Tourism Strategic Management Plan

This assignment tasks students with analyzing the multifaceted impacts of tourism, both positive and negative. It delves into key concepts like medical tourism, responsible tourism, and global economic influences on the industry. Students are then challenged to formulate a strategic management plan for tourism development, encompassing financial considerations, sustainability, and collaboration between public and private sectors.

Finance and Funding

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of costs and volume in financial management...................................................1
1.2 Pricing methods used in travel and tourism sector................................................................2
1.3 Analysis of different factors which influence profitability of travel and tourism.................4
TASK 2............................................................................................................................................5
2.1 Different kind of management accounting information which used in tourism sector.........5
2.2 Assess the use of investment appraisal management accounting information as decision
making tool..................................................................................................................................6
TASK 3............................................................................................................................................7
3.1 Interpretation of financial accounts to assist decision-making.............................................7
TASK 4............................................................................................................................................9
4.1 Different sources and distribution of development of capital projects.................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
For a business organisation it is required to manage their financial sources in appropriate
manner to getting desired growth and success easily. For this they needs to manage their liquidity
funds to build a positive bridge in target market. Travel and tourism is one of the fastest growing
industry in UK that provide its effective services to inbound, local and outbound tourists. For
them it is required to manage their financial sources to earn long term benefits. This project
reports is based on The Akaglo Tours Company which is planning to prepare holiday trip for
Maldives. For them it is required to manage financial sources and funds to build future success
properly (Evans, Stonehouse and Campbell, 2012). This reports includes importance of cost and
volumes as well as analysis of different factors that influence profitability in tourism sector. It
also determine use of investment appraisal management accounting information and
interpretation of financial account. At last it represent different sources and distribution of
development of capital projects.
TASK 1
1.1 Importance of costs and volume in financial management
For a business organisation it is required to analyse values of their products and services
cost to make appropriate easily. Through this they can easily get higher profit and desirable
success in future. In The Akaglo Tours Company, industries needs to manage their funds and
reserve to offer quality and attractive services to their target customers. This is one of the fastest
growing industry in world wide, so for this government of UK provide their own contribution to
maximise its size easily. In this process, cost and volume of organisational services play their
own role in front of tourist and visitors as-
Cost – This is known as an appropriate amount of values and things that has to be paid to get
something easily. Cost is mandatory values that has been used to produce several things and
services. In it, organisation can easily add their revenue and profits that they need to earn on the
behalf of their services (Henderson, 2010).
 Direct cost – These type of cost are directly accountable as cost objective in which
organisation includes operating cots, efforts and expenses that requires to cove through
firm's services and products.

 Indirect cost – These type of costs are not directly calculated as organisational objectives
and it can be either variable as well as fixed by its nature. It includes indirect expenses
and values of organisational services as advertising, electricity bill and rent as well.
 Variable cost – These type of costs are variable by nature and it can be changes in several
proportion easily. Variable costs are basically depends on companies production and
services to make desirable changes. It can be rise and fall at any time as per company's
demand and choice.
 Fixed cost – These type of costs are fixed by nature and organisation can not make any
changes in its nature by their own choice. Through this firm can easily serve impressive
and appropriate cost in front of their target customers.
Volume – It is used to analyse values and quantity of organisational products and services to
analyse different components easily. In travel and tourism sector there are various tools and
techniques are available to serve effective services to tourist. Volume is determine as -
 Break even analysis – This is an appropriate point in which organisation cover its overall
cost thorough impactful strategy. This process is very beneficial in travel and tourism
industry that helps to cover overall cost of its expenses (Heung, Kucukusta and Song,
2011).
 Economies of scale – In this process travel and tourism sector serve its own contribution
in economy growth. In UK Tourist industry provide higher growth and income.
 Diseconomies of scale – In this procedure economy scale do not function so for this The
Akaglo Tours Company require to perform properly in several situations that can not
affect negatively in economy.
1.2 Pricing methods used in travel and tourism sector
The Akaglo Tours Company require to use effective pricing method to serve quality
services to their customers in appropriate manner to pay their attention easily. These kind of
things helps to capture customer's eyes toward different services packages. In this process
organisation needs to use effective methods to solve issues and problems that are related to
pricing methods of travel and tourism sectors. For this organisation van use several techniques as
-
Seasonal pricing – In travel and tourism sector different organisation needs to make
effective and appropriate changes according to different seasons. In this process The Akaglo

