Finance and Funding in the Travel and Tourism Sector: A Comprehensive Analysis

This report delves into the crucial role of finance and funding in the travel and tourism sector, examining key concepts and applying them to real-world case studies. Using Carnival Corporation & plc and Dalata Hotel Group plc as examples, the report explores cost-volume-profit analysis, pricing methods, management accounting information, and capital project funding. It analyzes the importance of financial management in driving profitability and sustainable growth within the industry.

Finance and Funding in the Travel and Tourism Sector
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Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
P1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study..................................4
P1.2 Analyze pricing methods used in the travel and tourism sector. You should use relevant
examples from different cruise brands of Carnival Corporation & plc.......................................5
P1.3 Analyze factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study....................................................................7
Task 2: (Poster)................................................................................................................................8
P2.1 explain different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc as your case study........................8
P2.2 assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc..............................................................................................................10
Task 3.............................................................................................................................................13
3.1 interpret travel and tourism financial accounts for Carnival Corporation & plc.................13
Task 4.............................................................................................................................................15
4.1 analyse sources and distribution of funding for the development of capital projects
associated with tourism..............................................................................................................15
Conclusion.....................................................................................................................................17
Bibliography..................................................................................................................................18
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Introduction:
Management accounting is primarily used internally by the Carnival Corporation’s management.
The work done in this branch of accounting is much more detailed, so as to allow for a more
organized approach to the Carnival Corporation’s finances. Management accounting purports to
aid viable decision making. In this report, there is analyzing the purpose of attaining the goal of
an organization through management accounting. Furthermore, the report is going to explore
other types and tools of management accounting.
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Task 1:
P1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study.
Among the many tools available to entrepreneurs and Carnival Corporation managers of carnival
corporation CVP analysis offers comprehensive and objective ways an entrepreneur can predict
and assess the forecast of their business. Another key advantage of CVP is that it offers a
detailed snapshot of the business’s activity. In return, this can help entrepreneurs determine the
costs needed to produce products or provide services in spite of changing variables such as
material or ingredient costs and transportation expenses. CVP is an essential part of profit
planning that can help entrepreneurs build and sustain a new business. CVP analyzes the
relationship between product cost and product sales volume and how it will affect Carnival
Corporation profit. With using a C.V.P. managers can focus on several levels of a business and
the interactions with other areas. Some of these areas would include the price of their products,
per unit cost, total fixed cost and the mix of products produced. Cost volume profit can also
provide information to the manager about the breakeven point allowing the management team to
project how future spending and production will benefit or harm the Carnival Corporation
(Banker, Basu, Byzalov, & Chen, 2013).
Cost-volume-profit analysis, or CVP analysis, has five different components that are used for
profit planning. Management can use CVP analysis and other formulas, such as the formula for
contribution margin per unit, to help them make important decisions regarding Carnival
Corporation expenses and Carnival Corporation profits. Carnival Corporation can be at a
certain point where it makes no profit yet suffers no loss. This is known as the break-even point.
A Carnival Corporation can find itself at this point if a certain volume of sales is equal to the
Carnival Corporation’s variable costs plus the Carnival Corporation’s fixed costs. The Carnival
Corporation must therefore sell a certain amount of units in order to break even with their
variable costs and fixed costs. If the fixed costs were to decrease, the Carnival Corporation
would then require fewer sales to be able to break even. For example, let’s say that a Carnival
Corporation needed to sell 100 units in order to gain enough revenue to cover the variable costs
and the fixed costs, and the Carnival Corporation would break even. If the Carnival
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Corporation’s fixed costs were to decrease, the Carnival Corporation might now only need to sell
95 units in order to break even.
