Finance and Funding in Travel and Tourism Sector

Finance and funding
in
Travel and Tourism sector

INTRODUCTION
The tour and travel sector is very important for the growth of a country's economy.
With the change in trends the customers are becoming very choosy for the packages as
prefer the packages which will satisfy all their preferences in a fair price. There are many
companies in tour and travelling sector. So the financing and funding of this sector is also
very important part of the sector. This report presents different type of financing and
funding methods for the Carnival& corporation plc which are involved in high luxurious
cruises. This report is based on the different financial management by the company. The
report also presents different type of management accounting information and how it is
useful in decision making. The report interpret financial accounts of Dalata Hotel Groups
showing its annual performance. The report also presents the sources of funding for
different capital projects in te tour and travelling sector.
TASK 1
1.1 The importance of financial management of travel and tourism business.
The management of the funds in an effective way to accomplish the organizations
goals and objectives is financial management. It plays a vital role in organising the financial
activities in tour and tourism business. It helps in estimating capital requirement and the
choice of sources of funding, management of funds, disposal of surplus and financial
control of the carnival corporation's activities. Financial manager's key tools or techniques
to control the financial activities in the business is CVP analysis. It explains the behaviour
of profit in response to a change in cost and volume. This analysis indicates the planning
process which management is using for predicting volume of future of any cost which has
been incurred, and margin which is earned and sales performances (Luzecka, 2016). The
three elements of CVP in financial decision making of carnival corporation & plc are
follows:
 Cost: the cost of the company can be determined by the profit which company
earned in a specific time period. The funds required for the production of a product can be
cost of the production. The cost of a company is classifieds as:
Direct cost: the expenses which incurred for the production of the product is direct cost.
Labour, machinery, raw materials can be includes in cost objects. The majority of direct

cost are variable like direct material, direct labour, direct expenses. These cost are called
prime cost.
Indirect cost: the costs which are hard to trace in relation to a certain cost object are indirect
cost (Tolkach and King, 2015). The cost which are required for the operational activities in
the company are called indirect cost.
Fixed costs: the cost which stay fixed when changes occurs to the volume of activity. They
can only change according to the rise or fall in inflation rate. Fixed cost in carnival &
corporation is the salary of the staffs, the maintenance of the room and ships etc.
Variable cost: these costs will vary with the level of activities like if carnivals sells more
cruises they will need to put on additional vessels, increase the staff and the cost of
additional fuel. Volume: The type and behaviour of cost will directly affect the the volume of
activities in business. Product price will be based on the cost of production, however there
is not a specific price level as the fixed cost needs to be covered regardless of the number
of tourist . The number of units produce and sell by carnivals will determines the price to
break even. Economies of scale are achieved when the carnival & corporation will increase
in the sales to increase the savings of the company to extends the business.
 Profit: high volume of sales and low cost will contributes in generating more profit
for the company (Vana and Malaescu, 2016). Break even analysis will helps in the
volume of the sells of packages and the cost of per package that will provide the
profit to Carnival & corporation
1.2 Different pricing methods for Carnival & corporation plc.
Pricing strategy is very important for the profit maximization of any organization.
Carnival & Corporation plc in order the enhance the profit and covers all the cost and
expenses incurred, should adopt the following pricing and funding methods: Competitive or marketing pricing: Now a days, with the increasing in the tourism
sector the tourist are becoming more choosy for the travel packages. Tourists are
preferring the packages with the attractive offers and discounts. The tourist compares all
the packages offers by different company with their preferences such as price, choice of