Finance and Funding in Travel and Tourism: A Comprehensive Analysis

This report delves into the crucial role of finance and funding in the travel and tourism sector. Using Carnival Corporation & PLC and Dalata Hotel Group PLC as case studies, it examines cost and volume concepts, pricing methods, management accounting information, and capital project funding sources. The report analyzes financial performance, interprets financial accounts, and assesses the impact of various factors on profitability. It provides valuable insights for understanding the financial dynamics of the travel and tourism industry.

Finance and funding in travel and tourism

Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................4
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. (M1)........4
P1.2 Analyse pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brand of Carnival Corporation & PLC. (M1).6
P1.3 Analyse factors influencing profit for travel and tourism businesses using..................7
Carnival Corporation & PLC cruise brand case study. (M3).........................................7
Task 2.........................................................................................................................................8
2.1 Explain different types of management accounting information that could be used in
travel and tourism businesses.................................................................................................8
2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group PLC........................................................................................................8
Task 3.........................................................................................................................................9
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st
December 2017 showing at least two years performance (for example comparing 2017 to
2016). (M2).............................................................................................................................9
Task 4.......................................................................................................................................10
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism. (M3)..............................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

Introduction
This report has stated that travel and tourism sector is one of the renowned sectors in the
global economy. In this report factors pricing methods and concepts that are affecting the
business of Carnival Corporation has been discussed. The various types of management
accounting tools and their use has been discussed in the poster prepared in the second task of
the report. In third task the financial position of the company has been discussed based on the
financial report generated by the company. In forth task of the report sources of funds
required by the tourism sector and how they are distributed has been discussed.

Task 1
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. (M1)
Introduction
This task of the report has discussed the concept of cost and volume, various methods of
pricing and also the factors that has influenced the travel business of Carnival Corporation
Plc.
Both the cost and the volume play a vital role in supervising the business of travel and
tourism. Cost and volume also helps the top-level management in the process of decision
making in the company and also helps in assessing the possibility of the risk involved in the
company. So, these concepts have been discussed in detail below.
Cost concept
In order to explain the concept of cost the, it is important to held a brief discussion on the
various types of cost. These costs may be direct, indirect, fixed and variable. An explanation
of such cost has been given below.
Direct costs
These are the costs which are incurred in the production of specific goods and the services.
Such costs can also be referred to as production cost as they are incurred at the time of
production. Direct cost incorporated many components such as labour, material, expenses and
human resources. It is mandatory for the company to incur such costs (Kimbu and Ngoasong,
2013).
Indirect costs
The cost which are not directly related to cost object are termed as indirect costs. The nature
of such costs can be fixed as well as variable. These costs can be related to the security,
personnel or even administration. Such costs are also called factory costs.
Variable cost

The nature of these costs is changing. Such cost is incurred as the level of production
undertaken in the company. Change in production causes change in such costs. Such costs
can be termed as dependent cost as they are dependent on the level of production in the
company (Thakran and Verma, 2013).
Fixed cost
These are the costs which remain fixed at every stage of production. Change in production
does cause change in such cost. Fixed costs will be incurred even if the production in the
company is one unit.
Volume concept
This term can be defined as the total production during a particular span of time. This concept
incorporates various perceptions. These are the economies and the diseconomies of scale and
break- even analysis.
Economies and diseconomies of scale
Economies of scale can have explained as with increase in the entire production of the
company the cost per unit decreases. So, the company gets benefited from the increased
production. If the company wants to achieve economies of scale in the company then it is
required to enhance its services in order to increase its profits. The main motive behind it is to
reduce cost and enhance the operational efficiency of the company.
In diseconomies of scale the increase the size of the firm and its enhance productivity causes
an increase in the price per unit. It can be observed that in the long run it is difficult for the
company to achieve economies of scale. This is because of the reason that it is not possible
for the company to continue increased production so this will not allow company to achieve
economies of scale another reason is that cost of transportation and warehousing is every time
overlooked by the company (Vogel, 2016).
Break- even analysis
This is the point for the company where the firm is in the situation of no profit no loss. This
concept is important for the company in order to determine its profitability. This concept can
be applied in the Carnival Corporation Plc to analyse the methods of increasing the sales of
the company along with profit contribution (Van Der Sterren, 2017).

