Financial Analysis & Funding for Travel & Tourism Development

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, focusing on cost, volume, and profit management. It uses Carnival Corporation & plc as a case study to explain the importance of cost and volume in financial management, pricing methods, and factors influencing profit. The report also assesses the use of management accounting information as a decision-making tool, using Dalata Hotel Group plc as an example, and interprets their financial accounts for 2016, comparing it with 2015. Furthermore, it analyzes sources and distribution of funding for public and non-public tourism development, offering insights into capital project financing and distribution strategies. The report leverages financial statements and various accounting tools to provide informed decision-making strategies for businesses in the travel and tourism industry.

Finance and Funding in the Travel and Tourism
Sector
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Table of Contents
Introduction.................................................................................................................................................3
TASK 1.......................................................................................................................................................4
LO1- Understand the importance of costs, volume and profit for management decision making in travel
and tourism..................................................................................................................................................4
P1.1 explain the importance of costs and volume in financial management of travel and tourism
businesses using Carnival Corporation &plc as your case study..............................................................4
P1.2 analyse pricing methods used in the travel and tourism sector. You should use relevant examples
from different cruise brands of Carnival Corporation & plc....................................................................6
P1.3 analyze factors influencing profit for travel and tourism businesses using Carnival Corporation
&plc cruise brands as your case study.....................................................................................................7
Task2...........................................................................................................................................................8
LO2- Understand the use of management accounting information as a decision making tool in travel and
tourism businesses.......................................................................................................................................8
P2.1 explain different types of management accounting information that could be used in travel and
tourism businesses using Dalata Hotel Group plc as your case study......................................................8
P2.2 assess the use of management accounting information as a decision-making tool for Dalata Hotel
Group plc...............................................................................................................................................15
Task3.........................................................................................................................................................20
LO3 Be able to interpret financial accounts to assist decision making in travel and tourism businesses...20
3.1 interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December 2016
showing at least two years performance (for example comparing 2016 to 2015)..................................20
Task 4........................................................................................................................................................23
LO4 – Understand sources and distribution of funding for public and non-public tourism development. .23
4.1 analyse sources and distribution of funding for the development of capital projects associated with
tourism...................................................................................................................................................23
Conclusion.................................................................................................................................................29
References.................................................................................................................................................30
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Introduction
Finance is the major requirement of any business and it is necessary that it shall be managed in
the best possible manner. For that various analyses regarding the sources and the manner in
which allocation shall be made is to be done. In this report use of cost and profit in decision
making process. Also the manner in which management accounting information will be taken as
decision making tool. Financial statement will be analysed for all the company so that
performance can be evaluated. In this report presentation will be made and also leaflet will be
prepared for the better understanding.
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TASK 1
LO1- Understand the importance of costs, volume and profit for management
decision making in travel and tourism
Report:
Introduction:
Under this report the aspects related to cost, profit and volume will be discussed in respect of
Carnival Corporation &plc. That is one of the best travel companies. It is dealing in cruise brands
in various parts of world which includes Australia, North America and Europe. Also the pricing
methods and actors by which profits are affected will be discussed.
P1.1 explains the importance of costs and volume in financial management of travel
and tourism businesses using Carnival Corporation &plc. as your case study.
Carnival Corporation is one of the largest companies in terms of travel sector and is operating in
various parts. The main aim of this is to provide its customers with the best services. For this it is
needed that cost shall be spend so that all the operations are carried out in an effective manner. It
can be said that for the growth of business, cost is the main factor that shall be taken into
consideration (Macve, 2015). Whereas volume defines the amount that is needed in business so
finance measurement will be covered in this. In the given case cruise facility is provided by
carnival so the cost related to accommodation, food and other facilities will have to be incurred
by it. For the management of finance in proper manner it is required that proper cost and volume
analysis shall be carried out so that all the needs are met on time.
