Report on Finance & Funding in Travel & Tourism Sector
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Added on 2020-07-22
Report on Finance & Funding in Travel & Tourism Sector
Added on 2020-07-22
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FINANCE ANDFUNDING INTRAVEL ANDTOURISM SECTOR1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................2TASK 1............................................................................................................................................3P1.1 explaining the importance of cost and volume in financial management of carnivalcorporation and plc.................................................................................................................3P1.2 analysing pricing methods used in the travel and tourism sector. Defining the optimalstrategies with relevant examples from different cruise brands of Carnival Corporation & plc.................................................................................................................................................4P1.3 analysing factors that influencing profit for travel and tourism businesses of Carnival5Corporation & plc cruise brands.............................................................................................5TASK 2............................................................................................................................................6TASK 3............................................................................................................................................63.1 interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December2016 showing at least two years’ performance (for example comparing 2016 to 2015).......6AC. 4.1 Analysing sources and distribution of funding for the development of capital projects..............................................................................................................................................10associated with tourism........................................................................................................10REFERENCES..............................................................................................................................122
INTRODUCTIONFinance and funding play important role in in tourism and travel industry. Importance ofcost which proceeded into the decision making process. Business use finance information as alllevel of operation to understand the effect of costing and help to management in effectivedecision making. In the brief of tourism and travel industry the mode of assessment, assessmentcriteria after completion of the detail knowledge and the importance of direct, indirect, fixed andvariable cost. Analysing the pricing model which lead to organization in the competition and getbetter return on the investment. Finance and funding in the travel and tourism industry with acausative to addition of knowledge in various concept and aspects related to financial funding.Financial analysis of company also helps to process of calculating the viability, stability&profitability. TASK 1P1.1 explaining the importance of cost and volume in financial management of carnivalcorporation and plc.Carnival corporation &plc is the among the largest, most profitable and financial strong leisuretravel company in the world. Assets turnover ratio help the organization to indicate howeffectively and efficiently the management use its assets by calculating net sales of the companyand average total sales of the company. By using the inventories turnover ratio company candetermine the deficiencies in the product line, obsolescence’s. For calculating inventoriesturnover ratio company annual sales/ inventories cost incurred. All pricing factors are consideredin reference of seasonality, operating cost, competition and demand. The average price theorganization sell product can vary but this all factors are concerned (da Silva Etges and et.al.,2016). Costing related to tour packages that completely depends upon different tour type andnumber of passenger, and number of rooms that company provide to the customers. Fixed cost,variable cost and annual business cost which determining annual business cost of the company.Fixed cost for instance rent, equipment and insurance these cost stay the same no mattercompany sales are increasing or decreasing (Lopes Miiller and Lopo Martinez, 2016). This typeof cost is sate of nature and company factors can’t influence these cost. For maintaining thevariable cost carnival corporation plc have to determine the operating cost for instance wages,gas, electricity in the organization. For betterment of financial management company need to3
analyse the distribution network cost and competitive cost against the rivals. Demand from pastand future customers it also worthwhile for target a particular segment.P1.2 analysing pricing methods used in the travel and tourism sector. Defining the optimalstrategies with relevant examples from different cruise brands of Carnival Corporation &plc.Carnival corporation & plc now comprises 10 cruise line brands. Operating a combined of fleetof over 100 ships. The company’s portfolio of 10global cruise line brands include Carnival Cruise Line, Fathom, Holland America Line,Princess Cruises and Seaborne in North America; P&O Cruises (UK) and Cunard inSouthampton, England; AIDA Cruises in Rostock, Germany; Costa Cruises in Genoa,Italy; and P&O Cruises (Australia) in Sydney. For maintaining the cruise brands of carnivalcorporation & plc have to determine the pricing strategies for the betterment maintenance ofdifferent cruise brand.Mark up pricing: - These strategies involves setting the price of tour and activities inorder to ensure that company gain profit on each of their operation. for instance, carnivalcorporation need to determine each tour of the different cruise brands running andidentify all the cost which are associated with a running tour that concerned with timespent of developing the tour and resources used in each tour by all cruise brands of thecompany (Robinson and et.al., 2016). The overall cost of the business depends uponwhich mark up pricing company adopt. For instance, cost of each tour about $500 andcompany can accommodate 5 people for every single tour that means in order to earninga profit organization need to mark up pricing $200 as company profit margin. Thisstrategy allows high profit per customers, high perceived tour value and extra budget toupgrade the services of vary brands.Mark down pricing: - These strategies involves mark down their prices in order tocompetitive in the market and influencing the customers for using the mark down pricebecause customer and future prospects can attract toward the desirable price. In additionto this strategies carnival corporation may generates more booking with different brandline of the company and still remaining competitive position in globally (Roy, 2016). Byadapting these strategies help to allowed more booking without the promotion activity4
that vary brand of the company can generate more profit and earn more income in theend. This strategy allows attract future prospects and customer in low season by settingcompetitive pricing levels. Cost plus pricing: - this method is based on the cost for instance total cost of the shipwhich are concerning a single tour and total time and resources taken in the single tour.This method is based upon the total cost (profit) is added to the total cost of the set price.For calculating the cost plus pricing carnival corporation need to identify the totalexpenses incurred in single tour and divided by no. of packages that company haveoffering.Inter-temporal pricing: - customer’s demands become more inelastic during seasonaltime and departure dates. This pricing allows carnival corporation lines to increase theirfares. Before the departure time of cruise that strategies allowed to increase and cruiselines try optimizing capacity by reduction in price just before last minutes (Said, 2016).This strategy occurs in peek season. Reaching max capacity, the critical ratio underscoresthe cost of underage and overage.P1.3 analysing factors that influencing profit for travel and tourism businesses of CarnivalCorporation & plc cruise brands.1. Seasonal variations:In context of tourism industry seasonal factors plays a major role in thecompany profit margin. Seasonality in tourism industry means a temporal imbalance of in thephenomenon of tourism which are expressed into number of visitors and expenditure of visitors,transportation modes which directly impacted on the company profitability (Armenski, Dwyerand Pavluković, 2018). Due to seasonality variations demand of ships and cruise are directlyimpacted. During the seasonal variation company gets to offer discounted or mark down pricingfor the customer to reduce the impact of seasonality factor.2. Economy factor:In duration of economic recession customers will be more careful in theform of money where they spent. Tourist will also be demoralized when the economic recessionis over. If customer’s have a strong purchasing power and willing to spend their money ontourism they will get the desired result of the company services and company took advantage theeconomic standard of prospects.5
3. Bad debts: - Bad debt shows the excessive side of liabilities as compare to assets side which isnot ideal situations for the organization. Assessing customer’s creditworthiness by analysing lower credit limit.Making and communicate the clear terms and norms with other party (Camilleri, 2018).Carnival corporation & plc have involving the professional advisor for auditing thefinancial statements and analytical analysis of costs which incurred in single trip of thecompany. TASK 26
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