Financial Performance Analysis of Tour and Travel Business

The assignment involves analyzing the financial performance of a tour and travel company using various tools and techniques. It includes evaluating the company's revenue management strategies, comparing financial results to strategic targets, and considering legal and ethical implications. The report presents a comprehensive analysis of the company's financial status, highlighting areas for improvement and best practices in budgeting and revenue management.

The Travel and
Tourism Business
Toolkit

Table of Contents

INTRODUCTION
Tour and travel industry is the fastest growing industry in the world. Tourisms is a
complex industry made up of different businesses with a common theme of providing products
and services to tourists. The given assignment is based on British Airways (BA) which was
founded in 1974 at London Heathrow Airport. It is among the largest airline which consists of
two airport hubs situated at Heathrow and Gatwick airport and consists of 183 destinations. This
report will analyse the importance of revenue management in the industry which can be used as
an tool in to order to generate and maximise profit. It will also review stages of human resource
cycle and the importance of retaining and developing talent while providing technique to resolve
negative behaviour (Bayliss, 2014). Later part of the report deals with the legislation that are to
be followed and kept in mind while operating in the market.
PART1
Examine the key principles of revenue management for the travel and tourism industry
Revenue management is defined as an analytics, which assist to know the behaviour of
customers, so as to ensure product availability and price can be optimise which is done in order
to maximise the revenue possible (Budeanu and et. al., 2016). In the industry it's chief purpose is
to increase revenue while selling the same number of product and services. Successful revenue
management involves understanding of customer thinking process and finding out their
perception of value. Thus primary aim of revenue management is to sell the right product to the
right customer at right time and place along with right pack. There are certain element and
principle of revenue management that have been analyse while working as a graduate that can be
elaborated below:
Yield Management
It is pricing strategy which is focussed on anticipating and understanding the consumer
behaviour so that it can be further influenced for maximization of profit or revenue. Which can
be done from fixed and time limited resources such as airline seats, advertisement and hotel
reservation (Lamsfus and et. al., 2015).
Rationale and Principles of Revenue Management
The rationale of revenue management are as follows:

 It assists in creation of new product and services and also in their pricing.
 It helps in maintaining balance among revenue mangers and other managers such as
general manager and hospitality manager. Coordination among different manger will help
the organisation to work more efficiently and effectively.
 As the tradition pricing tactics consists of Hugh amount of cost and time adoption of
revenue management will help the organisation to eliminate it.
Different principle of revenue management in travel and tourism industry can be elaborated
below:
Market Segmentation- It comprises of classification of customers into qualified and
non- qualifies classification. These segmentation are based on attributes of consumers which will
help in maximizing overall revenue of the organisation. As per segmentation revenue is further
generated by the organisation which will help the company to maximise it's sales and revenue.
Historical Demand and Booking Patterns- This principle comprises of using and
studying historical data in order to plan for the future activities. It help in analysing customer
booking pattern which will help in providing valuable information which will help business to
earn more revenue and sustain growth (Budeanu and et. al., 2016).
Demand Forecast and Displacement Analysis- Demand forecasting have a Hugh
impact on revenue of hotels. In order to occupy product in accordance with demand of customers
demand forecasting plays an important role. If the assumption generated are right then high
revenue can be earned Where as if the assumption is wrong then it lead to decline in revenue.
Overbooking- It comprises of selling more then the actual capacity of the business. Such
process can serve as effective factor in case of cancellation of booking by customer. The reason
behind it is to encourage revenue and minimize risk associated with refused services.
Revenue Management Tools
These tools are being used by organisations in order to maximize the generated profit. It
should be applied by businesses in order to work effectively some of the revenue management
tools can be elaborated below:
Capacity Utilisation- As there are fixed number of seats available in the airline the
business needs to utilize it properly. British Airway will make reservation in accordance with the
capacity . Reservation will be done in accordance with the customer needs so that they get all the
required facilities. For example if BA has capacity of 60 individual in the flight, they should only
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carry that amount of people in order to achieve capacity utilization. It would help BA to work
under their capacity and maintain revenue till tenure of the business life.
Discount Allocation- This tool should be used by organisation for providing discounts to
the customers who are availing their services. By providing discount the regular and new
customers feel especial. It can also be done to attract people in off season. The main purpose
behind this is to encourage and enhance the sale of product and services
Duration Control- British airways can focus more on people that have more multiple
flights comprising of several destination instead of individual with reservation for only one day.
This will help the organisation to earn more revenue and will also encourage customers to travel
various destination. It the managers duty to have a control the service duration which is being
used by its users.
Impact of differentiated pricing strategies on revenue management
It means enabling different prices in the market based on various factors such as
geographical and factors of external environment. It has impacted in both ways in an positive as
well as negative way. In context of British airways, positive impact can be increase in revenue
and decreased pressure on production Where as negative factors comprise of discrimination
which will result in decreasing brand value.
Principle of revenue management
Forecasting: It will enable the organisation to forecast revenue in relation with the near
future.
Monitor: Monitoring help in management and maintaining information in such as way
that they can be used in taking certain business decision.
Control: It comprises of controlling different organisational activities related to cost
which comprises of analysis of best rate availability, overbooking and group pricing.
Application of revenue management
Market Segmentation: As per the airline the consumer can be divided into two
separated sections such as qualified and non qualified. On one hand, qualified consumer is
majorly comes out of the income level and also segmentation is done on that basis and on other
side, unqualified are segmented on the basis of their needs or wants.
Demand forecasting and supply forecasting: Demand forecasting have a large
influence on revenue of British Airways.
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PART 2
Managing Human Resources (HR) life cycle within context of HR strategy
HR strategies are those strategy which is adopted by the business firm whose is focus at
integration an organization's culture, employee's and other system by coordination different set
of action directed towards achieving overall organisational goals. Human resource has an unique
HR cycle of life instead on focussing on the different biological aspect of development it
involves different stages through which people go through and role of HR in those stages. Each
stage of human resource has it's own challenges opportunities and benefits. In context of the
British airways, HR life cycle will be analysed for job role of Tour & travel manager. Different
stages of product life cycle can be explained below:
Recruitment: This is a complete process of hiring a right people. Organisation needs to
conduct the entire process in a effective manner as it plays an important role in turnover,
productivity and growth. As hiring of the Tour & travel manager is an essential part of British
airways HR process because right people in right place will enable the organisation to increase
the overall work productivity of the business (Hunt and et. al., 2015). This role person will be
hired using defined interview process and recruiting system.
Education: The second stage of the cycle comprises of comprises training the recruited
employees so that they can perform their job duties and responsibilities in an effective manner.
As the industry comprises of meeting and greeting new customers on a regular basis training will
help them to get comfortable with the working environment of the organisation (Chang,
Backman and Chih Huang, 2014). Tour & travel manager of the British airways is being eligible
to avail training & learning to realises its respective roles or responsibilities to work.
Motivation: Keeping the employees motivated is an important part of a work process as
there are their motivation will help in reaching higher level of performance. Individual can be
motivated through various methods such as by providing compensation, benefit or by providing
recognition to employees. Need of the Tour & travel manager such as financial support, appraise
performance and continual promotion must be fulfilled under this step.
Evaluation: In this stage a supervisor is responsible for evaluating and measurement of
employees performance. The reviews gives leaders and employees both different specific meters
which help them to determine if they are the right fit for the job. After the motivation, again
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person will perform his duties or responsibilities and then it will be evaluate again. This periodic
cycle is happens for specific time say one year.
Retention and development: This is the final stage of the HR life cycle, in which focus is
on retaining employee and people on longer basis. As part of HR regulation, its been necessary
to enhances necessary regulation in order to led development of employees and people in context
of business. But process of development is still need to be carry out in an effective or productive
manner. To retain Tour & travel manager, job promotion with increment in the pay is the best
option to rise growth and development of the British airways. An importance of retaining &
development is to rise operation of the firm to be continue for longer time duration.
The human resource life cycle is the process that works on regular basis and is indulged
in creating effective strategies for the proper functioning of business operations. The main
purpose of the HR is to make all the arrangements that is required by the company to commence
their business activities in effective manner. It also helps in eradicating the issues within the
organisation and helps in controlling wastage of work force with the appropriate measures.
Performance management plan:
Step 1: Determine if a PIP is appropriate: Tour & travel executive is suffering with an
issue of lack of skills or competencies to perform its own respective job or task. Even manager is
helping out to rise ability of Tour & travel executive, but response is viewed as negative and also
performance is downgrading.
Step 2: Develop a Draft Plan: In this Smart goal such as Tour & travel executive wants to
rise its performance capacity by 10 percent and productivity within the time period of 2 months
or say 60 days. Management have a proposed option to assist tour executive in process of
training & development their skills or ability. This program will be for period of 1 months 20
days and 10 days evaluation or reviewing of the performance will be undertaken.
Step 3: Review the Plan: This plan is clearly authorised to solve the problem of lack of
the skills or competencies and there is no as such biasses. Also, this plan is true and trustworthy
in nature.
Step 4: Implement the Plan: In this, tour executive will be communicated on problems
which was realised as major such as lack of responsibilities based skills such as communication
deficiency, leadership etc. This person is assigned plan for the training or development and HR is
expecting good or an effective response out of the given procedure.
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Step 5: Monitor Plan Progression: During this stage, process of the development will be
carry out and monitor till its assigned time period. Moreover, HR will report every stage of the
development till its completion. Then, results will be occupied and ascertained.
PART 3
Potential impact of legal and ethical considerations on business
Potential impact of the legal and ethical framework
on British airways
Regulation are different set of rules which are being made by government and other authorities
who posses the power to make rules. These are made in order to control various activities of
businesses. Legislation can be termed as set of laws made by government authority. Standard
can be termed as a level of quality or achievement which has been agreed by higher authority
and which needs to be maintained. Which will make the life of a business easier. Regulation,
legislation and standards are different part of law because legislation provide direction
established by legislative body and regulation are based on different specific legislations. These
all rules and regulation which are decided by UK government are established so that
organisations can achieve success. There are remaining in legal boundaries and they are applied
by British Airways in order to keep ongoing for future growth as it helps in finding out a
particular way in regard with future perspective. Legislation, regulation and standard should be
inclusive as they are well connected with each other and they also apply in a systematic manner
in an organisation. It is important for organisation to maintain both standard legislation as well
in order to achieve growth in the market.
Legislation law in the airline industry
 Civil Aviation Act 1982 – It is comprised with all the latest amendments which have
been made before 26 January 2019.
 Operation of air services in the community regulations 2009 – Statuary instrument no 41
2009
 Civil Aviation Act 2006
 Air carrier liability (No 2) Regulations 2009 – Statutory instrument No 41 2009
 Civil Aviation Authority regulations 1991
Different employment and protection law have impact on the decision making process of airline
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industry that can be further analysed below:
A contract of employment is an agreement between employer and employee which defines the
relationship between them. These are in written format which is based on the law and regulation
of the country. Contract is made in order to bond both the parties into agreement which needs to
follow different laws such as:- Minimum wages act, 1998: As per this act airline industry is bound to pay a specific
amount as wage to the employees. If the organisation is not paying this then they have to
face legal issues. Where as if the organisation is following all the laws properly they will
be able to attract and retain large number of employees. This has put positive impact on
British airways by bringing confidence and interest of an employee to work with
collaborative manner or power. This law has assist British airways in taking proper and
effective decision making to bring harmony in their operations. This has made people of
the British airways to take strong decision making to achieve business purpose. Contract Act, 1990: It is an Act which comprises of certain rules and regulations which
every company needs to follow and non compliance of which can create an legal
problem so in order to avoid issues company will work according to this. Contract act
has brought favourable impact on doing effective regulation in order to bring a kind of
perfect working in the British airways. Contract law has assist in taking strong decision
making to led effective decision making in given point of time.
 Employment act, 1996: This act has been initiated in British Airways to provide good
and effective opportunities for people or staff. In response to this act has played a high
level productive role in order to make work based outcomes in an effective manner. This
act has positive impact on decision making of the British Airways to gather positive
results or outcomes in the defined manner.
Potential implications of regulations, legislation and standards
All of these have an important role in the functioning of the business as they have a great impact
on the functioning of the business and also on the business decision making. Compliance of
different rules and regulation play an important role in affecting the individual behaviour and
environment of an organisation.
 Trade description act, 1968 – In this act organisation provides all the necessary
information in accordance with the customer requirement. They are not allowed to
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present wrong information and misleading customers. In British Airways customers are
being taken care in an effective manner and all the necessary information are provided to
them. It will benefit the organisation as it will crate their brand image in the minds of
customers (Höpken and et. al., 2015).
 Consumer protection act, 1987 – The main aim of this Act is to protect and encourage
the right of customers. This act help the customer to stand for their right provided by the
legislation. Under this Act customers can file compliant against organisation if their
rights have been violated. By enabling pricing strategies in accordance with the
customers British airways play in safer Zone in relation with the legal problems
associated with the pricing of products.
Potential impacts of regulations, legislations and ethical principles
Regulations, legislations and ethical principles have a great influence on the business decision
making process of British airways. All of them are connected with each other as principle are
set in accordance with rules and regulations. In order to achieve success and to retain in the
market these will be followed by airline sector.
PART 4
Managing Budgets and maintaining statistical and financial records
Different types of financial statements
Financial statements provide whole picture of an organisation in term of performance of
different departments which can be used by the mangers and owners in order to analyse the
overall performance. These documents are used by several individuals such as creditors and
managers in order to determine the financial position of the business (Cohen, 2017).
Income Statement – It is that pert of financial statement which defines financial
performance of an organisation. It comprises of recording sales and then deducting all expenses
and net profit or loss. It is being issued by public held company and it is considered as one of an
important part of financial statement depicting the performance of the organisation.
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Balance sheet – It depicts the financial position of a business for a particular period of
time. All the information are being gathered into general classification of assets. Balance sheet
consists of the liabilities and assets with separate column and also in that balance of both sides
must be same to ascertain financial position for a business operation at a longer side of business
regulation.
Statement of cash flows – It comprises of recording both inflow and outflow of cash
flow in different processes of the organisation (DeLacyand et. al., 2014). This cab be further
divided into three parts such as Operating activities, financial and investing activities. This is a
formal structure, which helps to known how much cash is inflow or outflow in business activities
or task of the British airways.
Statement of changes in equity – This report shows all changes in equity which
happened during to reporting time period. These include issue of dividends, purchase of shares
and profit and loss. This statements shows how personal equity contributes to growth into the
shareholding funds of the person. Also, it is helpful to check or find balance of the equity
available to any company or an individual in an effective or develop manner.
The importance and value of budgets
A budget is an estimation of all the revenue and expenses occurred in a particular period
of time. It is a process associated with creation of plan which consist of preplanning the budget
associated with different activities (Du Cros and McKercher, 2014). Along with this, budget is
recognised as formal structure, in which cost is used to be mention to arrange it to make or set
activities in accordance to business goals or targets. Budget helps to estimate time to time cost &
expenses to carry out an activities in an effective or productive manner. British airways needs to
implement budget in such situation, if they want to carry their business activities in an effective
manner. It is important for British airways in order to fulfil the demand of the company. The
importance of budget can be analysed below:
 It keeps to keep a track of money.
 It will help to prepare companies for future contingencies.
 It will help the organisation to invest money in accordance with the requirement of
departments.
 This will help British airways to keep track of cost which are highly incurred in day to
day regulation of the business operations.
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Interpretation of financial statements and reports
The interpretation of a financial publication of British Airways is been defined and the
profit before the tax is 1744 and after tax deduction it amounts to 1403 and the various financial
aspects are as follows:
Calculations of ratios
Net profit ratio – Net Profit/Net sales*100
Profitability ratio 2017
Net profit 1403
Net sales 12226
0.11
Gross profit ratio = Gross profit/Net sales*100
Profitability ratio 2017
Gross profit 1774
Net sales 12226
0.15
Return on equity = Net income/Shareholders equity
Profitability ratio 2017
Net income 1403
Shareholder's equity 5774
0.24
Current ratio = Current assets/current liabilities
Liquidity ratio 2017
Current assets 4518
Current liabilities 5468
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0.82
Quick ratio = Quick assets/Current liabilities
Liquidity ratio 2017
Quick assets 3752
Quick liabilities 5468
0.68
Asset turn over = Cost of goods sold/Total assets
Efficiency ratio 2017
Cost of goods sold 17326
Total assets 16678
1.04
Inventory turn over = Net sales/Inventory
Efficiency ratio 2017
Net sales 12226
Inventory 766
15.96
Debt to equity ratio = Total long term debts/Shareholders fund
Financial ratio 2017
Total equities 5974
Total liabilities 16678
0.36
Earning per share = Net profit after tax & preference dividend/No of equity shares
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Investing ratio 2017
Net profit after tax & preference dividend 1403
No of equity shares 5974
0.23
Compare financial performance against strategic targets and objectives
The financial status of the firm can be defined after the evaluation of ratio analysis and it
helps in determining that there is strategies targets for every aspect is different and the objectives
which are required to be achieved. On behalf of the strategic targets the operating costs in the
year 2017 was around 7915 million and revenue amounted to 1226 million. The financial
performance according to the profit after tax is 1447 (DeLacyand et. al., 2014). thus, it will be
good to include 5.7% in comparison to the year 2016. After the comparison it is getting that in
2017 all the results have been improved s compared to the 2016 and all the business strategies
are working in effective manner.
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CONCLUSION
In the given report this has been concluded that the tour and travel business toolkit is very
essential for any business organisation as it helps in analysing the performance of the business.
The report describes the principles which is related with the revenue management. The revenue
management is the process that helps in arranging all the expenses and revenues of all the
departments in order to get potential revenues. Legal and ethical thinking shows the great impact
on the company and assist in managing budgets in statical and non statical records effectively.
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introduction.
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motivation, experience, perceived value and revisit intention. International Journal of
Culture, Tourism and Hospitality Research. 8(4). pp.401-419.
Cohen, S., 2017. Decline, renewal and the city in popular music culture: Beyond the Beatles.
Routledge.
DeLacy, T. and et. al., 2014. Green growth and travelism: Concept, policy and practice for
sustainable tourism. Routledge.
Du Cros, H. and McKercher, B., 2014. Cultural tourism. Routledge.
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23(3). pp.339-357.
Lamsfus, C. and et. al., 2015. Going mobile: Defining context for on-the-go travelers. Journal of
Travel Research. 54(6). pp.691-701.
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