Analyzing Tourism Industry Resilience

This assignment requires a comprehensive analysis of the tourism industry's resilience, focusing on various aspects such as accessible tourism, medical tourism, strategic management, and global economic crises. Utilize provided books ('Accessible Tourism' by Buhalis & Darcy), journal articles (e.g., 'Medical Tourism Development in Hong Kong' by Heung et al.), reports (Dalata Hotel Group), and other relevant resources to inform your analysis.

Finance and Funding in the
Travel and Tourism Sector

INTRODUCTION
In the modern scenario, it is highly essential to manage all the resources especially in finance
sector. There are various kinds of barriers which are being faced by company if they do not deal
with the monetary resources in an effective manner. So, it is important to have the best services
which can be given to customers (Buhalis and Darcy, 2011). Since few decades, travel and
tourism sector is growing at a rapid pace and thus, high contribution is also given by it into
economic and social factors. In this report, company chosen is Carnival Corporation and Plc. as
well as Dalata Hotel Group. Both the companies mainly deal in travel and tourism sector. There
are number of elements which will be discussed in this report like identification of various
pricing strategies which have direct impact on the profitability of company along with the
management accounting methods for making up of decision which will be discussed within the
report.
TASK 1
1.1 Significance of cost and volume in travel and tourism sector
In travel and tourism sector, various kind of factors and other elements plays up the major
role . Business is being run by Carnival Corporation and Plc within many countries and thus now
they have the cruise brand in which they have to run their business and travel company. Beneath
is the explanation of several profits and costs:
Indirect cost: These type of cost are not attached to generating the revenues and other
activities. These are essential for this kind of expenditure as they are not similar in nature and
thus, finer services can be given to the customers.
Direct cost: There are various cost which mainly occur while production of goods and
services. It is very important to bring off this kind of price in order to have better profit ratios.
Buying of plane tickets for travelling from one place to another can be explicit as an example of
direct expending.
Variable cost: Undulation is being seen each and every year. They are highly cranky in
manner as they fluctuate at a high speed (Choi and Turk, 2011). Suitable model can be taken of
earnings which are cashed to staff members in Carnival Corporation and Plc which can be
declared as an instance of expenses.
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Fixed cost: Fixed cost can be stated as a constant factor even if the other cost is
fluctuating. This is a kind of cost which is not being affected by any other costs. Example can be
taken of rent which is being paid by the company.
Allocation and distribution: These are basically the direct expenses which are kind of
similar to the direct labour and material. Utilisation is being done for number of approaches for
cost allocation. Fixed overheads are allocated for every type of product but later on allocation to
each and every item which are not being produced.
Break even analysis: The main direction of this kind of fiscal management which is being
determining out the literal unit amount which is being sold-out by an company. This can be
developed on quarterly, monthly and yearly basis.
Economies of scale: Since the product is being improved, then the manufacturing cost is
being minimised like the allotment of rigid cost in more technology. This can be explicit as the
name of economies of scale (Evans, Stonehouse and Campbell, 2012). The primary reason
behind the happening of Carnival Corporation and thus they primarily focuses on intensify up of
effective results in order to obtain the business cost.
Diseconomies of scale: The connection of this sort of idea is identified with increase in
minor cost when the upgrade of yield is being finished. Essentially, these kinds of issues emerge
when the administrator of large organization like Festival Company neglects to direct their work
in a solid way. For instance: There are two exercises which are state engaged with voyage trip
and even organization lessened the rate of certain movement then they have to convey the pace
later on.
1.2 Pricing methods used in travel and tourism sector
Carnival Corporation Plc is a travel company which deals in tourism sector. This
company provides a large number of tour packages for their customers. Pricing is considered as
an important factor which plays an important role regarding influencing the behaviour of
customers. So, the management of company regarding fixing their pricing policies uses various
tools and techniques. Such tools and techniques are defined as below:
 Rack rates: It includes the use of total amount to increase their prices without offering
any kind of discounts and packages. Carnival Corporation uses this rate by written it on
their Boucher which are given to their customers.
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 Seasonal pricing: This includes the process of deciding prices on the basis of seasonal
requirements. At peak season of tourism, the prices decided by carnival is high but in
other season, the price is low to attract customers.
 Last minute costing: This includes about adoption of the such cost procedure which
calculated the costs which are going to occurred on last minute. This provides an
opportunity to Carnival Corporation to earn revenue from the last minute cancellation
charges of tour plans by customers (Henderson, 2010).
 Discounting: It is an effective method regarding attraction of the customers and
influencing their behaviour to select packages. Carnival Corporation provides special
discounts to their customers which wants to travel in off season.
 Package deals: Regarding pricing of such packages, Carnival Corporation uses different
strategies. In such package, everything is included from travelling to hotel booking. This
will attract the customers because every this is managed by company and also becomes
cost efficient in comparison to other offers.
 Commissions: If the bookings are done by third party then commissions are charged by
Carnival from such clients. In this method, more price is charged from the visitors.
