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Finance and Funding Travel and Tourism Sector

   

Added on  2020-10-05

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Finance and FundingTravel and Tourism Sector
Finance and Funding Travel and Tourism Sector_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1 ........................................................................................................................................11.1 Importance of cost and volume in financial management of T&T sector:...........................11.2 Pricing methods used in travel and tourism sector: .........................................................31.3 Factors influencing profits of travel and tourism business:..................................................4TASK 2............................................................................................................................................62.1 Different types of management accounting information:.....................................................62.2 Use of management accounting information as a decision making tool:..............................7TASK 3............................................................................................................................................73.1 Interpretation of financial accounts of The Fulham Shore Plc.............................................7TASK 4..........................................................................................................................................124.1 Sources and distribution of funding for development of capital projects related to tourismsector.........................................................................................................................................12CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................16
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INTRODUCTION For any company engaged in tourism sector, significant emphasis should be required onfinance and funding requirements to run business operations efficiently and in effective manner.Finance means get money from various sources and use this money for business purposes forrunning of a business. Financing and funding are used in business to get money from differentsources and applied them in required areas of business in optimum way. This report explains theimportance of finance and funding activities in the context of travel and tourism sector. Thisreport is divided in four task and for each task, there is a different scenario is given. First taskdefines importance of cost and volume, various pricing method used and factors which influencevarious profits by taking Carnival Plc for this purpose . Second one describes the different typesof management accounting information which is used by company, third task providesinterpretation of financial statements of Fulham Shore Plc. The last task defines sources, fromwhere funds are received and their distribution for development of capital projects of tourismsector.TASK 1 1.1 Importance of cost and volume in financial management of T&T sector:For understanding this, a company named Carnival Plc is taken. The details about thiscompany is as: Carnival Plc:Carnival Corporation & plcis a UK based travel, tourism and cruise operatorcompany, currently the world's largest travel leisure company, with a combined fleet of over 100vessels across 10 cruise line brands. Company is planning a holiday trip to a resort lasting onemonth for its tourists. The company will also book a floor of a hotel at a resort to accommodateits tourists. While conducting this tour, various aspects relating to financial management relating tothis is considered by Carnival Plc to make profits from this tour. For this, organisation shouldhave a knowledge of following terms which are:Cost:Cost for any company is important part to evaluate because it has a huge impacton the profitability of company running in this sector like Carnival Plc (Evans,Stonehouse and Campbell, 2012). For conducting any tour, firstly company shouldestimate the cost which is incurred for this tour so that it can modify its plan1
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accordingly to make tour profitable and it is also good for Carnival to have costestimation to know whether tour is profitable or not. Cost can be classified as follows:fixed cost: it is a cost which is stay fixed when changes occur in the volume ofactivity, in other words, it remains fixed irrespective of volume of activity (Jucanand Jucan, 2013).Variable cost: it is a cost which vary according to volume of activity.Direct cost: it is a cost which is incurred and can be specified directly in the productor cost centre.Indirect cost: It is a cost which is not directly accountable and specified in theproduct or cost centre but it is occurred. It may be either fixed or variable. Volume: In context of tourism sector, it can be defined as how many times CarnivalPlc is provided travel services to target customers services. In other words, it refers toquantity of services, which an organisation serves to target customers. Cost and variousbudget are allocated to volume of product or service. Carnival Plc has been providingits services around the globe. There are various tools and technique which is used byorganization to compute the ideal volume tours and travel package that helps it to makehigh amount of profits (Kimbu and Ngoasong, 2013).Importance of cost in context of this industry are as follows:Cost reduction:For any organisation like Carnival Plc in tourism sector, cost estimation for tour plansshould be done, it is very beneficial for the company to do this to reduce the cost of tours and asa result enhance the profitability of company. Decision-making:By taking more emphasis to Cost analysis, an organisation like Carnival Plc can assess itsperformances and accordingly, take decision for the improvement of company. Importantdecision like making plans & strategies for achievement of goals and objectives. Therefore,analysis of cost is important for an organisation working in tour and travel sector.Increasing performance of managers:Cost analysis is helpful for the improving the performance of managers. By the help ofdata which is collected through cost analysis, it can be used by these managers to takemeaningful decisions about the current & future business activities.2
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