There are various tools which can be used for this purpose and they include:
 Break even analysis: this is required as breakeven is the point where the company will be
in no loss and no profit situation. It means at this point the cost that is incurred will be
recovered and profits will start to flow. So Carnival will have to do this in order to know
the amount that shall be spent and time in which it will be recovered (Bushman, 2014).
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 Economies of scale: This is the process by the help of which cost can be saved by
attaining an increment in the volume. So it can be said that if Carnival focuses on the
maximization of volume then its cost will be saved which is beneficial in long run.
So it can be said that with the help of all this cost and volume analysis Carnival Corporation can
attain various advantages in terms of financial management. This is because cost will be reduced
and y this profits will be increased and this will lead to opportunity for the business to grow
further (Seyidov and Adomaitiene, 2016). Also the decisions can be taken by the use of the data
related to cost which will be useful in investment management as comparison can be made and
can identify what will be trend in coming future for tourism sector.
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P1.2 analyse pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brands of Carnival Corporation & plc.
As the Carnival corporation is dealing in cruises so there will be price that will be charged from
the visitors and it is very important that it shall be fixed by use of appropriate method. Under that
it shall be noted that all the cost that have incurred whether they are variable or fixed shall be
taken into consideration. Some of the methods are as follows:
 Cost plus pricing: This is the model in which all the expenses or can say cost are added
and then the profit which is expected to it. By this the total amount to be charged is
determined. Under these factors such as status of visitors, market position will be evaluated.
 Seasonal pricing: This is the method which is most important in travel business because
seasons play relevant role in it. If the cruise is used by visitors in summers then the price at
that time will be fixed at higher rate than the one to be charged in non-peak seasons.
 Market-led pricing: under this market conditions, customer’s opinions and other factors
are considered for fixation of price. If there are other competitors whose services are taken by
customers then the price will be decided by taking all of that under consideration (Macve,
2015).
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P1.3 analyzes factors influencing profit for travel and tourism businesses using
Carnival Corporation &plc. cruise brands as your case study.
The profits that are made in travel sector depend highly on certain factors and some of them are
as follows:
 Political factors: This the factor under which all the government regulations are taken
into use. It shall be noted that the rules and laws which are made at the place of cruise are
complied with as then only profits can be maximized by attracting more customers.
 Competition: In travel sector there is high level of competition as new entrants are there
who offer new facilities and by that visitors are attracted by them. Thus by it profits are
highly affected (Elhaj and Barakeh, 2015). Carnival shall consider the market position of
competitors to maintain its profits.
 Environmental factors. This affects the profits as before travelling people consider
environmental conditions of that place and if they are not favorable then travel is not
considered. So by this profits are also affected.
Conclusion
From the report it can be said that cost and volume analysis shall be done to take important
decisions. Also manner in which prices are fixed is provided together with the factors which
affect the profitability of Carnival group.
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Task2
LO2- Understand the use of management accounting information as a
decision making tool in travel and tourism businesses
P2.1 explain different types of management accounting information that could be
used in travel and tourism businesses using Dalata Hotel Group plc as your case
study
Slide 1
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Slide 2
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Slide 3
The types of information system helps in presenting the adequate and timely information to the
management of the company and assist in efficient decision making processes.
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Slide 4
Financial statements are the documents that are required to be prepared by all the companies
in which all the transactions that took place within an year are recorded (Guinea, 2016). They
are mandatory and are to be made in specified format that is set by standards. The most
important among them are as follows:
Balance sheet: Under this all the assets and liabilities of the company are to be presented.
This is also known as statement of financial position.
Income statements: In this all the incomes and expenses which have been made during a
year are stated. By that the profits that are earned are identified.
Cash flow statement: All the transactions that include the use of cash are to be recorded
under this. This helps in knowing the manner in which cash has been allocated and also if
balance in beginning and end are reconciling with each other.
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Slide 5
Variance analysis is the process in which all the budgeted and actual figures are compared
with each other so that deviations can be calculated. By the use of this it is possible for the
company evaluate the performance of company.
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