Finance and Funding: Analysis of Travel and Tourism Business Report

This report delves into the crucial aspects of finance and funding within the travel and tourism sector, using Carnival PLC as a primary example. The report begins by emphasizing the importance of cost and volume in financial management, exploring various cost-related factors, and their impact on pricing strategies within the industry. It then examines different pricing methods, including seasonal pricing, rack rates, discounting, and last-minute costing, along with cost-based and market-based pricing approaches. Furthermore, the report analyzes factors influencing profitability, distinguishing between internal and external elements. Internal factors encompass cost of manufacturing and staffing, while external factors include economic factors (currency rates), government regulations, environmental considerations (seasons, natural calamities), and social factors (terrorism, events). The report also discusses various types of management accounting information, such as financial statements and their role in decision-making. Finally, it explores the sources and distribution of funding for both public and private tourism projects, providing a comprehensive overview of financial management within the travel and tourism industry.

FINANCE AND FUNDING IN
TRAVEL AND TOURISM

Table of Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
1.1 Importance of costs and volume in financial management of travel and tourism businesses...........3
1.2 Pricing methods used in the travel and tourism sector.....................................................................5
1.3 Analysis of various factors which influence profitability of travel and tourism.................................5
TASK 2..........................................................................................................................................................7
2.1 Various types of management accounting information.....................................................................7
2.2 Use of management accounting information as decision-making tool..............................................8
TASK 3..........................................................................................................................................................9
3.1 Interpretation of financial accounts to assist decision-making..........................................................9
...................................................................................................................................................................12
Task 4 ........................................................................................................................................................15
4.1 Sources and distribution of funding for public and private tourism................................................15
CONCLUSION.............................................................................................................................................17
REFERENCES..............................................................................................................................................18

INTRODUCTION
Finance and funding is a necessary concept which is helpful for business firm in
explaining cost which can used through an organisation to invests in order to developing an
economy. The travel sector is a fastest or rapid growing sector which provides many advantages
for company. This present business report is depending on Carnival plc which is regarded as
largest travel firm in all over the world. In order to developing an economy of United Kingdom,
this business firm give its more contribution. Under this present business report various methods
of pricing which are used in the industry of Travel and Tourism (Evans, Stonehouse and
Campbell, 2012). Carnival Company provides better travelling services to consumers so that they
will attracted towards firm. There is a discussion about the different pricing which organisation
uses in its business or travelling process. Various kinds of management accounting system which
could be used in the travel and travel sector will be discussed under this given report. In addition
to this, distribution and many sources of funding for growth of many capital projects which are
associated with the travel will mention in this as well.
TASK 1
1.1 Importance of costs and volume in financial management of travel and tourism businesses
Carnival plc is a regarded as a largest travel and tourism organisation in world. This
company has develops big portfolio of more brands which are situated in the Australia, North
America. The main motive of financial management of this company is to arrange all finance in
order to conducting business operations in an effective or better manner. There are some factors
such as expenses as well as costs which are required to include in context to development along
with productivity. By all these factors, packages of travelling for consumers are developed.
It under travel and tourism, cost is regarded as a most necessary factor and helpful in examining
cost of travel packages which are travelling for visitors or travels. Carnival Corporation and Plc
uses these factors at the time of taking decisions for an organisation. These factors are given
below as above:
Cost- It is term as part of the money which a business firm used for conducting its business in a
better manner. It is regarded as most necessary component because without this firm cannot do
anything ( Henderson, 2010). It is necessary for Carnival Corporation and Plc to assure that sit

does provide the better prices to consumers so that they will attract towards the products of an
organization.
Importance of Cost
It is a necessary component for every business firm and it plays an essential role in
making business successful. If in case cost of products of Carnival Corporation Plc will high than
it will not good for business firm and develops bad impact on its business.
Cost minimisation- It is essential for travelling organisations to assure that they using minimum
resources and also consuming the low cost so from this cost of goods will not be higher. It will
be helpful in enhancing the profit level of an organisation. There is a need to Carnival Company
to develop effective cost according to demands of consumers (Heung, Kucukusta and Song,
2011).
Decision making- Under this it is essential that firm should take the better decision related to
budget ns cost allocation in the favour of company. Before doing the activities, it is
responsibility of manager to conduct proper research otherwise its impact on productivity will be
bad.
Designing Financial Structure:
In order to managing financial resources of Carnival company, there are many different types of
cost are included which are given below as above:
Volume- Carnival Plc provides the better services and products to its consumers in all over the
world. There are some techniques and tools which are available at market and used through
referred organisation to know proper and reasonable packages which are needed through
travelling organisation in order to reach at its breakeven point, EOQ and many others.
Significance of Volume
Break even analysis- It is kind of each business firm where firm wants to reach. This kind of
condition is regarded as no profit and also no loss where company covers all costs which it spend
for developing better products and provide them to organisation in an effective or better manner.
Economies of scale- It is that type of cost which is saved through firm through enhancing its
producing level. So in context to this Carnival Corporation Plc should save their cost through
using scale of an economy (Morrison, 2013).

