Finance & Funding in the Travel Tourism Industry

FINANCE AND FUNDING IN
THE TRAVEL TOURISM
SECTOR

Table of Contents
INTRODUCTION........................................................................................................... 3
TASK 1........................................................................................................................ 3
1.1...................................................................................................................... 3
1.2...................................................................................................................... 4
1.3...................................................................................................................... 5
TASK 2........................................................................................................................ 6
TASK 3...................................................................................................................... 10
3.1.................................................................................................................... 10
TASK 4...................................................................................................................... 14
4.1 Enclosed in Poster...................................................................................... 14
CONCLUSION............................................................................................................ 14
REFERENCES............................................................................................................. 16

INTRODUCTION
The finance is act as a magic wand for the new entrepreneur for whom new business is
like a fantasy world whose problems will remove from financial magic. The current entity will
be saved from the attack of devils of this fantasy world in form of competitors on internal control
system and its operations. Conducting this business is a tedious work as in this section parties
involving in operations like customers and suppliers changes their needs and requirements
frequently which has a crucial impact on entity. Merlin entertainment is selected for project, this
entity provides entertainment services like theme parks which attracts its customers including
kids and old persons which means its a place for family entertainment. It provides very exotic
and thrilling services, that strengthens an organization’s performance. This report contains the
information regarding the link between the three factors cost ,volume and profit analysis which
an entity is required to analyze. This will provide details about the current status of organization's
performance and its cost structure. Cost structure here refers to the evaluation of cost and other
factors related with it. This evaluation allows management to decide the price of its goods and
services, and to develop that price. Management plays a vital role in communicating internal
information with external parties.
TASK 1
1.1
The primary concern of the management owner is to determine the cost incurred in the
future which needs to be predicting in advance to cut down the costs. There are different type of
cost incurred in industry of travel and tourism sectors. These costs are mentioned as follows:
Variable cost – cost arises during the operational activities of business which keeps on changing
as per the quantity of product. It means if the production level increases then the variable cost
will also be increased and vice versa in case of Merlin Entertainment. This is one of the material
segments used in an entity such as commission given to travel agents for their services regarding
sale of travelling services. (Locatelli, Fedele, Fayolle and Baglee, 2016). The variable nature of
services rendered by the agents will be liable for payment of commission. The cost incurred in
marketing and advertising is cost which incurred by organization to take steps against its
competitors. This will allow Merlin Entertainment to attract a huge number of customers.
Fixed cost- Rigid cost incurred in the business that doesn’t affected with the sales units incurred
in the existing business. Expenses like rent paid for building or warehouse is termed as fixed
cost as this will not change due to change in the production level of business. Cost of licensing is
also an example of fixed cost. Cost volume profit (CVP) analysis is a very common technique to
analyze the cost incurred during production. It will help the entity which are opting for BEP and

Margin of safety. There are several factors which needs to be evaluated by Merlin entertainment
in order to opt for CVP analysis :
Duo combo of major cost like fixed cost and variable cost should equally and effectively taken
into consideration. Which allows them to maintain its financial position and business operations.
Standard sales mix should be improved to be assured about meeting all kinds of cost and other
factors related with them.
Break even analysis will be used by an entity owner which determines that specific point at
where there is no profit or loss earned by an enterprise owner. The break even units higher than
the existing sales level will result into loss on the contrary the lower breakeven point units will
result into the overall profit of an enterprise.
1.2
The role of travel and tourism sector has increases with the external difficulties arises in
the external business environment. It is also regarded as one of the integral parts of the overall
hospitality sector as the increasing global exposure of this sector will also raises the existing
levels of this particular travel and tourism sector. The organizations which are required to meet
different quality assurance techniques in order to deliver quality related services to its all kinds
of customers (Moran, M., Porter and Curth‐Bibb, 2016). The price sensitive can dominate the
overall market by influencing an entity to reduce their prices to take higher base of customers for
their offered products. The designing of different tour packages is essential in order to add
additional features in order to lure different variety of customers. Pricing is a segment which
proves that only manufacturing will not be effective until it will reach to the ultimate consumer.
Travel and tourism industry needs to develop their pricing model in under mentioned forms :
Cost Plus Profit Pricing- this method is used by various organization for its profit maximization
just by opting for several operational activities which are fair and fruitful (Schmidt, Mason,
Bruwer and Aspeling, 2016). This method considers a specific percentage for the consideration
of each and every cost element.
Differentiating pricing- The unique concept of differentiating pricing is related with the
external market rivals in order to keep prices lower than all the competitors. Prices of product are
used to kept lower as compared to the competitors of entity which allows it to grab a large share
of market revenue as compared to its competitors. Having control over the cost will allow a cited
entity to develop its share by reducing price of its product and services which they provides.
Result will be profit earned over a little cost. Merlin Entertainment provides services of
entertainment hence if its having control over its operational cost then it can provide its services
to customers at a price level below its competitors.
1.3
Dominating factor that rule on the overall market in beating different kinds of customers
who attracted towards the cost reduction activities of the entity. It helps in enhancing business