UK College of Business: Finance and Funding in Travel and Tourism

This report delves into the financial aspects of the travel and tourism sector, focusing on cost and volume analysis, pricing techniques, and the interpretation of financial statements. The report examines the significance of cost and volume in financial management, exploring pricing strategies such as cost-based, demand-based, and competition-oriented pricing. It analyzes factors influencing profit, including currency rates, development, government support, travelling trends, and destinations. Case studies of Carnival Corporation Plc and Dalata Hotel Group plc are used to illustrate financial concepts and practices. The report also covers sources and allocation of funds for capital projects within the tourism sector, providing a comprehensive overview of financial management in the industry.

Finance and Funding in the
Travel and Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Significance of cost and volume in financial management of T&T business..................1
1.2 Pricing techniques which are implemented in travel and tourism sector.........................2
1.3 Analysis of factors influencing profit for travel and tourism business............................4
TASK 2 ...........................................................................................................................................6
Covered in PPT.......................................................................................................................6
TASK 3..........................................................................................................................................13
3.1 Interpretation of financial statements and accounts of Dalata hotel group....................13
TASK 4..........................................................................................................................................15
4.1 Sources and allocation of funds for the development of capital projects.......................15
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Finance is a major concern of every business which need to understand by managers and
other individual in an appropriate frame. Although, for every project, there is a need of fund
which constitutes better and effective working as well as accomplishment of targets (Guttentag,
2015). Finance and funding in travel and tourism is a major aspect of every business which need
to understand by every association whom working under such consent. This project is based on
Carnival Corporation Plc and Dalata Hotel Group plc which need some fund in order to improve
their working and operations. In such aspect, management need to understand the importance of
cost, volume and profit for management decision making. Along with this, there is a need to
understand the management accounting system as a decision making tool for both association so
that appropriate and effective funding lead to take place. Moreover business need to interpret
financial accounts properly which facilitate suitable judgement as well in order to gain
appropriate opportunities.
TASK 1
1.1 Significance of cost and volume in financial management of T&T business
Carnival corporation Plc: It is biggest travel association which is operating their
business in many locations (Tribe, 2015). For example: Europe, North America and so on. Along
with, they are dealing with more than ten global cruise line brands. They cater financial help to
those individuals who wants to travel distinctive destination. Additionally, they use many
marketing activities so that they will be able to get attention of numerous persons. In modern era,
sector of travel and tourist is very advantageous because now day many individuals want to visit
other places with distinctive aims. Henceforth, there are certain facets associated with finance
according to business of travel and tourism:
Cost: It is that amount which will incur at the time of booking of package. This is
foremost elements which has to be taken into under consideration by individual so that they will
plan their tour in an appropriate and efficient way. Therefore, firm will provide suitable trip
which comes under their budget. As a result, they will make their trip memorable and
experienced (Vanhove, 2017).
Volume: This is related to service quantity as well as expenditures which will present in
financial terms, need to be considered under this. It is basically connected to overall quantity of
those tickets which is purchased by people from Carnival association.
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Importance of costs: This is considered as main factor in the sector of travel and tourism.
If cost of company is much high then, this will provide impact to success as well as growth of an
organisation either in a direct or indirect manner (Veal, 2017). Entire things need to managed in
an appropriate manner; therefore, unnecessary mistakes will get decreased. Fundamental aim of
tour firm is to enhance their profits. For above stated purpose, they need to formulate some
strategies as well as policies so that they will be able to sell maximum packages to customers at
the time of season. Cost reduction: This is considered as the foremost element for each kind of company. By
reducing or eliminating unwanted cost from business process company will maintain
their revenues. This aids to improve image and market share of an enterprise at
marketplace (Castaño-Isaza and et. al., 2015). Decision making: It is must for an organisation to take best judgement for business as this
will assist them to cater advantage for longer period of time. As a result, they will
maintain their position at marketplace for longer period of time. Increasing performance of managers: If extra cost is saved by firm then, they will easily
save fund, which will help them to enlarge business operations. Thus, they will provide
their services at many other countries effectively (Adiyia and et. al., 2015).
Importance of volume: BEP analysis: This sort of process is utilized by company if their recent place at
marketplace is much effective as well as efficient. This is basically associated with entire
expenditures and in addition cost. It can occur operational balance; thus, Carnival firm is
trying to make an appropriate plan so that they will cover extra cost. Economical of scale: If sales of items and services get enhanced then, this will cater cost
advantages to company. Therefore, they will be easily overcome from variable cost per
unit due to synergies and operational efficiencies (Sawyer, 2015).
 Diseconomies of scale: As indicated by this phase, there is a circumstance under which
economic of scale is not operating by firm in an effective manner. This will occur
because of business size.
1.2 Pricing techniques which are implemented in travel and tourism sector
Each type of company needs to identify needs and wants of their customers so that they
will accomplish it within limited period of time. Therefore, there are many tour packages which
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developed by manager so that they will make experience of clients more effective (Hjalager,
2015). As persons are much sensitive; therefore, the choose those items which is benefits for
them for maximum period of time. Along with, employer has to divide market to satisfy each
kind of users appropriately. Policy of price will altered as per circumstance and time.
Organisation needs to provide effective packages to their customers so that they will be able to
make their journey more experienced or rememberable. Cost for some routes are fixed by
Carnival firm which is providing by them to their customers (Airey and et. al., 2015).
