Finance and Funding in Travel and Tourism Sector

Finance and funding in the Travel and Tourism
sector
1

Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................5
LO1- Understand the importance of costs, volume, and profit for management decision making
in travel and tourism........................................................................................................................5
Report:..........................................................................................................................................5
Introduction:.................................................................................................................................5
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..................................5
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.......................................6
P1.3 Analyze factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study....................................................................6
Conclusion...................................................................................................................................7
Task2................................................................................................................................................8
LO2- Understand the use of management accounting information as a decision-making tool in
travel and tourism businesses..........................................................................................................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..............................................................................................................16
Task3..............................................................................................................................................22
2

LO3 Be able to interpret financial accounts to assist decision making in travel and tourism
businesses......................................................................................................................................22
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2016 showing at least two years performance (for example comparing 2016 to 2015)............22
Report:........................................................................................................................................22
Introduction:...............................................................................................................................22
Content:......................................................................................................................................22
Conclusion:................................................................................................................................24
Task 4.............................................................................................................................................25
LO4 – Understand sources and distribution of funding for public and non-public tourism
development...................................................................................................................................25
4.1 Analyze sources and distribution of funding for the development of capital projects
associated with tourism..............................................................................................................25
Conclusion.....................................................................................................................................30
References......................................................................................................................................31
3

Introduction
In the changing environment, travel and tourism sector are gaining importance and due to this, it
is important that all the aspects that are indulged in this shall be analyzed in a proper manner. In
this report, all of them will be considered such as the cost and profit relation in whom volume
will also be involved. In this factors which are affecting them are involved. Then a presentation
will be prepared related to all the information which is required and use of systems in that
process will also be discussed. The evaluation process will be carried out and in that ratios will
be determined in respect of Dalata group. All the sources which are available and the manner in
which they are allocated for capital projects will also be explained in the report below.
4

Task 1
LO1- Understand the importance of costs, volume, and profit for management decision
making in travel and tourism
Report:
Introduction:
The report is in context of Carnival Corporation and in this cost volume analysis will be
undertaken. Together with that factors by which profits will be affected are considered. The
methods by which price will be determined will also be described below.
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.
In the business, the main element is finance which shall be managed in a proper manner and for
that, all the factors which are related to it shall be understood properly. For that firstly the
objective shall be set which will be required to be attained and all the operations should be
performed accordingly. The cost will have to be incurred for that and so it is required that all of
them shall be identified. In this, all the fixed and variable cost will be included (Navaneetha, et.
al., 2016). In this volume will also be undertaken and all of it will help in eliminating the issues
which are faced in this process. There are many such tools which can be used to carry out the
evaluation in a proper manner and they are as follows:
Break-even analysis: In this method the point at which company will be in a position of no profit
and loss. Here it will be able to recover all the expenditures which are made by it. So the volume
will be decided by the help of this at such level where the company will be able to earn the
profits.
Economies of scale: According to this there are inverse relations which exist between the price
and volume. It is said that of the volume will be increased then the overall reduction in cost can
be noted which will prove to be of great advantage for the company.
5

Diseconomies of scale: In the business, there are variable and fixed two types of cost which are
incurred. Only the variable portion will be considered in this method (Kim, 2015). This states
that if the customers will be increased then cost will also rise as all the services have to be
provided to them.
The company will be able to evaluate the profitability and on the basis of that, it will be able to
make the required decisions which will be in the overall interest of it.
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.
Price is very important and it shall be decided by using all the tools which are available. In this
several factors whose impact will have to be borne by the company shall be taken into
consideration (Sije and Oloko, 2013). The main methods which are taken into use for this
purpose are explained hereunder:
 Cost-plus pricing: At this price will be determined by adding a certain amount of profit to
the total cost which is incurred. For that, all the expenses will have to be identified so that
there is no such amount which remains.
 Market-led pricing: There are various conditions which prevail in the market and due to
them various impacts are made on business. They all shall be included while setting the
price. One of the most important among them is competition.
 Marginal costing: The profit in this is calculated on the basis of marginal expenses. These
are those which deviate with the change in production. By considering all of them the final
price will be identified which will be charged.
P1.3 Analyze factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study.
In business, there are many such aspects by which its profitability is affected and they shall be
controlled for that their knowledge is to be gained. This is because it is the main aim of any
company. The same is provided below:
6