Finance and Funding in Travel and Tourism Sector

Assignment – Finance and funding in
Travel and Tourism sector
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Table of Contents
Introduction....................................................................................................................................4
Task 1..............................................................................................................................................5
Introduction................................................................................................................................5
P1.1 Explain the importance of costs and volume in financial management of travel and
tourism business using Carnival Corporation & plc as your case study. (M3)...................6
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. (M2).....8
P1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study. (M1)...................................................9
Task 2:...........................................................................................................................................11
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.........11
P2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc...........................................................................................................17
Task 3............................................................................................................................................19
P3.1 Interpret the financial accounts of Dalata Hotel Group..............................................19
LO4:..........................................................................................................................................26
P4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism...........................................................................................................26
Conclusion....................................................................................................................................28
References.....................................................................................................................................29
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Introduction
The central theme of the report depicts the significance of finance as well as funding for travel
and tourism sector. An attempt has been made to explain the fact that development of travel and
tourism is equally important. There are various sources to gain and attract finance which is
essential for the promotion of this sector. Management accounting information system plays a
crucial role in the growth of travel and tourism sector. For this purpose, various tools of
management or planning information system can play a significant part. The report tries to cover
various aspects associated with the travel and tourism sector. For better understanding and
knowledge, tools of management accounting information system have been applied to Dalata
Hotel Group Plc, company operating in the tourism sector. This instance will help to understand
the complexities and scope of organizations operating in the travel and tourism sector. Besides
this, several conclusions and interpretations have been given at appropriate places throughout the
report.
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Task 1
Introduction
This report depicts the use and implications of management accounting information system in
the decision-making process. It tries to list factors affecting the price of companies operating in
the tourism sector. For this purpose, the cost-volume relationship has been discussed. For the
ease of understanding, an example of Carnival Corporation & plc has been explained. Thus, this
report will facilitate a better understanding of significance and pros of management accounting
information system in the financial management of companies operating in travel and tourism
sector. An additional knowledge of pricing methods will assist in understanding it better.
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P1.1 Explain the importance of costs and volume in financial management of travel and
tourism business using Carnival Corporation & plc as your case study. (M3)
According to Dogra, (2016), financial management has its own significance in every company
whether small or big and whether manufacturing or service oriented. For this purpose,
knowledge of cost and volume is a prerequisite. For practical understanding, an instance of
Carnival Corporation & plc has been covered.
Importance of costs and volume of travel and tourism business
Some of the major advantages of costs and volume in financial management that Carnival
Corporation & plc will enjoy in the long run are as follows:
 Since Carnival Corporation & plc is the world largest travel leisure company, proper
classification and segmentation of costs are very important to maintain its dominance in the
market. Bifurcation of costs will improve the operating performance of the organization.
 An in-depth study of cost and volume components will facilitate the better understanding
of financial performance of the concerned business enterprise. As such, stakeholders will get
satisfied.
 According to Georgescu, (2015), proper analysis of the cost of each and every tour
package will help in the determination of profitability of individual travel and tour package. As
such, Carnival Corporation & plc can easily determine the package which is not profitable and
can make suitable and appropriate changes to make it profitable. Break-even analysis is one of
the most important tools for cost analysis as it helps at the minimum cost that needs to be
charged or recovered from the tourists or travelers.
 Generally, companies engaged in tour and travel business spend a major proportion of
their expenditure towards advertising and promotion since they need to make the tourists aware
of their tour packages. Thus an in-depth analysis of marketing plan along with their associated
cost needs to be assessed periodically. This will help the top level managers in taking various
strategic and crucial decisions.
 Since Carnival Corporation & plc is a service-oriented organization, it is essential to
properly allocate and absorb the cost of the various services provided by the concerned
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