Tours Company provide different kind of offer and discount packages to their tourist as per their
demand and choice. Visitors and tourist are demand for several packages as they come in
different seasons to visit different places. Through this firm can easily higher profit and income
as well.
Rack Rates – In this process organisation serve different kind of prices to their tourist
without including any discount and offer in it. These rate are based on their pre planning package
and pricing methods. For this tourist require to avail their order in tourism organisation's to visit
several places easily (Nielsen and Spenceley, 2011).
Last minute costing- These are known as different kind of cost methods that are uses by
several organisation's at last time as per customer's demand and requirement. In this process firm
provide different offer prices that tourist can afford easily. The Akaglo Tours Company make
their pricing policy variable as they can make appropriate services in them at different times.
Package deals – These are uses as pricing strategy of several organisations in which they
provide different kind of tourism facilities to their visitors as per their demand with several
offers. For The Akaglo Tours Company it is require to use package deals for their customers to
provide quality services top them easily.
Discounting – This is one most attractive method in which firm provide several
discounts and offers to their visitors to attract them easily. These kind of ideas helps to capture
customer's eyes toward different packages.
There are several methods can be used by The Akaglo Tours Company for different pricing
methods as -
 Cost based method – This is a common way in which organisation ad their margin and
further cost in organisation's prices to getting higher profit easily. It is uses as one of the
simplest method that includes variable and fixed cost of firm. For The Akaglo Tours
Company this method will be useful to getting future success. It is simply helps to earn to
income and market place in several countries (Papatheodorou, Rosselló and Xiao, 2010).
 Demand based method – This is one of the most beneficial method in which The
Akaglo Tours Company can easily make appropriate changes in their pricing method as
per customer's demand and need. Through this they can easily earn their own market
place and goodwill in front of target visitors.

 Market competition based method – In this process, The Akaglo Tours Company
requires to analyse their market condition and rivalry firms to set their offer prices easily.
Through this they can easily serve them affordable facilities and prices as per their
requirement and demand as well.
1.3 Analysis of different factors which influence profitability of travel and tourism
Travel and tourism is one of the fastest growing industry that earn higher growth easily.
For this, it is requires that management of these organisations manage their strategies and
services in appropriate manner to getting desirable growth easily. The Akaglo Tours Company
require to make proper planning to reduce negative impact of different factors that influence
profitability of travel and tourism sector. There are various elements are determine below as -
Internal factors – These are inbound factors of organisation that are directly affect profitability
of organisation. For this, The Akaglo Tours Company requires to make effective strategy ti
reduce impact of internal factors easily (Pike, 2012). Through this firm can easily improve their
organisational position in target market or in front of target audience. These factors are known as
Visitors, organisational policy, management services, tourists demand and need as well.
External factors – These factors are related to external environmental factors that are directly
influence in decision making and profitability of travel and tourism sector. These factors are
beyond the control; of firm but they can make impactful strategy to reduce its negative impact
easily. All these factors are directly or indirectly affecting on organisational policy and procedure
as well. There are some factors are determine below that are related to external factors as -
 Political environment - The Akaglo Tours Company requires to manage their
organisational terms and policy as per the governmental rule and regulation to making
desirable profit easily. Political factors has direct impact on profitability and decision
making procedure of firm. To making smooth functioning process in organisation, The
Akaglo Tours Company requires to build political stability in their business procedure.
Through this they can easily build attention of visitors toward political values of their
country.
 Current trends – In travel and tourism sector, it is require that organisation manage their
terms and policy as per current trends and requirement of visitors. Through this they can
easily capture tourist's eyes toward their services and offers. These kind of things play a
most important role to maximise organisational profitability and growth in target market.