Even though this is a great tool for managers to forecast aspects of the Carnival Corporation and
is widely used in the business world, it does have some drawbacks. One such drawback is that
CVP analysis is not always accurate. CVP analysis assumes that all cost is either completely
fixed or completely variable. Given the constraints of C.V.P analysis the tool is still widely
accepted throughout the business world and has been proven to be an extremely useful tool. By
understanding the pros and cons of using such a tool as with any tools you utilize you can make
an informed decision as to whether this is the right tool for your business or not. . There are
formulas that management can use in CVP analysis in order to make important decisions for the
future of the Carnival Corporation. Each of the components in CVP analysis is important for
both profit planning and decision making. The business will also determine whether it has stayed
within the stipulated budget or if it has not stayed within that budget. The departmental managers
will have to report the expenses to the department of the accounting that they had incurred. The
accounting department has to maintain the information concerning the expenditure of the
Carnival Corporation (Nixon & Burns, 2012).
P1.2 Analyze pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brands of Carnival Corporation & plc.
In an organization that deals with production and distribution, it is not only important to
understand the detailed operational demands/ requirements, it is also important to provide
Carnival Corporation stakeholders with mission-critical capabilities. Customer availability
indicates the number of potential customers in market that hold purchasing power for services
and goods. As such, customer availability is the life source of businesses supporting the trade
and procurement of products such as firearms. As such, firm growth and expansion is all
dependent of market opportunities and consumer availability. The two factors influence business
structuring and pricing programs. An effective pricing program attracts consumers by creating
value in Carnival Corporation products and services. Furthermore, an effective pricing program
allows businesses to observe increase market opportunities by easing the market penetration
process (Drury, 2013)
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The biggest mistake is the utilization of the wrong pricing strategy; especially in instances where
the target market is new to the business managers. Determining pricing for a product-based
business is no different from pricing strategies conducted for service-driven business ventures.
The only difference is that one entity is dealing with service valuation, and the other is concern
with product valuation (for instance; the pricing approach for pistols, rifles, and shotguns). The
first step is assessing what the competition charges for its products; the cost of procuring a
firearm from a competitor. Afterwards, the business managers should consider where current
marketplaces product prices favor their intended business objectives and goals. For instance, if a
business owner can offer better firearms than his/her competitors then he/she is allowed to issue
higher firearms charges (skim pricing) (Laudon & Laudon, 2016).
If instead an organization is manufacturing substandard products than its competitors, then such
a business entity must issue lower product charges (penetration pricing). Therefore, a new
business organization can utilizes either a skim or penetration pricing strategy. The best
technique to employ in product pricing for a new business would be penetration pricing strategy.
This pricing strategy allows a new business entity to ease market entry by offering lower
products prices than the existing organization operating in the market. A penetration pricing
strategy will allow a firm operating in the world of firearms production and distribution to offer
affordable products that will attract need customers. Penetration pricing strategy increases
consumer retention and market reputation for a new business enterprise.
Markup evaluating technique utilizes the expenses and rate markups to ascertain offering cost of
an item and overlooks the working costs. It ascertains the cost of obtaining or creating the item
and includes the coveted markup to it.
Target return pricing method is setting price of products or services with a given equation so that
the price results in a given amount of profit being targeted after the sale of specified amount of
products or services. A business uses the method to set prices for its products or services at a
level meeting the profit objectives at specified sales volume.
Value pricing method involves setting price of a good or product depending on its quality or the
level with which it is able to satisfy the target consumers. It is pricing a product with how worth
it is to the target consumers.
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Going rate pricing method involves setting a price for a product or service using the price in the
market as a basis. Commonly used when pricing homogeneous products with less product
differentiation (Nixon & Burns, 2012).
P1.3 Analyze factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study.
Great and successful administration technique is the best instrument to attain benefit. On the off
chance that the arranging is planned in an appropriate way at that point there are chances that by
usage benefit can be created in an exact way.
Publicizing and advancement battle likewise assumes an imperative part in that setting as in the
aggressive market this showcasing arranging is vital to expand the benefit of the business.
In tourism business voyaging costs is likewise vital to decide as there are less possibilities that if
plane or some other method of transport toll is high then edge in benefit would be low.
