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

2 Finance and Funding in the Travel and
Tourism Sector
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Contents
Introduction.................................................................................................................................................3
TASK 1.......................................................................................................................................................4
Introduction.............................................................................................................................................4
1.1) Explain importance of costs, volume and profit in financial management of Carnival
Corporation & plc....................................................................................................................................5
1.2) Analyze pricing methods used in travel and tourism sector.........................................................9
1.3) Analyze factors influencing profit of travel and tourism business using Carnival Corporation &
plc. 11
Conclusion.............................................................................................................................................12
TASK 2.....................................................................................................................................................13
2.1) Explain different types of management accounting information used in travel and tourism business
using Dalata Hotel Group plc. (2.2).......................................................................................................13
TASK 3.....................................................................................................................................................22
Introduction...........................................................................................................................................22
3.1) Interpret financial accounts of Dalata Hotel Group plc by showing at least two year’s performance.
...............................................................................................................................................................23
Conclusion.............................................................................................................................................25
TASK 4.....................................................................................................................................................26
4.1) Analyze sources and distribution of funding for the development of capital projects associated with
tourism...................................................................................................................................................26
Conclusion.................................................................................................................................................28
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References.................................................................................................................................................29
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Introduction
The analyses in the report have been done to provide the understanding of costs, volume and
profit so that the decision of future can be taken in travel and tourism sector. This is explained
with the motive of enhancing the financial performance of organization. The methods of pricing
that can be used by the Carnival Corporation & plc are also depicted so that the
information for pricing of product can be determined. The factors that influence the profits of
Carnival Corporation & plc are also explained. The training package predicts that how the
training will be provided to non financial managers so that they can get understanding of use and
the types of management accounting systems. The ratios of Dalata Hotel Group Plc are
calculated and for practical implementation 2016 and 2017 data are evaluated. The various
sources which are used for funding is defined with the distribution of funding for the
development of tourism sector.
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TASK 1
Introduction
Carnival Corporation & plc is the world’s largest travel company with the cruise brands in
Europe, Australia and North America. It also owns the tour company which has its operations in
Holland America princes Alaska Tours. The headquarters are located in Miami, Florida.
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1.1) Explain importance of costs, volume and profit in financial management of Carnival
Corporation & plc.
The cost can be defined as the total of all the expenditures which are incurred in business during
the particular year for the production of goods and services that can satisfy the needs and
demands of customers (Rawes, 2018). There are various types of cost in Carnival Corporation &
plc which will help in increasing the revenues of business such as:
Image: Cost
Source: By Author, 2018
Direct and Indirect Cost: These are the costs which are directly attributed to the production of
goods and services such as the direct labor while the indirect cost is the cost which are difficult
to assign to specific products such as in case of Carnival Corporation & plc it will be
depreciation and the administrative cost (Rawes, 2018). The depreciation of the Carnival
Corporation amounted to be £1846 million during the year 2017.
Fixed and Variable Cost: These are the costs which remains constant in all level of output. The
amount of fixed cost in Carnival Corporation & plc is £2.12 billion. The variable costs are those
which changes in all level of sales volume (Rawes, 2018). The amount of variable expense of
commission for 2017 was £2.35 (Carnival Corporation & plc, 2018).
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FixedCostVariableCostTotalCost

The allocation and apportionment cost means the allotment of properties to the items of the cost
units. It covers the centers such as salaries and other running cost (Rawes, 2018).
Volume: The volume helps in generating the revenues for business so that the profits of Carnival
Corporation & plc can be enhanced.
Image: Volume
Source: By Author, 2018
Break Even Analysis:
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BreakEvenAnalysisEconomiesofScaleDiseconomiesofScale

Image: Break Even
Source: Knowledge Grab, 2018
The break-even point is the point where the organization is neither earning profits nor incurring
losses. This will help Carnival Corporation & plc in setting of prices which covers the fixed cost
of investment (Knowledge Grab, 2018). It can be seen if the organization has to increase the
profit so cost will be determined after the breakeven point.
Economies of Scale: It is advantage to large firms so as they have large operations which will
help them in negotiating terms with suppliers by bulk purchasing (Economics Online, 2018). The
economies of scale of Carnival Corporation & plc are £10.2 billion (Carnival Corporation & plc,
2018).
Image: Economies and Diseconomies of Scale
Source: Economics Online, 2018
Diseconomies of Scale: This is the disadvantage to the large firms as they have the complex
organizational structures and communication barriers. The losses incurred by the Carnival
Corporation & plc are 1.626% of the income amount (Economics Online, 2018).
Cost Volume and Profit Analysis
It shows the reaction of cost and profit with the change in sales volume so that the better level
can be decided by the managers. It provides various advantages to Carnival Corporation & plc
such as:
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