Different pricing methods which are used by Carnival Corporation Plc:
 Cost based methods: It is an effective and simple method of pricing about their products
and services. This method has two parts which are full cost pricing and direct cost
pricing. Under full cost pricing method, both fixed and variable costs are included while
fixing prices of their packages (Heung, Kucukusta and Song, 2011). Final price also
includes the percentage of profit margin. On the other hand, in direct cost pricing method,
only variable cost is considered while fixing up the prices of their tour packages. It is
considered as an important method to enhance their earnings.
 Demand based method: It is an effective method which includes the process of deciding
prices on basis of customers’ demands regarding their tour packages. This includes an
important factor regarding price skimming, price discrimination and yield management,
etc. Carnival Corporation used such market research to fix the prices. On off seasons, the
price is fix by management is low and in peak seasons the prices fixed by them is
comparatively high.
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 Value based method: It is another important method which helps in deciding the price
according to their value in market. Carnival Corporation is a large tourist company which
has a good brand image in market. So, as per the number of visitors, prices are decided by
management.
1.3 Analysis of different factors which influence profitability of travel and tourism
The primary impact of the tourism sector is on the on season where the profit of Carnival
Corporation & Plc. Increases at rapid rate and thus majorly goes down in the off seasons. There
are various other factors which has direct effect on on the net income ratios like social culture ,
Political support, health of economy and many others. Some of the factors are being described
below:
 Seasonal variation: This kind of factor is highly essential for travel and tourism sector.
This type of institution is mainly existing in various countries like United Kingdom,
United Sates of America, Germany, Italy and many others and thus there is broad need of
cruise especially in summertime while in both of the countries there is another season
(Nielsen and Spenceley, 2011). This mainly states that in the off seasons Carnival
Corporation and Plc. Does not have the customers as per their expectations level and due
to that their profit ration will automatically decline and vice versa will be followed in the
peak season. Companies area of operations are large in nature and thus due to that profit
ratios does not fluctuate.
 Political environment: There are various negative effects on the net profit ratios of the
institution which are majorly operating in the business within the tourist sector. High
quantity of taxation is being generated from the Britain. Political unreliability restrict
mentioned within the institution for formulating out lengthy term policies and this
hamper their net profit ratios.
 Economic environment: This type of economical growing of European Countries is very
dilatory in manner. The plot of the gross demands of these countries which are going
down-bound and thus citizens are spending out monetary system on needed products.
This form of element has adverse effect on the maturation of the institution and thus
infatuation of profit is being done in unfavourable manner (Papatheodorou, Rosselló and
Xiao, 2010). If the Carnival Corporation & Plc. Would have been operational in
Continent Reason and thus benefits can be taken of high economical growth.
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 Social environment: In an economy there are various which are being present and thus
due to that business is being influenced in successful manner. In USA, there is high
market trend and that too on regular basis. Like for example: families are planning for
Holidays an thus on that they prefer to travel via roads instead of water and airways. This
type of change within the culture made a optimistic affect on the earnings ratios of
mentioned company and thus they have attained high profit.
 Current trend: In modern scenario, number of rich people and billionaires are increasing
and this has made huge impact like creating the petition of lavishness work like Cruise
Trip or it can be rental their own cruise (Pike, 2012). In old times, perception was set that
cruise is only for rich class people but in actual position and market trend has cleared the
fact that the middle class people has been started opting for cruise trips.
 Bad debts: it is highly apparent that atrocious debts has created perverse impact on the
profit ratios and along with that as per case study issues can be resolved as there is
effective management accounting system along with the making up of accounts on
receivable reports. When the organisation can not go along with the problems like the bad
debts then the primal brand like Fathom incur more amount of profit.
TASK 2
2.1 Different kind of management accounting information which used in tourism sector
To Be Covered in PPT
2.2 Utilisation of management accounting information as a decision-making tool
To Be Covered in PPT
TASK 3
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3.1 Interpretation of financial accounts to assist decision-making
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Cash flow statement: There are number of documents which are highly essential for the firm and
one of them is cash flow statement. This is very necessary as it performs every currency which is
being coming inside and going outside the institution (Pocock and Phua, 2011). Three various
sections and those are process where the cash influx and out-flux due to many functional
activities and they are being expressed. Another one is investment funds which has the
information regrading the purchasing up of fixed assets.
Trading account: in this kind of approach there are majorly two parts and those can be trading
and second can be P&L account. They are mainly expressed as change of beginning which has
mainly provided elements for the gross profit along with loss. There are minute details which this
this factor mainly consist of regarding the credit sales, COGS and other services.
Profit and loss account: In this type of factor, there is net profit and net loss is being stated of the
stakeholders. There is data which is being provided for the certain period of accounting and
various other factors like salary, rent of office and many others.
Balance sheet: This is highly important sector for the company as it provides overall detail of the
company along with its position for certain tenure of accounting.
