help in ensuring that all the activities which are
conducted within an enterprise are increasing the value and contributing to the profitability of
firm. It also helps management team in identifying as well as eliminating the activities or
operations s which are leading to increase in unnecessary costs. Cost, Volume and Profit analysis
also assist management team in making decision related to the action which are to be taken in
future regarding the production of specific product. It helps the manager in identifying the
products as well as customers which helpfirm in yielding high profit and are contributing
towards growth of business. Manager in Carnival Corporation should apply this technique in
operational department. As this strategy will assist business entity in reducing the cost of
production as well as preventing the wastage of financial resources. It is essential to have the
sufficient information regarding the costs and expenses incurred in the operations.
Business volume – It is required by the management in an organisation during peak seasons as
well as when making strategic plan. Travel and Tourism business is a kind of seasonal business.
People plan their holidays during summer and winter vacations. Management should consider
the business volume so that it can frame strategies for operational activities and make effective
cost control.
Costs -There are different costs and volume method which can be utilised and analysed by the
professionals at Carnival Company .These are:
 Direct costs-It is those expenses which are related to the production of goods and
delivering the products to customer. Direct costs can be included in the price of goods. It

is easily tractable as well as can be recovered. Examples: money spend for buying raw
material, labour etc.
 Indirect cots- These are the expenses which incurred during the production of products
or services. For instance, electricity charges repair as well as maintenance of machinery
etc. Indirect cost can also be charged by customers in indirect way such as by including
price of goods or services. In context of Carnival Corporation, manager when
determining the price of products or services required to be considered several factors
such as expenses incurred by firm for providing the transportation or other special
facilities to tourists.
 Variable costs-It is recognised as the expenses which are not fixed and fluctuates with
the change in activities or procedures. A variables cost varies as per the change in the
volume or quantity of production. In context of travel and tourism sector, the variable
expense includes fluctuation in prices of goods or services, taxes and exchange rates.
These costs have direct as well as significant impact on the profit margin.
 Fixed Costs-It remains constant during the specific procedures. Fixed costs include
various expenses such as parking charges, salary of the employees etc.
 Apportionment-It is required to be considered as an effective technique which is utilised
by an organisation for centralising the expenses such as payment of wages, salaries and
other relevant business cost. It helps the management team in determining the price of
products or services.
 Allocation- It is considered to be a technique which is helpful in determining the costs
required to be incurred as well as funds which will be needed for facilitating particular
operations.
 Break even analysis- It assists management team in determining the product or services
that an enterprise wants to sell in order to recover costs of doing business. Break even
analysis is also considered to be an effective tool which assists in estimating or
identifying the level of profitability.
 Economies of scale- This technique assists an organisation in identifying the new
sources, methods or way of increasing revenue. There are several sources from where the
Carnival Corporation can raise funds for fulfilling the requirement of operations.

 Diseconomies of scale -It is recognised as a phase e where the economies of scale such
as supporting units in an enterprise are no longer functioning. In other words, firm does
not have much potential to earn higher revenue.
1.2 Pricing methods utilised in travel and Tourism sector
Price is defined as the amount of money expected, required, or given in payment for
something. Especially in the service industry, the most difficult task is to determine or set the
price of products or services. There are several methods or techniques used by companies
operating in travel and tourism sector, for setting the price of products or services. Some
methods which are utilised by an organisation operating in tourism sector includes value adding
technique, cost plus pricing technique, discounted pricing etc. It is very much essential for
management team in an enterprise top set price on the basis of value or satisfaction gained by
customer when consuming specific good or services. As this strategy will assist business entity
in attracting more number of customers and increasing sale. Some of pricing methods are:
 Market lead pricing-The Company with this type of technique, determine or set the
prices of the product or services as pert the tour packages which are already offered by its
competitors. Market lead pricing helps an enterprise in attracting the customers and
enables form to gain competitive advantage in the market. This pricing strategy also helps
business entity in increasing sales as well as profitability.
 Cost and pricing – This method or pricing technique can be used by Carnival
Corporation, for setting the price of tour packages. In this pricing strategy, company
considered as well as include both direct, indirect expenses and profit margin when
setting the prices of goods or services which are to be charged by customers. In context
of Carnival Corporation, it is required by the management in an organisation to evaluate
break even point. As this strategy will assist an enterprise in earning the sufficient
amount of profit or high return on their investments in business.
 Marginal cost pricing method- Business entity which uses this pricing also includes
extra expenses in price of products or services. This type of pricing all the cost as well as
expenses which are incurred by an organisation in organising the tours are included in the
price. By Marginal cost pricing method, Carnival Corporation can easily recover its
expenses incurred by an enterprise in organising another tour package.