Diseconomies of scale- Under this, when scale of an economy is not properly working in an
effective or better manner. So in context to this Carnival company should assure and it does not
indulge in any kind of situation that it impact in a wrong way.
1.2 Pricing methods used in the travel and tourism sector
Carnival Plc business firm is a travelling business firm and also trying to take the many
kind of travelling packages to consumers in a better manner. In context to take better decision
concerned with issuing costing of different travelling packages and also planning methods which
should use then some tools and techniques will be used which are given below:
Seasonal pricing- During full year, there are several kinds of seasons which go and also come
with tourists. The visitors come in various seasons and also visit the various kinds of
destinations. In context to this, Carnival Corporation mainly makes charges which are based on
the season so from this consumers will not face any types of issues.
Rack rates- These are total cost which are used through organisation to elaborate its prices
without any types of discounts as well as offers. So Carnival companies make better prices and
give discounts to consumers so that they will attract more.
Discounting- This kind of method is connected with discounted components which are put on the
different travelling organisations inside of a firm. Under this, Carnival Company gives discounts
to its consumers in context to attract them. So, it is necessary top included this factor.
Last minute costing- These kind of costing are designed through an organisations in order to
calculate the actual cost which is incurred at last minute. Sometimes, consumer makes a plan to
het cancel its flight it trips so under this case Carnival Corporation Company get profit with the
help of charging cancellation fees (Papatheodorou, Rosselló and Xiao, 2010).
There are some pricing given below:
Cost based method- It is regarded as a most simplest method of identify the profit as under this
fixed margin is linked with travelling firm so that it can earn more profit in a systematic or better
manner. It is a simplest and effective method which Carnival Company uses to earn more profit
at market place.

Market completion based- Under this, firm can identify its cost which is depends on competition
at market place. It is necessary for Carnival plc Company to assure that its prices should be
minimum as comparison to its competitors at market place. This firm provides the better quality
of services at reasonable cost for earning more profit.
1.3 Analysis of various factors which influence profitability of travel and tourism
It is necessary that Carnival Corporation and Plc should execute the better management
related strategies in order to conduct the all activities and operations of business in an effective
or better manner ( Nielsen and Spenceley, 2011). It is a duty of manager to select best
management related strategies so that it will be beneficial for travel organisation in a better
manner. In addition to this, good planning is need for Carnival Travel Company. Under this
management should include its staff members in a better way. Activities and operations which
are conducted through Carnival organisation concerned to advertisement as well as promotion
must be done in a proper way for aware consumers regarding services or products which are
providing at market place. On the basis of existing business environment, marketing planning
plays a necessary role in Carnival plc Company to enhancing profit level of business. In addition
to this, it is necessary for managers to display all expensed which are incurred by an
organisation. It will be helpful in analyse all profit of business in a systematic manner. The
factors are divided among the two parts internal and external.
INTERNAL FACTORS- These factors impact on business from internally. Under this includes:
Cost of manufacturing- This factor is having the better power to impact travelling sector
in a better manner. In case if Carnival Corporation Company, decrease its production cost then in
this case cost of services will be high and also vice- versa. It is helpful in enhancing productivity
and development of an organisation (Pike, 2012).
Staff members- Under this, it is necessary for employees to treat visitors in a better way
by providing them good customer services. From this they will attract towards company
otherwise consumers will be dissatisfied from services and products of Carnival Corporation and
Plc.
EXTERNAL FACTORS- These factors impact on the tourism activities from externally. It
consists:

Economic Factors- Under this those external factor are involved which can develop strong
affect on Carnival plc company. It involves:
Rates of Currency- In every nation, currency rates are different from each other and
currency rates develops impact on profit level of business because in Carnival company tourists
come from various countries and it will be helpful in enhancing profit level of an organisation to
develop better reputation at market place.
Government- It can affect on profit level of Travel Company like for an instance petrol
cost (Ritchie, Amaya Molinar and Frechtling, 2010).
Environmental Factors- These can affect the travel and tourism sector in natural way and its
main components are given below as above:
Seasons- There are several tourists which come for travelling on seasonal basis such as at
the time of winter or summer vacations, peak season and from this the profit level of firm
enhanced. At the time of that kind of period, this travel company invites many different visitors
for the purpose of visiting specific place so that more profit can generate.
Natural calamities- Under these types of disasters, there is no control of people. If any
types of calamity happen it will develop negative impact on business of Carnival Corporation
and Plc and because from this tourists will not travel from one place to another.
Social Factor- This external factor is related to the society and culture. In this includes:
Terrorism- If there is any country with more terrorist attack then visitors will not like to
go there because of fear of tourist attack. It develops negative effect on the travel industry.
Events- It can develop impact on profit of Carnival Corporation and Plc due to various
pricing methods and it is necessary that events should be attracted so that people will enjoy. It
will be helpful in generating more profit (Spenceley, 2012).