Thus, there are certain pricing methodologies which are mentioned as beneath:
Cost based pricing: This is much easier manner to evaluate price in an appropriate way.
This will be classified into some parts, which are stated as beneath:
Full cost pricing: This is collaboration of fixed as well as variable cost.
Direct cost pricing: It is related to cost of variable plus overall percentage of markup.
Cost plus pricing: This is considered as an effective pricing which is using by Carnival
firm so that they will easily improve their profits.
Skimming pricing: According to this, manager of company charge higher value from
clients at beginning of tour. This is basically adopted for those
individuals who belong to high class. For instance: International
stay.
Penetration pricing: As per this, company offers less price to clients as comparison to
rivals. Like: discounts.
Demand based pricing: According to this price of package is much associated with the
demand of clients. This is considered as more real in nature (Lunt, Horsfall and Hanefeld, 2016).
Competition oriented pricing: This is also called as market oriented pricing and it
includes some basic value which is charged by contenders from customers. This will comprise
Parity, premium and discounted pricing.
Product line pricing: This is basically related to the provided package which is much
associated with one another. Along with, planning cost of these trips are not much similar. This
will be high so that sufficient revenues will be gained by firm (Hingtgen and et. al., 2015). For
instance:
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Destination Cost (in Pounds)
Domestic location 90
National 285
International 550
Seasonal pricing: As indicated by this, price is charged by the Carnival organisation as
per season, for example: Summer pricing: At this duration, there are maximum number of individuals who visit to
other places with different aims. Thus, firm will alter prices of services which are
providing by them. Along with, they will enhance trip cost by giving some sort of
discount offers as it attracts many people towards them (Shahbaz and et. al., 2017).
 Winter pricing: According to this, many persons do not want to visit different
destinations due to high temperature. Thus, association has to choose price accordingly.
1.3 Analysis of factors influencing profit for travel and tourism business
Revenues of an organisation are basically associated with marketing activities as well as
trends. With assistance of this, they will gain attention of numerous individuals towards them.
Main income source of nation is tourist or traveller (Loh, 2015). They will get attracted towards
heritage and cultural places of country. It has been evaluated that activities and trends of
marketing very much changed the sector of travel or tourism.
Henceforth, there are certain components which will provide impact on the profits of
travel as well as tourism section:
Currency rates: Sector of travel and tourism is linked economy of country with other
nations. It has been seen that each nation is having their own currency. Along with, foreign
traveller's criteria is much high in industry of travel and tourism (Tourism information centre of
Paris, 2018). This get evaluated that rate of currency is highly depend on various factors, such as
rate of employment, fiscal deficit and GDP. In US, there is an enterprise named, Carnival
corporation and plc which is cruise based association. Dollar is utilized over there so that people
will do their financial transactions. Currency rate will fluctuate according to time; therefore, it is
not easy for firm to set revenues priorly (Tolkach and King, 2015).
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Development: If production as well as profits of company get improved then, this will
provide success and growth to them. This assists to render positive outcomes to them which will
help to be competent in marketplace. It has been evaluated that Carnival Cruise is collaboration
of two associations; one is Carnival Corporation and another is Carnival plc. They both are very
much capable to improve the quality of items and services. Along with this, they are having
some partnership agreements with many service companies as well as cruise control ships.
Enterprise is utilizing the latest and new tools as well as methods which help them to capture
attention of number of travellers towards them (Buckley and et. al., 2015).
Government support: Success and improvement of any country is highly associated with
regulatory bodies and authorities. With assistance of these, components aid to decrease the
complexity ratio and in addition, assist travellers to comprehend laws and regulations related to
tourist places. Thus, travel industry is linked with country's economy. In many aspects, ministry
body is running tourist boards which support finance and funding and thus, sustainability as well
as profits of travel and tourism sector will get enhanced. There are many sorts of session is
organised by regulatory body which will include, awareness programmes, marketing campaign
and many others. Additionally, some bills and budget are passed by government so that tourist
segment will get developed (Guttentag, 2015).
Travelling trends: Fundamentally, three elements are much helpful in determining trend
of tourism, such as tradition, customer and in addition culture. Each nation is having their own
culture and trends which are following by them. But, US is known for combination of multiple
customs as well as trends. Along with this, it is also popular for its western culture which helps
to pull attention of large number of travellers. This assists to improve the revenues of country
and promote industry of travel and tourism. In the United States, structure and theme of Carnival
Corporation Plc is designed according to their tradition and culture. Best and royal experience is
provided to tourists through cruise as well as deluxe ships. It has been evaluated that marketing
activities are affecting the trends of travel and tourism which will render a direct impact on
profits either in a direct or indirect manner (Tribe, 2015).
Locations and destinations: This factor plays a significant role to generate maximum
revenues as well as sustainability. There are various attractive destinations which capture the
attention of numerous individuals towards them such as Hollywood industry, luxurious hotels,
infrastructures, museums, Casinos and many others. It has been noticed that tourists select
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adventurous places and western culture on the priority basis. Instead of this, some spots are
popular due to royal weddings, events, meetings and so on. Therefore, government is supporting
country to maintain these destinations and heritage effectually (Vanhove, 2017).
TASK 2
Covered in PPT
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