 Demand oriented price method- As per this technique; prices of the product or services
are set by travel companies by considering the demand of the goods or services. For
instance, during the peak seasons, there is a high demand tourism product or services, at
that time price of tourism services are generally high.
 Skimming pricing method-This pricing technique is generally adopted buy business
entity for becoming the market leader. In this pricing techniques, companies operating in
tourism sector set high prices for their respective products and services. By adopting this
strategy, Carnival Corporation can easily as well as quickly recover the cost incurred by
an organisation.
1.3 Analysing the factor s affecting the profit for travel and tourism sector
There are several variables which have direct as well as significant effect on the profits of
travel and tourism industry. Such as:
Environmental factors: During holiday time, there is a high demand of the tourism products as
well as services. During such season, Carnival Corporation earn higher profits and generate
revenue from several business operations and able to recover the expenses. However, at the time
of off-season, an enterprise has to face difficulty in fulfilling business requirements.
Environmental or seasonal factor has direct as well as major influence on the earning capacity as
well as profitability of Carnival Company.
Political constituents: This variable has great effect on an enterprise which is operating in
tourism sector. Situations like political instability, wars etc. have negative influence on the
tourists choice related to destinations further it has effect on the demand for services or products
offered by travel companies.
Social factors: the culture and traditions of certain countries would not be allowing us to do
certain things in those nations. It is required by management team in Carnival Corporation to
identify the needs of the customer and develop the understanding on the culture or tradition in
particular nation. As this strategy will assist manger in planning for services or products. It will
also help business entity in increasing sales as well as profitability.
Economic factors:It includes changes in interest as well as exchange rate will also be affecting
revenue generating capacity of company. Economic consistent also have direct as well as

significant influence on the financial performance of an organisation and also on the profit
margin.
TASK 2
2.1 Different types of management accounting information which can be utilised by tourism
industry
Management accounting techniques assist management in improving bushiness activities
as well as executing several operations in smooth manner. This accounting method involves the
revelation of financial statement which is beneficial in terms of creating the budgets, analysing
the variation in profit as well as sales, identifying the financial performance of company etc. It is
required by the Dalata hotel to adopt the management accounting tools as well as techniques.
This strategy will assist manager in making appropriate business decision.
Objective of management accounting information is to provide all the useful information
which is collected from different departments in an enterprise. Such information are required to
be analysed as well as interpreted in systematic manner by finance manager in Dalata hotel.
Management accounting system consists of all relevant information such as revenue, profit
earned by an organisation, expenses or cost incurred by company during specific financial year
etc. It also assists firm in improving business performance.
Management accounting system can be used by manager in Dalata hotel. For forecasting
revenue and preparing the budgets. This accounting information when adopted or implemented
by Dalata hotel will support an organisation in making suitable decisions as well as will provide
several other benefit such as
Ease in comparing the
There are many techniques which can be adopted by management in Dalata hotel, which
will assist an organisation in reducing the cost, increasing the profit margins. It will also help an
enterprise in bringing improvement in business operations. Some of the tools as well as strategies
are:
Ratio analysis-It is recognised as a quantitative analysis of information contained in a
company’s financial statements. This technique is utilised by an organisation for evaluating
several aspects of business operations financial performance such as its efficiency, liquidity,
profitability and solvency.

Budgets -The purpose of preparing the budget is to help business entity in controlling the
expenses and assist firm in maintaining financial stability. Budget is prepared by the financial
department in an organisation on the basis of revenue earned as well as expenses incurred by the
firm during previous financial year. It helps management team in formulation of plan for
controlling the cost or other expenses in the future. Manager in Dalata hotel is required to
prepare flexible budget. This strategy will assist an organisation in reducing the negative effect
on economic factors on business operations.
Financial Statement- It is required by the finance manager in Dalata hotel to keep record of
financial transactions in systematic manner. As this will assist management team in identifying
the actual financial performance of company. It supports manager in identifying the actual
income earned and expenses incurred by firm during specific financial year. Dalata hotel is
required to implement reporting system at workplace. As this strategy will help business entity in
controlling the financial transaction as well as costs. It is required by top-level management to
delegate roles as well as responsibilities to the head of functional department to ensure that all
the activities are conducted as per the prescribed budget. Financial statement includes several
financial records such as balance, income and expenditure account, cash flow statement etc.
Variance analysis-It helps manager in identifying the performance gap. This technique also
helps management team in identifying the reason for variation in output.
2.2 Assessing the utilisation of management accounting information system as decision making
tool
It is required by the Dalata hotel to adopt the management accounting tools as well as
techniques. As this strategy will assist manager in making appropriate business decision.
Objective of management accounting information is to provide all the useful information
which is collected from the different departments in an enterprise. Such information is required
to be analysed as well as interpreted in systematic manner by finance manager in Dalata hotel.
Management accounting system consists of all relevant information such as revenue, profit
earned by an organisation, expenses or cost incurred by company during specific financial year
etc. It also assists firm in improving business performance.
Improving business operations-Management accounting techniques assist management in
improving business activities as well as executing the several operations in smooth manner. This

