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

Finance and Funding in the Travel and
Tourism Sector
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Table of Contents
Introduction:....................................................................................................................................3
Task 1...............................................................................................................................................4
P1.1 explains 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 Analyse pricing methods used in the travel and tourism sector. You should use relevant
examples from different cruise brands of Carnival Corporation & plc.......................................7
P1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc. Cruise brands as your case study..................................................................8
Task 2.............................................................................................................................................10
P2.1 explains different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc. as your case study.....................10
P2.2 assesses the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc..............................................................................................................18
Task3..............................................................................................................................................24
3.1 Interpret financial accounts of Dalata Hotel Group plc. for the year ended 31st December
2017 showing at least two years of performance (for example comparing 2017 to 2016)........24
Task 4.............................................................................................................................................27
4.1 analyze sources and distribution of funding for the development of capital projects
associated with tourism..............................................................................................................27
Conclusion:....................................................................................................................................29
References......................................................................................................................................30
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Introduction:
The financial management is to be made in all the businesses and so is the case with the tourism
business. In that also there is the requirement of funds and so proper evaluation shall be made of
all the aspects which are related to this. The cost will be determined and also the CVP analysis
will be performed in the report below. The management accounting information will be
identified and it will be used in the making of decisions. The ratios will be calculated so that the
evaluation of performance is made possible. All of that will be used in the making of the correct
interpretation and by that future aspect will be decided. The sources of the funds which will be
used in the process of making of capital projects will be identified. They will be identified and
with the requirement of funds will also be evaluated.
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Task 1
Report:
Introduction:
The cost, volume, and profit will be considered in this report with the relations who exist among
them. There will be the identification of the strategies and factors which will be used in the
pricing decision.
P1.1 explains the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation &plc. as your case study
In the process of the financial management, there are various aspects which are required to be
taken into consideration and they are as provided below:
Cost: In the making of the product or the provision of the services to the customers Carnival will
be required to incur several expenses and they are required to be identified on a proper basis. In
the total cost, there will be a division which will be made for the various types of cost which
include the direct and the indirect cost. All of that expense which has been incurred directly in
relation to the product will be direct and all of the remaining will be indirect (Garvey, et. al.,
2016). In all of the expense which is involved, there will be a variable portion that will be in
correspondence with the units produced and remaining part will be fixed which will not be
fluctuating and no effect will be made on this of the change in volume.
Total cost = Total Fixed cost + (Variable cost per unit * Number of units)
Volume: The production which is made is for a particular quantity and that is identified as the
volume. The total services and the products which have been provided by the company in the
defined period of time will be included in the calculation of the total revenue. In Carnival
Corporation there is travel related services which are provided and so the volume will be based
on the number of the visitors who have taken the company’s services. If the company is required
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to determine the volume in value then it will be determined with the help of multiplying the
number with the amount which is collected from each person.
Revenue/Volume = Sales price per visitor * Number of visitors
Profits: The business is carried out with the objective and the main aim of it is to earn the
maximum amount of the profits. This will be the amount which will be retained with the
company after the deduction of the total cost from the revenue which is made. By that, the net
amount will be identified and that will be used for the undertaking of further actions and for this
purpose income statement is made which is presented below in the context of Carnival
Corporation.
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The explanation which has been provided above describes all of the important factors which are
to be considered in the business and for that proper analysis is required to be made so that the
relation which exists among them is identified.
The interrelation among the cost, profit and volume will be evaluated with the help of the CVP
analysis in which they all will be considered. There is the direct relationship between the cost
and the volume and so when the increase in the units is made then there will be a rise in the cost
also (Nas, 2016). Then the profits will be based on the cost as they are inversely related and if
there will be a reduction in the cost then the rise in profits will be experienced and vice versa.
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