 Environmental factors – In travel and tourism sector, environmental factors play a most
important role that helps to incise or decrease customer's range at several places. For this,
The Akaglo Tours Company require to mange their budget and package that helps to
capture customer's attention toward these services easily. Choice and demand of visitors
or tourists are changes as per environmental factor of specific country so for this tourism
organisation require to make impactful stategy6 to earn higher profit in peak seasons
(Pocock and Phua, 2011).
 Social and cultural values – Social and cultural values of an country helps to attract
visitors and tourist easily. So for this government of a country requires to maintain their
historical and cultural values to get attention of visitors easily toward this.
TASK 2
2.1 Different kind of management accounting information which used in tourism sector
For travel and tourism organisation, it is require to manage their management accounting
sources in appropriate manner to getting desirable outcomes easily. Through this they can
analyse information about their overall expenses that require to recover through various planning
and strategies as well. The Akaglo Tours Company requires to use different kind of management
accounting information to analyse each and every information properly. For this process, they
can use such type of sources as -
Budget reports – These kind of reports is related to organisation's functional activities that
require to be manage in appropriate manner to getting proper information of overall budget. This
type of reports are uses to manage total expenses and cost of organisation to greeting desirable
outcomes easily. Through this The Akaglo Tours Company can easily minimise its extra
expenses that can affect profitability and future growth as well. Budget report always manage
appropriate control in cash flow, reserve manage management and fund flow analyse that helps
to attain future objective easily.
Financial statement – These are most important statement of organisation that require to be
manage in appropriate manner to getting appropriate information of all financing transactions.
Through this firm can easily get proper information of their income management sources, cash
flow analysis, Profit and loss management as well as analysis of balance sheet. These kind of
statement helps to manage organisational record in appropriate manner to getting desirable
outcomes of their investment and funds as well (Ritchie and Frechtling, 2010).

Management information system – These kind of statement helps to manage organisation's
financial resource in proper manner. This is known as effective techniques that uses to analyse
firm's future performance as per their current trends and working procedures. The Akaglo Tours
Company can easily get effective and desirable outcomes through such type of statements as well
(Zapata and Hall, 2012).
Variance analysis – These are uses to calculate standard rate of organisation that they invest to
getting proper information of their funds and investment in tourism development. In this process
manager of organisation mange their organisational activities as per their future requirement and
current position to making appropriate strategy easily.
2.2 Assess the use of investment appraisal management accounting information as decision
making tool
The Akaglo Tours Company requires to analyse the use of investment appraisal
management accounting information to getting appropriate outcomes of their decision making
process. Through this organisation can easily analyse proper information of their investment that
they made to getting desirable outcomes. These kind of packages are related to several packages
that organisation serve to their tourist and visitors (Spenceley, 2012). There are different
appraisal techniques are given below that affect decision making process of organisation such as
-
The internal rate of return (IRR) – These kind of values are consider as discount rate of
organisation that they want to offer top visitors. This values is calculated as zero for expected as
equal present value techniques. Formula of internal rate of return is -

The accounting rate of return (ARR) – These kind of techniques are uses for considering
return in investment and capital that they put in their business procedure. It is also known as
target rate of organisation that fir require top recover easily.
Payback period method – This is exact time period of organization in which they require to
recover their investment amount with specific profits and growth. In this decision are made as
per minimum timing that consider to recover overall amount.
Net present value method (NPV) – This methods uses to getting appropriate outcomes that
require to analyse future desirability and investment of firm ion several places (Tribe, 2015).
TASK 3
3.1 Interpretation of financial accounts to assist decision-making
Income statement of TUI of TUI travel and tourism company for the year ended 30th
September 2017
Revenue Amount (£)
Total Revenue 18535000
Cost of Revenue 16535500
Gross Profit 1999500
Operating Expenses
Selling General and Administrative 1178900
Total Operating Expenses 17807000
Operating Income or Loss 728000
Income from Continuing Operations
Total Other Income/Expenses Net 351700
Earnings Before Interest and Taxes 728000
Interest Expense -125200
Income Before Tax 1079700
Income Tax Expense 168800
Minority Interest 594000
Net Income From Continuing Ops 910900
Non-recurring Events
Discontinued Operations -149500