accounting methods involves the revelation of financial statement which is beneficial in terms of
creating the budgets, analysing the variation in profit as well as sales, identifying the financial
performance of company etc. (Hess and Kelman, 2017)
Forecasting - Management accounting system can be used by manager in Dalata hotel. For
forecasting revenue and preparing the budgets. This accounting information when adopted or
implemented by Dalata hotel will support an organisation in making suitable decisions as well
as will provide several other benefit such as ease in comparing the trends.
Investment decision- Management accounting system can also be utilised by manager in Dalata
hotel for making suitable business decisions, such investment, raising capital, meeting budgets as
well as objectives.
Performance evaluation – manager in an organisation can use management accounting system
for collecting information in order to evaluate business performance. It can be utilised for
identifying the performance gaps as well as reason for the same.
Financial analysis- management accounting information system is used by stakeholders in
Dalata hotel for analysing the financial status of company. It can also be utilised for measuring
the efficiency of firm (Divisekera and Nguyen, 2018)
TASK 3
3.1 Interpretation of Financial accounts of Dalata Hotel Group plc
Interpretation: Profitability ratio is utilised by the management or finance manager for
measurement of the profitability of the business. In context of Dalata Hotel Group plc ,there has
been increased in the gross profit ration of organisation which indicates that business entity has
been successful in making improvement in business operations. Information contained in the

table has also demonstrated that an enterprise is performing well in the market and have scope of
business growth in the future. There has also been increase in the revenue earned by a company
as compared to previous year sales. The net profit of firm has risen to a great extend. There has
been rise in gross profit margin in 2017. Company enjoy stable return as per profit after tax.
Interpretation: Liquidity ratio is defined as the variation between liquid assets and the liabilities
of a bank or other institution. This accounting tool help in measuring or determining the potential
of firm for paying its debts. It also indicates the firm’s strength to fulfil its liabilities. There are
two types of liquidity ratio, these are quick and inventory turnover. The quick ratio Dalata Hotel
Group plc has increased by 0.97.But the quick ratio Dalata Hotel Group plc is less than which
display that business entity does not have capability to repay its debts or short term liabilities.
Solvency ratio

Interpretation:
Efficiency ratio
Interpretation: Efficiency ratio helps manager in identifying the way well a company uses its
assets and liabilities internally. It includes various ratios such as inventory turnover, fixed assets
turnover, etc.
Asset turnover ratio: It indicates the number of times the inventory of the business is being sold.
The Asset turnover ratio of Dalata Hotel Group plc was .31 in 2016 which has increased to .33
during 2017.
Inventory turnover ratio: This is decrease in the inventory turnover ratio shows that the time for
which the inventory has increased (Buckley and Mossaz, 2018)
TASK 4
4.1 Analysing the sources and distribution of funding for the development of capital projects
associated with tourism
Evolution of capital projects plays a very significant role in growth of companies

