Management Accounting in Travel and Tourism Businesses

LO2 - Understand the use of
management accounting
information as a decision-
making tool in travel and
tourism businesses

Table of Contents
Introduction ………………………………………...Slide 3
Different kinds of management accounting
information that can be used by any business in
travel and tourism and Dalata Hotel Group Plc
…………………………………………………….……..Slide 4
Assessing the use of management accounting
information as a tool for decision-making for
Dalata Hotel Group Plc …………..………….. Slide 8
Conclusion …………………………………………..Slide 12
Reference list ………………………………………Slide 13

Introduction
• Information from management accounting is one of the
major sources of information in any business for the
purpose of effective decision-making. The information
from management accounting is helpful especially for
managerial decision-making.
• In this presentation, an understanding of the use of
management accounting information as a tool for
decision-making in the companies of travel and tourism
will be established with the use of diverse types of
management accounting information that could be used in
the organizations of travel and tourism will be reviewed
along with the use of management accounting information
as a tool for decision-making for Dalata Hotel Group Plc.

Different kinds of management accounting
information that can be used by any business in
travel and tourism and Dalata Hotel Group Plc
Financial statements –
• Financial statements of an organization is another instrument of management
accounting that helps in effective decision-making (Biddle, 2015).
• The financial statements of a firm such as the profit & loss statement or the income
statement, the statement of financial position, the statement of changes in equity
and the statement of cash flows has a great influence on decision-making of the firm.
• This is true in case of tourism organizations as well (Biddle, 2015). For instance,
Dalata Hotel Group PLC can analyze its statement of consolidated income of the
preceding years along with the present year in order to analyze whether the net
earnings of the company have increased or decreased.
• This analysis helps the company in making decisions how to improve the company’s
profit along with reducing its costs.
• Similarly, the statement of financial position can help Dalata Hotel Group PLC in
assessing its liquid position and help the company in deciding how to maintain an
optimum liquid position.

Contd.
Budgets –
• It is an important tool for forecasting and planning
the costs to be incurred and profits to be earned by
the company in the upcoming accounting years.
• For example, the tourism company Dalata Hotel
Group PLC uses budgets for planning its revenues
and costs, and helps in making decisions on how
the activities of Dalata should be executed in order
to accomplish the budgeted target of the company.

Contd.
Variance analysis –
• The comparison and derivation of the difference in the
planned and actual behavior of costs and revenues of
tourism businesses help in deriving the reasons due to
which the variance occurs, which in turn can be used
for making important decisions in the company.
• For example, the Dalata Hotel Group Plc can use
variance analysis in deriving the variance in the planned
and actual profits in the company and make decisions
that will help the company in reducing the variance.

Contd.
• In these ways, information from
management accounting can influence
the decision-making of travel and
tourism organizations.
• Various other methods such as forecasts,
MIS, etc. and their information can help
travel and tourism organizations in
different ways.

Assessing the use of management accounting
information as a tool for decision-making for
Merlin Entertainments Plc
Raising capital –
• A company requires efficient decision-making for raising
capital.
• Management accounting information acts as the
backbone of decision-making for raising capital
(MamouniLimnios et al., 2016).
• For example, the information available in the financial
accounts and budget reports of Dalata Hotel Group can be
used by the company to analyze the need of raising
capital in the company followed by making effective
decisions on how to raise capital and how much to raise.

Contd.
Forecasting –
• The forecasts in tourism businesses can be made
from management accounting information.
• For instance, the variance, budget, performance,
scheduled and demand reports of Dalata Hotel
Group PLC can be used by the organization for
forecasting its future outcomes and making
decisions over how to accomplish the forecasted
outcomes of the organization.

Contd.
Investment decisions –
• Investment decisions are also important decisions
taken by all companies irrespective of whichever
sector they operate (Xu, 2015).
• Tourism businesses also require good decision-
making for making investments in capital, new
products, new hotels, new transport for tourists, etc.
• For example, Dalata Hotel Group Plc makes decisions
on investing in capital projects by evaluating the
information derived from management accounting
tools and techniques such as balance scorecard,
capital budgeting, etc.

Contd.
• Decisions can also be made by tourism
organizations based on management
accounting information.
• For example, decisions on introduction of
new goods and services can be taken
depending on management accounting
information.

Conclusion
• Hence, from the evacuation made in this
presentation, an understanding has been
developed on the use of management accounting
information and its importance as a tool for
decision-making in travel and tourism businesses.
• The ways in which management accounting can
be used and the use of these management
accounting information as a tool for effective
decision-making for tourism organizations such as
Dalata Hotel Group Plc has been understood.

Reference list
• Biddle, G.C., 2015. The Role of Financial Statements in Reporting
Financial Performance.In Accounting & Finance/IASB Research
Forum.
• Bogsnes, B., 2016. Implementing beyond budgeting: unlocking the
performance potential.John Wiley & Sons.
• Box, G.E., Jenkins, G.M., Reinsel, G.C. and Ljung, G.M., 2015.Time
series analysis: forecasting and control.John Wiley & Sons.
• MamouniLimnios, E.A., Watson, J., Mazzarol, T. and Soutar, G.N.,
2016.Financial instruments and equity structures for raising capital
in co-operatives. Journal of Accounting & Organizational
Change, 12(1), pp.50-74.
• Pollard, W.B., 2014.An active learning approach to teaching
variance analysis to accounting students.The E-Journal of Business
Education & Scholarship of Teaching, 8(2), p.69.
• Xu, Z., 2015. Uncertain multi-attribute decision making: Methods
and applications. Springer.

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