P1.2 Analyse pricing methods used in the travel and tourism sector. You should use relevant
examples from different cruise brand of Carnival Corporation & PLC. (M1)
Pricing methods are important from the point of view of the company as these methods helps
to undertake the pricing decisions which is very important from the point of view of the
company.
Bargain-basement pricing method
This strategy used for the pricing decisions of the company is very important as with the help
of this the customer base of the company can be enhanced. The company provides discounts
to its customers on the actual price of goods and services. In Carnival Corporation Plc, it can
be seen that in the company the services are provided by the company at discounted prices in
the off- season. This will increase the sales of the company and results in enhancing the
profits of the company (Chen and Petrick, 2013).
Apparent value pricing
In this price of the goods is decided on the basis of its perceived value and this price is
offered to the consumers.
Going rate pricing
In this price of goods is decided in the basis of par, premium and discounted pricing in par
the price of good is equal to market price of good. In premium the price of good is more than
the market price of good. In discounted the price of good is more than the market price of
goods (Becker, 2016).

P1.3 Analyse factors influencing profit for travel and tourism businesses using
Carnival Corporation & PLC cruise brand case study. (M3)
Pecuniary factors
Change in rate of inflation affects price of goods and services in the Carnival Corporation
Plc. Increase in the price of services will reduce the customer base of the company. People
will start losing their interest in these activities leading to decreased profits for the company.
Social factors
There various factors that affects the business of tourism industry. The change in taste and
preferences of the consumer, age, income. These factors must be take into consideration by
the company while taking the pricing decisions (Petrick and Huether, 2013). This will help
the company to sustain its sales in the market.
Cyclic factors
Changing weather conditions is one of the important that needs to ne considered by the
company while offering its travel packages to the people. Proper decision will help the
company in future business expansion and will also increase the profits available with the
company.
Lack of human resource
Lack of skill and knowledge among the employees of the company is affecting the sale of the
company. In order to increase the effectiveness and the efficiency in the company employees
should be trained and developed (Robinson. Et. al, 2016).
Conclusion
Various factors, pricing methods and concepts stated in the report has helped the company to
retain its sales and profits.

Task 2
2.1 Explain different types of management accounting information that could be used in
travel and tourism businesses.
2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group PLC
Explanation: The Dalata Hotel Group PLC uses many types of management methods to see
the explanation techniques in the external environment. The gather the information from
various sources and study them further so that the correct picture is framed in front of them.
The management accounting is a planning through which the correct report of the financial
position of the company is demonstrated of the Dalata Hotel Group. The final outcomes help
the management of the company to be on the current preferences and the aging of the
financials. The exploration of the financial and the monetary aspects be the demonstrations
and between the advantages and the disadvantages of the company. The Dalata Hotel Group
PLC is assessing the areas where the changes are required and the possible areas of changing
where there can be a number of benefits. The positioning is important in the company as it

aids in locating the future plans of the company. The most important option which can be
used is the management accounting. Dalata Hotel Group PLC is the best managed in the
United Kingdom as it has more than 8,000 rooms in it properties. Hence, it is made up of
strong financial resources and helps in the completion of all the plans of the Dalata Hotel
Group (Eagles, 2014).

Task 3
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2017 showing at least two years performance (for example comparing 2017 to 2016). (M2)
Introduction
The Dalata Hotel Group PLC is a hotel chain. It has operations throughout the globe and this
hotel serves the best hospitality to its customers.
The annual position of the company by the financial statements is given below:
As per the calculation of the ratios the following information has come out:

Examination of the above ratios has been discussed below:
Current Ratio
It is also named as the ability ratio. It shows the capability of the company to write off its
short-term loans and liabilities. It also shows the ability of the cash flow of a firm. It the
current ratio is more the liquidity of the firm will be more and if the liquidity ratio is less the
liquidity of the firm will be less. In 2016 the ratio was 0.27% and in 2017 it is 0.35%, hence it
is a positive side showing an improvement in the company
Quick Ratio
The quick ratio means the ratio which shows the deviation between the quick assets and the
quick liabilities. The quick ratio is also called as the acid test ratio. The ideal equation of the
for the quick ratio is 1:1. If the ratio improves it means that the performance of the company
is also growing. In 2016 the ratio was 0.23% and in 2017 it is 0.31% the ratio has improved
from 2016 to 2017 with is nice as per the growth of the company (John and Susan, 2015).
Asset Turnover Ratio
The asset turnover ratio the assessing of the operations performance of the company and this
is for the main use of the promoters and the shareholders. In the year 2016 the asset turnover

ratio was 1.46% which in 2017 increased to 1.68% this shows that the profit in the hands of
the company has fallen this year.
Solvency Ratio
Solvency ratio is basically the long term prudentially performing ratio which determines what
is the capability of the company to pay its long-term debts. Almost same ratio shows that the
company can perform better in the near future and will enhance the financial position of it
accordingly (Morrison, 2013).
Conclusion
In the task the financials of the company have been discussed and have been analysed with
the help of the ratio analysis of different types of ratios. The details of the ratios have been
deeply studied and the conclusion reached is in the form to enhance the financial position of
the company.

Task 4
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism. (M3)
Explanation: The sources of financing for the development of the financial enterprises are
there in a huge number. The more importance for this division is to keep the improving and
development of the outcomes of the new innovative items as the holiday time is approaching.
There are various sources like the non-governmental bodies, difference in the culture,
medium and the territory ang the geographical area. The financial tasks are happening as
these improve the interests of the tourists towards the different types of tours. There are many
different sorts of tours which are developed for different people according to their
preferences. There are many sources which are providing funds to the travel and tourism
sector. This sector when funded properly makes a lot of money and also develops the interest
of travelling in the tourists. The financing bodies are also looking forward to funding this
sector as this is the only sector growing with a boom and is developing in all the countries
across the globe. This sector has also seen a lot of development as this sector has a lot of

scope of developing and many new innovations can also be made in this sector as many
companies are involved in this sector. (Wanhill, 2013).

Conclusion
It can be concluded from the above report the poster and the leaflet has helped the in
recognising the sources of funds needed for the growth and the development of the company.
Use of management tools in the company will increase the profits of the Dalata Group Hotel
and in the proper implementation of practises in the business. Pricing methods and the factors
responsible for maximising the profits of the Carnival Corporation plc has helped the
company a lot. Company needs to improve its performance in order to facilitate growth and
development in future.

References
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development: A network perspective. Annals of Tourism Research, 40, pp.235-259.
 Thakran, K. and Verma, R., 2013. The emergence of hybrid online distribution
channels in travel, tourism and hospitality. Cornell Hospitality Quarterly, 54(3),
pp.240-247.
 Vogel, H.L., 2016. Travel industry economics: A guide for financial analysis.
Springer.
 Wanhill, S., 2013. Government assistance for tourism SMEs: from theory to practice.
In Small firms in tourism (pp. 63-80). Routledge.
 Van der Sterren, J., 2017. Financial markets, microfinance and tourism in developing
countries. ARA: Revista de Investigación en Turismo, 1(2).
 Chen, C.C. and Petrick, J.F., 2013. Health and wellness benefits of travel experiences:
A literature review. Journal of Travel Research, 52(6), pp.709-719.
 Becker, E., 2016. Overbooked: The exploding business of travel and tourism. Simon
and Schuster.
 Robinson, P., Fallon, P., Cameron, H. and Crotts, J.C. eds., 2016. Operations
management in the travel industry. CABI.
 Petrick, J.F. and Huether, D., 2013. Is travel better than chocolate and wine? The
benefits of travel: A special series. Journal of Travel Research, 52(6), pp.705-708.
 Eagles, P.F., 2014. Fiscal implications of moving to tourism finance for parks:
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 John, S. and Susan, H., 2015. Business travel and tourism.
 Morrison, A.M., 2013. Marketing and managing tourism destinations. Routledge.