Finance and Funding in Travel and Tourism: A Comprehensive Analysis

Finance and funding in travel and tourism
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
P1.1 Explains the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study...................................4
P1.2 Analyse 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 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study....................................................................8
Task 2...............................................................................................................................................9
P2.1 Types of management accounting in travel and tourism business.......................................9
P2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc..............................................................................................................11
TASK 3..........................................................................................................................................12
P3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2017............................................................................................................................................12
Task 4.............................................................................................................................................15
P4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism..............................................................................................................15
Conclusion.....................................................................................................................................18
Reference.......................................................................................................................................19
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Introduction
In Carnival Corporation & plc, the Cost-volume-profit analysis is an important tool for
enhancing decisions in their business activities. It offers the management of Carnival
Corporation & plc with detailed and objective methods that can be utilized in the assessment and
prediction of the course of the organization's business. This is for the benefit of both the
organization and its employees. The cost-volume-profit is important in the decision-making
process of Carnival Corporation & plc. It offers solutions to the various realistic questions that
are essential in the analysis of the business. Questions like the breakeven point of Carnival
Corporation & plc can help the organization's management to determine the success or failure of
the organization as regards to the future expenses and production. For example, if the
management is able to realize this breakeven point, it can then make the necessary amends so as
to cut down on the costs while amassing the production and hence the profitability. Cost-volume-
profit is basically based on models of statistics. This makes it possible to break down the
decisions into probabilities that can then make the decision-making process much easier.
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Task 1
LO1- Understand the importance of costs, volume and profit for management decision-
making in travel and tourism
Introduction
Cost plays a significant role in the business strategy for tourism and travel industry. This sector
provides services and hence there intangible elements like the facilities being provided by the
company or the way firm treat its customers which can be utilized as a differentiating factor.
Numerous travel companies charge exorbitant prices for their premium services. Therefore, the
company should be well acquainted with the service they provide to the customers and are
clients willing to pay for the service. This sector is very competitive, so to stay on top of the
game balance between the service and cost
There are various ways of coming up with the price of the service. Companies can utilize the
contribution concept, standardized costing or utilize any costing method. In addition to the same
token, this company has flexible costing where the expenses change depending on the demand
and supply and the period left to provide the service. As the deadline approaches rates tend to go
high for such companies. Cost can be determined depending on the nature, function and products
of the services being provided by the company.
To explain the concept of cost, Carnival Corporation & plc has been taken as an example to aid
in the explanation of the concept. In this case, the company follows the contribution pricing with
some tweaking. The firm charges higher costs for premium costing method and also it has a
flexible pricing system. The firm, Carnival Corporation has a high fixed cost of the planes and
the fuel. Therefore the pricing in this industry is flexible and also influenced by external factors.
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