Finance and Funding in Travel and Tourism Sector

Finance and Funding in Travel and
Tourism Sector
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Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................4
1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study.................................4
1.2 Analyse pricing methods used in the travel and tourism sector. You should use relevant
examples from different cruise brands of Carnival Corporation & plc.....................................5
1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study..................................................................7
Task 2.........................................................................................................................................9
2.1 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......................9
2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc............................................................................................................14
Task 3.......................................................................................................................................18
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2016 showing at least two years performance.........................................................................18
Task 4.......................................................................................................................................20
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism............................................................................................................20
Conclusion................................................................................................................................22
References................................................................................................................................23
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Introduction
Funding states the money or amount which is provided or offered by the business entities
along with the sector related to regulatory bodies for the particular purpose. But on the other
hand, funding refers to the procedure of receiving capital or money and that is useful for the
purpose of business and in this fund, are provided by the financial institutions which include
banks as well as other lending agencies (Difference between, 2018). In task one, discussion to
be done on cost and volume along with the importance of the different cost in Carnival
Corporation. Along with this, a demonstration to be done on different pricing method for the
company. In task two and three, Dalata Group Plc needs to be taken for analysing the
management information system and decision-making tools. Along with this, examination to
be done of financial accounts of Dalata Group. In task four, different sources and distribution
of funding for tourism development are to be presented.
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Task 1
Introduction
In this task, discussion to be done on the importance of finance and funding as well as cost
and volume as it reduces the profit of the company. If business entity manages the cost then
this will help them in generating more revenue. Along with this, a demonstration to be done
on diversified pricing methods which help in setting the appropriate price and by that they
can make correct decision to invest or not.
1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study.
If carnival Plc wants to earn more revenue, then they have to manage the cost as well as a
volume which help in collecting the funds and that can be used in the development of tourism
sector.
Cost
Cost can be defined as the value of money and that can be used up to produce something and
by that, they can deliver appropriate services. It includes different type of cost that is direct or
indirect cost, fixed as well as variable cost. Fixed cost is that cost which does not vary
according to the changes in the number of units. Variable cost is that cost which is changing
according to the number of units (Boardman, et. al., 2017).
Cost volume profit analysis: It assists in determining and analysing the changes in cost as
well as a volume which affect the operating income of the company. In this, sales price per
unit is constant and total fixed cost are constant (Cliff Notes, 2016).
Volume
Break-even point: It is a point where the company can identify the situation of no profit no
loss. It includes the sales volume at which company earns no money. It assists in determining
the potential to generate more profit. Along with this, changes need to be analysed in the
profit when prices are altered (Accounting tools, 2017).
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Economies and diseconomies of scale: Economies of scale define the advantages of cost as
it assists in expanding its services in the long run. It provides the discounts to the business
entity. Diseconomies of scale assist in increasing the cost of production of Carnival Plc. The
main factors include supervision or lack of decision (Nitisha, N.d).
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1.2 Analyse pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brands of Carnival Corporation & plc.
In the tourism sector, the tour operator needs to set the price for the different holiday
packages and for that appropriate method should be used. It includes:
Cost-plus pricing method: It is an appropriate and effective method for setting a price for
the holiday packages. This method also called as markup pricing method as it assists in
determining the cost of their services (Study.com, 2017). This method succour in setting the
price of a particular service. It includes the direct material, direct expenses as well as direct
labour cost. It can be computed in three steps which include determining total cost by adding
fixed and variable cost. Then divide the total cost by a number of units and at last unit cost
should multiply by the markup percentage for the selling cost (Peavler, 2016).
Return on investment method: It is part of profitability ratio which assists in calculating as
well as computing the profit on the basis of investment in terms of percentage of the original
cost. It aids in measuring the money which was made on the investment according to the
investment on a purchase price. It helps the investor in making the decision to invest or not
(My Accounting Course, 2017).
Break-even pricing method: This method is associated with the break-even analysis as it is
a forecasting tool which is used by the marketers to determine the sales of the company. This
will not consider directly to the demand in the market at the time of determining the price
(Know This, 2018). This can be calculated by using formula include:
Fixed cost / Price – Variable cost per unit = % of units to break even.
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