A superior settlement office is additionally required to win benefit for the business. As travelers
live in lodgings and are charges zone moderate at that point there are less possibilities that
business would endure any issue (Higgins, 2012).
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Task 2: (Poster)
P2.1 explain different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc as your case study.
Accounting is an ever evolving profession which has transformed in many ways in order to adapt
to and meet the specific needs of its users. There are now several differing types of accounting
that have branched out from this evolution, so as to better accommodate a varying range of needs
its consumers may have.
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Financial accounting deals in financial statements, processing the information received from
these documents for external use. The financial statements under the review of the financial
accountant show the consumer’s previous and current financial position based on the guidelines
of the GAAP (Generally Accepted Accounting Principles). The GAAP is used as a guide for
financial accounting setting the standard in this specific field.
Management accounting is primarily used internally by the Carnival Corporation’s management.
The work done in this branch of accounting is much more detailed, so as to allow for a more
organized approach to the Carnival Corporation’s finances. This gives the management the
opportunity to reflect upon the Carnival Corporation’s previous performances and their
outcomes, as well as create budget friendly plans for the future, all produced at their own
discretion. Management accounting also involves certain methods pertaining to the monitoring
and controlling of costs, referred to as cost accounting (Ronald & David, 2013).
Governmental accounting commonly referred to as public accounting or federal accounting is the
accounting structure used in the public division. It is only slightly different than that used in the
private division. There are differing needs in accounting for a state owned and a privately owned
institution. Governmental accounting warrants a budget friendly financial position and
performance within the constraints many state owned financial institutions are concerned with.
Tax accounting is simply that, accounting for tax associated matters. Each jurisdiction has its
own set of rules prescribed by tax laws in which tax accounting has to follow. Tax accountants
are charged with the adjustment of financial statements in accordance with the financial
accounting principles to make up for the differences in tax laws written under each jurisdiction.
Project accounting is used in the development of financial progression in a project through
regular financial reports. This specific type of accounting is a crucial element of project
management. Like cost accounting, project accounting is also a branch of management
accounting. However, project accounting has a main concentration of warranting the financial
success of Carnival Corporation projects.
Social accounting or corporate social responsibility reporting and sustainability accounting,
reports allegations made about an organization’s actions in regards to its ecological and social
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environment. Environmental reports are the main resource of this specific type of accounting. It
is a young type of accounting, submerging from the public’s growing environmental awareness,
and still in its early stages of development (Ronald & David, 2013).
P2.2 assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc.
Management accounting purports to aid viable decision making. The process involves-
collecting, processing and communicating information to the management in planning,
controlling and evaluating business strategy and processes. For the purpose of attaining the goal
of an organization the relevance of management accounting is most important. In the succeeding
years chief executives were placed in an organization that had a background in staff functions
(Accounting, Finance). They lacked the know how’s of technology. Short term measures were
the basis for assessing the impact of projected impact. Lately the advancement of the technology,
intense global competition and information processing threatened the existing management
accounting systems in generating relevant information that were required for decision making.
Basic leadership is the way toward recognizing a choice, gathering data and deciding elective
resolutions at that point settle on a decision. It includes steps which incorporate; Identifying the
issue, gathering applicable data, recognizing the choices, measuring the proof, pick among
options, making the move and inspecting the choice and its results.
Performance evaluation is a formal systematic evaluation of an organization where behavior and
outcome is evaluated exhaustively to discover how to perform effectively in future so that the
organization and society all benefit. It involves both past and future evaluation.
Contingency theory claims the best course of action is dependent to the situation at hand,
depending on the internal and external constraints that will always alter what the best way of
leading is. Certain leadership traits is helpful in a certain situation, hence leadership would
always need to change given a new set of situation. Despite the assumption, there was a severe
critique based on the lack of clarity in the theory. In a more theoretical version, Galbraith argues
that the amount of information processed depends on the degree of uncertainty faced by the
organization thus agreeing with the assumptions made by the theory.
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Accounting frameworks can deliver all the money related records utilized by the proprietors,
directors, and controllers of the organization. The report asked for would be founded on the sort
of data gathered and who the report would profit. The obtaining office may require a report that
subtle elements client utilization. This would enable them to plan and gauge what is required for
stock purposes. The stock office would utilize reports that detail the areas of items and amounts
close by. The money related group would utilize reports that detail the monetary status of the
organization. Managers should know about all that occurs in the business. With the end goal for
them to settle on choices they ought to have the capacity to know how to recover important data
and how to peruse that data.
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Task 3
3.1 interpret travel and tourism financial accounts for Carnival Corporation & plc.
Need to make comparison of financial accounts of two years:
The restaurant group plc:
 As indicated by the computed execution of the organization the snappy proportion has
expanded from 2014 to 2015 to .231783758€. The present proportion has diminished in
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year 2015 from .312453755€ to .278622904€. The net overall revenue apportion has
diminished. The receivables have expanded throughout the year to 17861.5€. The leasers
has expanded to 819153.5€ while the receivable turnover proportion has diminished. The
estimation of inventories has expanded up to 859€.
 The dissolvability proportion has diminished from 0.15786051€ in 2014 to 0.14716778€.
The organization's benefits turnover proportion has additionally diminished to
1.464245275€. The profit pay-out per share is expanded till0.7€. The P.E proportion of
the organization has expanded in contrast with the year 2014. Generally speaking the
organization's gross benefit proportion has expanded up to 0.185137901€. The working
benefit proportion of the organization has diminished (Nixon & Burns, 2012).
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Task 4:
4.1 analyse sources and distribution of funding for the development of capital projects
associated with tourism.
Differing financing decisions that can be used by a movement and tourism association are
discussed underneath. Retained income- Profits that are earned are additionally utilized as the
source in the capital activities. Equity- This the long however better approach to amass
subsidizes when contrasted with various sources. There are numerous options in these
alternatives that can be trailed by the organization with the end goal of gathering of assets from
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various sources. Another way that business utilizes is the holding the assets for a very long time
with the goal that assets can be expanded and can be put resources into the required
undertakings. This is trailed by the business as it is commonsense with no measure issue related
with it. This strategy is known as capital extends technique. It is a simple and basic technique
which comprise of bills of trade and numerous different receipts identified with loan bosses of
the business (Ward, 2012).
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Conclusion:
Travel and tourism is the vital segment of the economy from which appropriate measure of wage
is created so it end up fundamental that back and financing be made exact and reasonable. Aside
from that organization additionally requires to roll out essential improvements in the present
administration bookkeeping procedure alongside adjust speculation evaluation method that
would empower a superior development in connection to the right basic leadership. Dalata bunch
is the organization that is related with travel and tourism so it is likewise fundamental that all the
vital changes be gained for the ground of the organization.
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Bibliography
Banker, R. D., Basu, S., Byzalov, D., & Chen, J. (2013). Asymmetries in Cost-Volume-Profit
Relation: Cost Stickiness and Conditional Conservatism. Department of accounting .
Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management . Centage
learning .
Drury, C. (2013). Management and cost accounting . Springer.
Eierle, B., & Schultze, W. (2013). The Role of Management as a User of Accounting
Information: Implications for Standard Setting. Journal of accounting and management
information systems .
Higgins, R. C. (2012). Analysis for financial management . McGraw-Hill/Irwin.
Laudon, K. C., & Laudon, J. P. (2016). Management information systems. Pearson education.
Nixon, B., & Burns, J. (2012). The paradox of strategic management accounting. Management
accounting , 229-244.
Ronald, H. W., & David, P. E. (2013). Managerial Accounting: Creating Value in a Dynamic
Business Environment, 10th Edition.
Ward, K. (2012). Strategic management accounting . Routledge.
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