Finance & Funding in Travel & Tourism Sector Report

Added on - 21 Jul 2020

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FINANCE AND FUNDING INTRAVEL AND TOURISM SECTOR
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Explaining the importance of costs and volume for travel and tourism funding.............11.2 Analysing pricing methods for travel and tourism...........................................................41.3 Measuring the factors that influence profitability for travel and tourism sector..............5TASK 2............................................................................................................................................7TASK 3..........................................................................................................................................183.1 Interpreting the financial statement of TRG for the year ended on 27 December 201518TASK 4..........................................................................................................................................21CONCLUSION..............................................................................................................................21REFERENCES..............................................................................................................................22
INTRODUCTIONFund is the requirement of every business unit in context with having better survival inrivalry world. In travel and tourism sector there will be generation of funds or revenue with thehelp of consumer interest. Their main motive is to facilitate satisfactory as well as memorableservices to buyers. Funds can be generated by various sources and that helps in meeting the shortterm and long-term liabilities of an entity. In the present report, there has been several financialaccounting tools that are used to award financial funding or profit maximisation techniques toMerlin Entertainment and TRG plc. On the other side there will be use of various ratios as wellas their interpretation which helps in improving efficiency of business.TASK 1Merlin Entertainment Plc. is the most successful and fastest growing business in tourismsector. The company has originally begins from UK and currently operating in 23 countries at115 locations. This MNC need to improve its functional area and as per its three segments ofoperating business such as Midway Attractions, Resort Theme Park and LEGOLAND Parks.These different areas of Entertainment operates in several ways such as Midway attractionoperates indoor activities like in city centres and resorts. LEGOLAND is based on LEGOthemed activities which is based on the theme, rides and shows (Arestis and et.al., 2017). Resorttheme park activities operates in the accommodation, shows and rides facilities to consumers.For adequate and appropriate funding to enhance the efficiency of this organisation there must beuse of various cost and finance techniques.1.1 Explaining the importance of costs and volume for travel and tourism fundingCost and volume helps in analysing requirements of funds to initially operate anybusiness activity. There can be various sources through which Merlin Entertainments can analysethe costs of the business operations.1
(Illustration1: Source: Arestis and et.al., 2017)There can be use of several kinds of costs and volume such as fixed costs, variable costs,direct and indirect cost as well as break-even analysis and cost profit volume analysis that helpsin decision making as well as managing the business operation in profitable way (UK tourism setto benefit from weak pound,2017).Fixed Cost:These kinds of costs remain same and unchanged for each level of operationsin organisation (Fowles, 2014). These costs help in analysing the fixed expense over some piece2
of activities such as depreciation over assets, rent and telephone bills, insurance as well asinterest from loans. These are the costs which are not going to change as compare with Variablecosts. Merlin entertainment can be benefited with the use of this method as they can make thefavourable efforts in measuring the costs incurred for the particular tasks.Variable Cost:These costs varies as per the requirements or increase in the piece of workin organisation (Shepherd and et.al., 2017). It depends over events held in business operationalfunctions such as increase in the sales volume which will resultantly increase the number offunds to be expanded by Merlin Entertainments. These includes various kinds of costs such aslabour, material etc. which are fluctuating as per the changes occurred or the requirements inperforming business tasks.Direct costs:Expense that are incurred to meet the direct operations of the organisationssuch as direct material, labour as well as costs which will be calculated with the help of thismethod (Steffener and et.al., 2016). In travel and tourism there will be requirement of favourablenumbers of workers who make dealings with consumers for Merlin Entertainments as well asmake them aware with the facilities offer by themIndirect costs:These are the expenses which are indirectly related with the businessoperations and these will be denoted as the overhead expenses held in Merlin Entertainments(Bazot, 2017). It includes rent over property, costs incurred for cleaning and maintenance of theaccommodation facilities as well as energy costs.Break even analysis:These methods will be fruitful for Merlin Entertainments inmeasuring the earnings with expenses incurred by organisational operations. It helps themanagers and supervisors of unit in taking corrective decisions and they will be able to reducecosts or expenses over some piece of work (Carmo and et.al., 2016). An Equilibrium point wherethe expenses meet the gains of entity which says it is the favourable point such as no loss noprofit earned during that period. For the growth of organisation there must be positive ratios ofCosts and profits earned by business.Cost profit volume analysis: A technique is used to analyse changes or fluctuations in thecost and volume in Merlin Entertainments. These are aaffecting the functioning organisationaloperations as well as income generations (Shepherd and et.al., 2017). It will be favourable as itfills the certain requirements and assumption such as everthing which is produced by3
organisation must be sold and the consistency in fixed or variable costs. Selling prices of goodsand services must remain unchanged. Managers of unit will be benefited with the analysis ofContribution margins and ratios which helps them in analysing the costs or volume needed inwork.1.2 Analysing pricing methods for travel and tourismCosts or prices implied over the goods and services will be beneficiary for organisationalheads in context with determine expenses as well as methods to overcome such costs. There willbe various kinds of pricing techniques which will help in analysing costs for each operationorganised in Merlin Entertainments.Cost Plus Pricing:This technique applies in measuring costs or profit over goods andservices delivered by a unit (Radzi and et.al., 2015). Merlin Entertainments and its professionalaccountants need to measure labour costs, overhead costs which occurred in delivering theservices to consumers. These will be added to the mark-up percentage to analyse theorganisation has the high demand by buyers and then a favourable decision can be made aboutdetermining the prices over such activities.Penetration pricing method:It helps in the initial start-up of a business organisation suchas targeting the market and analysing prices set by other rivalry firms. In comparison, with otherunits the beginner set lower prices as to fetch the maximum numbers of consumers towards thebrand (Díaz and et.al., 2015). Merlin Entertainments will have the fruitful operating functions asthey set lower prices on some facilities like less travel fees, cheaper accommodation charges aswell as better quality food at budgeted prices. It helps in generating maximum sales as well as itwill be fruitful in earning profits.Per person Pricing Technique:This method will be beneficial for the travel and tourismsector in denoting the prices over the expenses helps in each operational task. Prices will beanalysed on the basis of Per room pricing, Occupancy based pricing these techniques tends tomake the analysis on the basis of overcoming the costs incurred all level (Nair and Sankar,2014). Merlin Entertainment need to make the analysis and record of each visitors in premises,the most preferable services, most liked travel destination. It helps in fetching the informationregarding the consumer preferences at each level of work. They must democratically analyse the4
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