Measurement of Dalata's financial performance
Current ratio: This ratio is calculated by divisional of current assets and current liabilities. In
this type of scenario, current ratio of Dalata hotels is 1.44, and in 2015 this was 2.89. Their
current assets in 2016 was 98771 pounds compared to 162278 pounds in 2015. Current liability
in 2016 was 68821 and in 2015 it was 56238. There are some factors which are being described
who doesn't aid in fetching decisions for long period of time but this can be made better for
formulating up of short term decisions (Ritchie, Amaya Molinar and Frechtling, 2010). Work
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needs to be done by Dalata because they got more capability and abilities to execute in effective
mode.
Current ratio
2015 2016
2.89 1.44
Acid test ratio: This type of ratio is mainly calculated by taking out stock from the current assets
and thus the remaining will be bifurcate by the current liability. Dalata Hotel's Acid test ratio was
1.41 in year 2016. This type of situation is kind of similar from them as compared to last year
presentation and thus they were unsuccessful to achieve the success. Ratio was 2.86 in 2015
which is remarkable.
Acid test ratio
2015 2016
2.86 1.41
Return on capital employed: 4.98 – 2016, 5.82 – 2015. This ratio is being calculated by making
comparison between net operating profit from the employed capital (REPORTS, RESULTS AND
PRESENTATIONS. 2018). It can also be called as profit ratio and thus mainly stated the
effectiveness of the institution in regarding the profit which they have create by applying capital
in better area. In 2016, return on capital employed of Dalata was 4.98, it was 5.82 in 2015.
Return on capital employed
2015 2016
5.82 4.98
Return on net assets: In 2016, this ratio of Dalata was 3.78, it was 0.04 points more then last
year. This tells that utilisation of fixed assets are bing done along with working capital in much
more effective from the last year in comparison.
Return on net assets
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2015 2016
3.74 3.78
Net profit ratio: 12.02 – 2016, 9.58 – 2015. This kind of ratio is identified by divisional up the
net income from net sales (Spenceley, 2012). Net profit of Dalata has been registered of 12.02 in
2016 and thus it was far more better then 2015 ratio which was 9.58.
Net profit ratio
2015 2016
9.58 12.02
Stock turnover ratio: 69.40 – 2016, 89.50 – 2015. This type of ratio majorly states regarding the
sold and replaced stock (Spencer and Zembani, 2011). In 2015, this ratio was approx 89.5 and
69.40 in 2016. These illustration are sedate and there is broad range of amended.
Stock turnover ratio
2015 2016
89.50 69.40
TASK 4
4.1 Analyse distribution and sources of funding for capital projects in travel and tourism sector
To be Covered in Leaflet
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CONCLUSION
From the above report it can be concluded that travel and tourism sector is growing on
rapid speed and thus has been contributing in economical and social factors. Finance and funding
is an essential part of this sector as it provides assistance in minimising up the barriers which are
being faced by the company. This in turn allows them to allocate the resources in better manner
and thus provide effective funding to the various process and operations in order to attain the
aims and objectives of the firm in better and effective manner.
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REFERENCES
Books and Journals
Buhalis, D. and Darcy, S. eds., 2011. Accessible tourism: Concepts and issues (Vol. 45).
Channel View Publications.
Choi, H.C. and Turk, E.S., 2011. Sustainability indicators for managing community tourism. In
Quality-of-life community indicators for parks, recreation and tourism management (pp.
115-140). Springer, Dordrecht.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor & Francis.
Henderson, J. C., 2010. Sharia-compliant hotels. Tourism and Hospitality Research. 10(3).
pp.246-254.
Heung, V. C., Kucukusta, D. and Song, H., 2011. Medical tourism development in Hong Kong:
An assessment of the barriers. Tourism Management. 32(5). pp.995-1005.
Nielsen, H. and Spenceley, A., 2011. The success of tourism in Rwanda: Gorillas and more. Yes
Africa Can: Success Stories from a Dynamic Continent. pp.231-249.
Papatheodorou, A., Rosselló, J. and Xiao, H., 2010. Global economic crisis and tourism:
Consequences and perspectives. Journal of Travel Research. 49(1). pp.39-45.
Pike, S., 2012. Destination marketing. Routledge.
Pocock, N. S. and Phua, K. H., 2011. Medical tourism and policy implications for health
systems: a conceptual framework from a comparative study of Thailand, Singapore and
Malaysia. Globalization and health. 7(1). p.12.
Ritchie, J. B., Amaya Molinar, C. M. and Frechtling, D. C., 2010. Impacts of the world recession
and economic crisis on tourism: North America. Journal of Travel Research. 49(1).
pp.5-15.
Spenceley, A. ed., 2012. Responsible tourism: Critical issues for conservation and development.
Routledge.
Spencer, J.P. and Zembani, P., 2011. An analysis of a national strategic framework to promote
tourism, leisure, sport and recreation in South Africa: tourism, leisure, sport and
recreation. African Journal for Physical Health Education, Recreation and Dance.
17(2). pp.201-218.
Online
REPORTS, RESULTS AND PRESENTATIONS. 2018. [Online]. Available through;
<http://dalatahotelgroup.com/investors/reports-and-presentations/?date=2017>.