Extraordinary Items -
Effect Of Accounting Changes -
Other Items -
Net Income
Net Income 644800
Preferred Stock And Other Adjustments -
Net Income Applicable To Common Shares 644800
Balance sheet of TUI travel and tourism company for the year ended 30th September 2017
Period Ending 30/09/17
Current Assets Amount (£)
Cash And Cash Equivalents 2516100
Short Term Investments -
Net Receivables 848400
Inventory 110200
Other Current Assets 843200
Total Current Assets 4317900
Long Term Investments 1375700
Property Plant and Equipment 3828500
Goodwill 2889500
Intangible Assets 548100
Accumulated Amortization -
Other Assets 1225800
Deferred Long Term Asset
Charges 323700
Total Assets 14185500
Current Liabilities
Accounts Payable 2653300
Short/Current Long Term Debt 1933100
Other Current Liabilities 3242000
Total Current Liabilities 6534700

Long Term Debt 630900
Other Liabilities 2355900
Deferred Long Term Liability
Charges -
Minority Interest 594000
Negative Goodwill -
Total Liabilities 10651800
Stockholders' Equity
Misc. Stocks Options Warrants -
Redeemable Preferred Stock -
Preferred Stock -
Common Stock 1501600
Retained Earnings -1562500
Treasury Stock 3000600
Capital Surplus -
Other Stockholder Equity 3000600
Total Stockholder Equity 2939700
Net Tangible Assets -497900
Liquidity ratio
Ratio Formula Results
Current ratio Current assets / Current liabilities 4317900 / 6534700 = 0.66
Quick ratio Liquid assets / current liabilities –
bank overdraft
2516100 / 6534700 = 0.39
These ratio statement shows that firms has less liquidity in terms of debts. The current
ratio of organisation is 0.66 that is less then 1 so for this firm needs to manage their
organisational liquidity in appropriate manner to getting desirable benefits and incomes as well.
Profitability ratio
Ratio Formula Results
Gross profit ratio (Gross profit / cost of goods 1999500 / 1653500 = 12.09%

sold)*100
Profit margin (Net profit / total revenue)*100 644800 / 18535000 = 3.47%
Solvency ratio
Ratio Formula Results
Debt equity ratio Debt / equity 630900 / 2939700 = .22 times
Debt ratio Total liabilities / total assets 10651800 / 14185500 = 0.75
times
As per the above ratio analysis it has been analyse that Debt equity ration is .22 times
which is calculated on the basis of total debts and equity.
TASK 4
4.1 Different sources and distribution of development of capital projects
For The Akaglo Tours Company it is essential to manage their capitals in appropriate
manner to getting desirable outcomes easily. There are different kind of sources are available for
The Akaglo Tours Company as -
Internal sources of finance - These are organisation's inbuild strategies and techniques that they
uses to buuild effective growth in their business process (Vellas, 2011).
External sources of finance – There are various external factor of sources and distribution of
development of capital projects are given below as -
Loan – These kind of funds are provided by government agencies, financial institute and
other banks for enhancing organisational services easily. Travel and tourism is one the fastest
growing industry that provide their effective services in economy growth.
Equity – These are share capital sources of organisation that helps to make effective
structure in travel and tourism sectors properly(Wong, Mistilis and Dwyer, 2011).
CONCLUSION
As per the above report it has been summarised that finance and funding is one most
important factor in each and every industry that requires to be manage in appropriate manner.
Travel and tourism is one of the fastest growing sector in UK that helps to provide effective

growth in economy. This project reports is based on The Akaglo Tours Company which is
planning to prepare holiday trip for Maldives. For them it is necessary top manage their funds
and financial sources in appropriate manner to getting desirable outcomes easily.