operating in tour and travel industry. It allows business entities to gain long-term financial
benefit. Capital projects also helps firm in maintaining its financial stability as well as supports
in improving business performance.
Source: Sources of funds are considered to be as the significant for every company. These
sources off raising funds assist an organisation in execution of several business operations in
systematic manner. The need for financial resources can differ from one enterprise to other. It is
completely based on the nature of business and level of operations. Sources are recognised the
different techniques or areas from where the firm can be obtained as well as capital can be
raised by business entity fort fulfilling the requirement of business operations or procedures.
There are mainly to sources from where the Dalata Hotel Group plc can raised funds or finance,
these are equity and debt. Among both the sources,equity is considered to be as an effective
source of raising capital , as it does not contain any additional charges on the.m The style of
collecting the adequate as well as sufficient amount of financial resources or funds for such
developments which are belongs to the different department. It includes Department of Culture,
Media and Sport such as National Lottery Commission, Regional Development and various
NGPB. These are the administrative unit or federal agencies which will be the best source for
the legal authorities in context of generating funds for the operations
Capital projects: The capital projects are applicable with the transaction of public as well as
non-public organisation to provide infrastructural installation to the society. However, which
will assist people in context of making the adequate improvement in economy of country. There
are several capital projects which were financed by the legal authorities of by several private
entities. In regard to the development of Heritage sites, footpaths, subways, railways, roads,
runways, cycle routes etc. in these respect legal authority in nation use financial resources or
funds which are collected in form of tax or from the investments made by various private
companies.
Non- public funding :There are various other origin for obtaining funds which will be useful
as well as beneficial for an organisation in terms of getting the suitable fiscal or financial
assistance which can be utilised for developing or improving the infrastructural facilities.
However, these sources are Debt funding, equity and governmental funding. These are the

sources from which the capital structure of company can be balanced and business entity will
have sufficient amount of resources for facilitating several business operations.
In travel as well as tourism sector there are several capital projects which are to be
implemented such as tourist information points, cycle route, health and medical infrastructure
etc. These project can be executed by obtaining the funds or financial resources from several
sources such as banks loans, financial assistance from government as well as grants from
international monetary institution
It is required by the finance manager as well as management team in Dalata Hotel
Group plc to conduct the debt analysis as well as consider several factors when planning to raise
capital from the different sources. The variables which are required to be considered include
risk , cots , extra charges , time period when debt are to be repaid etc. (Armenski,Dwyer and
Pavluković,2018 )
CONCLUSION
It has been concluded from the assignment that in terms of the sources of funds
generating for the development of capital projects it will be advantageous to have proper
financial assistance. Project has also concluded that financial analysis's well as management
accounting system plays important role in reducing the expenses as well as helping firm in

maintaining its financial stability. These are tools which assist business entity in increasing
profitability as well as controlling the business transactions. It has been concluded from the study
that Dalata Hotel Group plc is performing well in the market but still there are several areas
where an organisation can bring improvement. Study has highlighted the some management as
well as analysis tool s and techniques which can be used by an enterprise for measuring financial
performance of company. It has been concluded from the report that Management accounting
and financial analysis of the business assist manager in making suitable business decisions.
Budget is recognised as the appropriate tool which can be utilised by firm, for reducing the
expenses as well as controlling cost.
It has been suggested to Dalata Hotel Group plc, management team in an organisation
should adopt the appropriate techniques, strategies, or techniques for increasing working
efficiency.

REFERENCES
Books and Journals
Hess, J. and Kelman, I., 2017. Tourism industry financing of climate change adaptation:
exploring the potential in small island developing states. Climate, Disaster and
Development Journal. 2(2). pp.33-45.
Camilleri, M.A., 2018. Nurturing travel and tourism enterprises for economic growth and
competitiveness. Tourism and Hospitality Research. 18(1). pp.123-127.
Angel, K., Menéndez-Plans, C. and Orgaz-Guerrero, N., 2018. Risk management: comparative
analysis of systematic risk and effect of the financial crisis on US tourism industry: panel
data research. International Journal of Contemporary Hospitality Management. (just-
accepted). pp.00-00.
Cantú, F., 2016. The determinants of future economic growth Sabbatical programme report.
Chung, H. and Jung, W. O., 2016. Financial Disclosure Incentives and Organizational Form
Changes. Asia‐Pacific Journal of Financial Studies. 45(6). pp.839-863.
Divisekera, S. and Nguyen, V.K., 2018. Determinants of innovation in tourism evidence from
Australia. Tourism Management. 67. pp.157-167.
Buckley, R. and Mossaz, A., 2018. Private conservation funding from wildlife tourism
enterprises in sub-Saharan Africa: Conservation marketing beliefs and practices. Biological
Conservation. 218. pp.57-63.
Armenski, T., Dwyer, L. and Pavluković, V., 2018. Destination competitiveness: Public and
private sector tourism management in Serbia. Journal of Travel Research. 57(3). pp.384-
398.
Online
Cost-Volume-Profit Analysis. 2016. [Online]. Available through
:<https://www.cliffsnotes.com/study-guides/accounting/accounting-principles-ii/cost-
volume-profit-relationships/cost-volume-profit-analysis>.