TASK 2
2.1 Various types of management accounting information
Management accounting is a process of evaluating cost and also operation of business in
context to make financial record as well as statement for assist the process of decision making of
management for the purpose of achieving aims and objectives in an effective or better way.
There are various kinds of management accounting information given below:
Financial statement - It is a better technique which is used through employer of Dalata
Hotel Group Plc in addition to take efficient decisions which will be in favour of an
organisation. Management accounting means to financial statement which is helpful in measure
financial performance of business firm. It is required for manager to investigate the financial
information with the purpose of estimate better decisions associated to company in an effective
manner (Evans, Stonehouse and Campbell, 2012). Manager should utilize applicable information
as well as data for the period of making major decisions such as future investment and many
others. With the help of financial statement company can know its profit and loss or financial
statements.
Budget report- It is an effective tool which is used through management of Dalata
Group for controlling cost of manufacturing. In Dalata Hotel Group Plc, budget report is helpful
in attractive performance level of company in a proper manner. It is necessary for this hotel to
arrange an effective operational as well as cash budget in its internal report.
Forecasting- In Merlin travelling company, process of forecasting is depends on goals
along with the vision of a business firm. The forecasts refer to the future demands and wants of
specific services or goods which can satisfy the needs to consumers in an effective or better
manner.
Generally it is a kind of forecasting which is helpful in allotment of budget in a systematic
manner and also future development of company. With the help of this firm can get the
competitive advantage in a systematic or proper manner (Heung, Kucukusta and Song, 2011).
Variance analysis- The manager of Dalata Hotel Group Plc include analysis of variance
for evaluate difference in planned and actual behaviour of firm. It is a necessary procedure to

maintain activities and operations of business at market place. This kind f measure is depending
in performance level of the finance related activities in an origination.
It is necessary for Dalata Hotel Group Plc to congregate the relevant data or information
which is helpful in taking curative decisions of business. These all tools are helpful in gather any
of relevant information or data which can develop positive impact on company as well as staff
members so that they can perform in an effective manner.
2.2 Use of management accounting information as decision-making tool
Management accounting information is an essential procedure which is helpful in
providing the accurate data or information in addition to keep maintains financial performance of
an organisation (Nielsen and Spenceley, 2011). It is helpful in improving decision making so that
firm can sustain for long period of time in competitive market. Under this, information is
necessary in the process of decision making which consist activity based costing techniques,
utilizing the data, relevant cost analysis etc.
Some of the management accounting information related to process of decision making given
below:
Comparison with trend- There is a need for Dalata Hotel Group Plc recognizes recent
trends in the course of matching the performance of company of various years. It is helpful in
taking better and efficient decisions along with plans related to the trends.
Sales forecasting - It is necessary for this business firm to produce goods and services
on the basis of needs or tastes of consumers in an efficient way. In an organisation, sales
forecasting is concerned with goal as well as vision of company in order to achieve the set
objectives in specific time period.
New services and products - Management accounting system is used through a
supervisor of Dalata Hotel Group Plc in regards to take accurate or relevant information related
to manufacturing of new goods as we as services. It will be helpful in rendering satisfaction to
consumers. It is important for manager to estimate structure for significant new service and
products of firm in a proper manner. In Dalata Hotel Group Plc develop new and better quality
of services and goods for its customers.

It is essential for Dalata Hotel Group Plc to render development and training to its staff members
so from this they can serve better and effective services to its consumers and satisfy their needs
in a proper manner (Ritchie, Amaya Molinar and Frechtling, 2010). Each business firm needs to
develop its business in competitive manner or increase growth rate by attaining large number of
consumers towards services of firm.
Investment decisions- It is necessary for In Dalata Hotel Group Plc to take proper and efficient
decision related to those areas in which firm wants to invest. Accounting information is helpful
in explaining cost estimation which is concerned with new investment as well as return in an
organisation
Increasing capital- By proving better quality of products as well as to consumes, In Dalata
Hotel Group Plc increase its sales and gaining more profit level other than this, in a business
firm, there are many different methods to increase capital like for an instance venture capital,
personal capital, public capital etc (Turner, 2010).
TASK 3
3.1 Interpretation of financial accounts to assist decision-making
Dalata Hotel Company was situated in 2007 and it is the biggest operator of hotel in
United Kingdom. It has expertises in the field of hospitality and also continuously works in
improving this performance level in an effective or better manner. In Ireland, it is largest hotel
operator. In context to this, it provides the effective services to visitors like for an instance
accommodation, food facilities, provide clean rooms, better customer services and many others.
From this they will attract more and its financial position enhancing year to year ( Vanhove,
201.). There is a balance sheet of Dalata Group company of 2016 and 2015 is mention below: