Finance & Funding in the Travel and Tourism Sector: A Report
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This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, focusing on Akaglo Tours Company (ATC) as a case study. It examines the concept of Cost-Volume-Profit (CVP) analysis and its importance in financial management, analyzes various pricing methods ATC can utilize, and identifies factors influencing the company's profitability, including tourism season, climate, political stability, and terrorism. Furthermore, the report explores different types of management accounting information applicable to ATC and assesses investment appraisal techniques for decision-making. A financial statement analysis of a travel and tourism company using profitability, liquidity, efficiency, and investment ratios is also included, along with an analysis of potential internal and external funding sources for a new hotel development. The report concludes with a calculation demonstrating how ATC can achieve a net profit of £100,000 on a holiday trip for 90 tourists by increasing the number of units.

Finance and funding in the travel and tourism sector
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Table of Contents
Introduction........................................................................................................................3
Task 1................................................................................................................................4
1.1 Examine the concept of CVP analysis and explain its importance in the financial
management of a travel and tourism business such as ATC........................................4
1.2 Provide an analysis of pricing methods that ATC can use to determine the price to
charge each tourist on the trip. [M1]...............................................................................6
1.3 Analyse the factors that will influence the profit ATC will earn on the holiday trip.
[D1].................................................................................................................................8
Task 2..............................................................................................................................11
2.1 Explain the different types of management accounting information that could be
used in ATC..................................................................................................................11
2.2 Assess the use of investment appraisal techniques as decision-making tools using
an example from ATC or other relevant company.......................................................13
Task 3..............................................................................................................................15
3.1 Download the main financial statements of any travel and tourism company and
interpret the financial statements using appropriate ratios for profitability, liquidity,
efficiency, and investment. [M3, D2, D3]......................................................................15
Task 4..............................................................................................................................19
4.1 Analyse the sources of funding, both internal and external the company can
obtain in developing the new hotel...............................................................................19
Conclusion.......................................................................................................................20
References.......................................................................................................................21
2
Introduction........................................................................................................................3
Task 1................................................................................................................................4
1.1 Examine the concept of CVP analysis and explain its importance in the financial
management of a travel and tourism business such as ATC........................................4
1.2 Provide an analysis of pricing methods that ATC can use to determine the price to
charge each tourist on the trip. [M1]...............................................................................6
1.3 Analyse the factors that will influence the profit ATC will earn on the holiday trip.
[D1].................................................................................................................................8
Task 2..............................................................................................................................11
2.1 Explain the different types of management accounting information that could be
used in ATC..................................................................................................................11
2.2 Assess the use of investment appraisal techniques as decision-making tools using
an example from ATC or other relevant company.......................................................13
Task 3..............................................................................................................................15
3.1 Download the main financial statements of any travel and tourism company and
interpret the financial statements using appropriate ratios for profitability, liquidity,
efficiency, and investment. [M3, D2, D3]......................................................................15
Task 4..............................................................................................................................19
4.1 Analyse the sources of funding, both internal and external the company can
obtain in developing the new hotel...............................................................................19
Conclusion.......................................................................................................................20
References.......................................................................................................................21
2

Introduction
This unit of Finance and Funding in the Travel and Tourism Sector focuses on the
learners to gain the knowledge about the cost volume profit analysis. It also includes the
significance of cost volume profit (CVP) in the financial management of tourism and
travel association such as Akaglo Tours Company. This unit also includes the analysis
of various pricing methods which gets used in the Akaglo Tours Company for
determining the rates for charging to each and every traveler on the tour. Various
approaches to study for analysing an appropriate pricing method have also discussed in
the study in an attractive manner. Some of those factors which highly influence the
profitability of Akaglo Tours Company have also taken place herein. Calculation of profit
in organising a tour for around 90 tourists has also been included which greatly helps in
understanding the about the assumed profits and revenues.
3
This unit of Finance and Funding in the Travel and Tourism Sector focuses on the
learners to gain the knowledge about the cost volume profit analysis. It also includes the
significance of cost volume profit (CVP) in the financial management of tourism and
travel association such as Akaglo Tours Company. This unit also includes the analysis
of various pricing methods which gets used in the Akaglo Tours Company for
determining the rates for charging to each and every traveler on the tour. Various
approaches to study for analysing an appropriate pricing method have also discussed in
the study in an attractive manner. Some of those factors which highly influence the
profitability of Akaglo Tours Company have also taken place herein. Calculation of profit
in organising a tour for around 90 tourists has also been included which greatly helps in
understanding the about the assumed profits and revenues.
3
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Task 1
1.1 Examine the concept of CVP analysis and explain its importance in the
financial management of a travel and tourism business such as ATC.
It is well known that the financial management is connected with the deployment and
arrangements of various kinds of funds which helps in the functioning of tourism and
travel business such as Akaglo Tours Company. The cost gets explained by the total of
various expenses or expenditures which get included in the business activities for
producing the services and good in an efficient manner. In order to meet the customers’
needs and requirements, it is importantly required to maintain the cost of the services
and products in an efficient manner. It helps in the better functioning of the business
activities and takes the business to the top. Various kind costs take place herein such
as fixed cost, direct cost, variable cost, indirect cost, and tec.
Fixed cost is known as the one which gets paid for the activity which remains
unchanged for each and every activity related to the business. Depreciation, rent
amount is the example of it
According to Boskov, et. al., (2016), the cost which actually gets paid for buying the
material, expenses labor is known as the direct cost.
The cost which is basically getting include in some overhead such as property rent,
energy cost, cleaning cost is well known as Indirect Cost.
The cost which gets increased with the increment of activity level like material cost,
wages and etc. get to include the Variable cost (Boskov, et. al., 2016).
There are so many techniques or analysis that gets included in the process of the
business for making appropriate decisions. Break-even analysis & cost volume profit
analysis are the most important and popular techniques which get used in the business
of Akaglo Tours Company. Cost volume profit analysis helps in increasing the efficiency
of the business in various ways.
Cost Volume Profit Analysis- According to Agba, et. al., (2017), this analysis gets
used in the business of Akaglo Tours Company for taking the effective decisions which
4
1.1 Examine the concept of CVP analysis and explain its importance in the
financial management of a travel and tourism business such as ATC.
It is well known that the financial management is connected with the deployment and
arrangements of various kinds of funds which helps in the functioning of tourism and
travel business such as Akaglo Tours Company. The cost gets explained by the total of
various expenses or expenditures which get included in the business activities for
producing the services and good in an efficient manner. In order to meet the customers’
needs and requirements, it is importantly required to maintain the cost of the services
and products in an efficient manner. It helps in the better functioning of the business
activities and takes the business to the top. Various kind costs take place herein such
as fixed cost, direct cost, variable cost, indirect cost, and tec.
Fixed cost is known as the one which gets paid for the activity which remains
unchanged for each and every activity related to the business. Depreciation, rent
amount is the example of it
According to Boskov, et. al., (2016), the cost which actually gets paid for buying the
material, expenses labor is known as the direct cost.
The cost which is basically getting include in some overhead such as property rent,
energy cost, cleaning cost is well known as Indirect Cost.
The cost which gets increased with the increment of activity level like material cost,
wages and etc. get to include the Variable cost (Boskov, et. al., 2016).
There are so many techniques or analysis that gets included in the process of the
business for making appropriate decisions. Break-even analysis & cost volume profit
analysis are the most important and popular techniques which get used in the business
of Akaglo Tours Company. Cost volume profit analysis helps in increasing the efficiency
of the business in various ways.
Cost Volume Profit Analysis- According to Agba, et. al., (2017), this analysis gets
used in the business of Akaglo Tours Company for taking the effective decisions which
4
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are related with the profit & cost volume for the success of the business. This analysis
greatly helps the business in increasing the number of sales in an effective manner.
Increased number of sales helps in generating the desired amount of revenue and profit
efficiently. As same it also helps in reducing all those risk factors which are related to
the cost or profit in any manner (Agba, et. al., 2017).
According to Vanhove (2017), the cost volume profit analysis greatly contributes in
finding the actual cost and the analysis of the capabilities of Akaglo Tours Company in
producing the services and goods in the perfect time frame. There are so many benefits
of using the cost volume analysis of profit by the Akaglo Tours Company as it helps in
controlling the various activities of the business in an attractive manner. It also helps in
taking the better decisions for the success of the business. As same it plays a vital role
in fixing the actual prices of products and services and in forecasting as well (Vanhove,
2017).
5
greatly helps the business in increasing the number of sales in an effective manner.
Increased number of sales helps in generating the desired amount of revenue and profit
efficiently. As same it also helps in reducing all those risk factors which are related to
the cost or profit in any manner (Agba, et. al., 2017).
According to Vanhove (2017), the cost volume profit analysis greatly contributes in
finding the actual cost and the analysis of the capabilities of Akaglo Tours Company in
producing the services and goods in the perfect time frame. There are so many benefits
of using the cost volume analysis of profit by the Akaglo Tours Company as it helps in
controlling the various activities of the business in an attractive manner. It also helps in
taking the better decisions for the success of the business. As same it plays a vital role
in fixing the actual prices of products and services and in forecasting as well (Vanhove,
2017).
5

1.2 Provide an analysis of pricing methods that ATC can use to determine the
price to charge each tourist on the trip. [M1]
There are so many pricing methods which actually get used in the tourism and travel
business of Akaglo Tours. The pricing methods basically get used in for fixing the
prices of services and products which is getting purchased by the customers. It focuses
on that prices which are getting paid by the consumers so that the association can
attain the excellent level of profit. Some of the pricing methods which help the
businesses for setting the prices are well discussed below-
Skimming Pricing Method- According to CIOCHINĂ (2017), the managers or leaders
of the market follows the skimming pricing method in the Akaglo Tours Company for
setting the higher prices of their services and products. By the help of setting the higher
prices, it gets easier for the association to recover all the incurred cost, as because the
higher profit includes an ample number of revenues and profits in the business. The
skimming pricing method greatly helps in recovering their actual cost in the shorter
period of time and takes the business on top with higher levels of profit in the
competitive market (CIOCHINĂ, 2017).
Cost-plus pricing method- According to Boskov, et. al., (2016), the association of
travel and tourism uses this pricing method to set the prices by including the fixed cost
and variable cost of products and services. After adding the fixed & variable cost the
leaders of the association adds some more amount for increasing the level of profit by
selling them. By the use of cost-plus pricing method the managers and leaders of the
Akaglo Tours Company set the reasonable prices for their services and products so that
they can earn the adequate and perfect level of revenues and profits as well (Boskov,
et. al., 2016).
Per Person Pricing Method- According to Agba, et. al., (2014), this method gets
followed by some of the new entrants for evaluating the current trend of the market.
After finding out the current trend they tend to set the prices of products and services
according to the situation so that they can facilitate the customers in an appropriate
manner. In this method, the associations make charges according to the number of
6
price to charge each tourist on the trip. [M1]
There are so many pricing methods which actually get used in the tourism and travel
business of Akaglo Tours. The pricing methods basically get used in for fixing the
prices of services and products which is getting purchased by the customers. It focuses
on that prices which are getting paid by the consumers so that the association can
attain the excellent level of profit. Some of the pricing methods which help the
businesses for setting the prices are well discussed below-
Skimming Pricing Method- According to CIOCHINĂ (2017), the managers or leaders
of the market follows the skimming pricing method in the Akaglo Tours Company for
setting the higher prices of their services and products. By the help of setting the higher
prices, it gets easier for the association to recover all the incurred cost, as because the
higher profit includes an ample number of revenues and profits in the business. The
skimming pricing method greatly helps in recovering their actual cost in the shorter
period of time and takes the business on top with higher levels of profit in the
competitive market (CIOCHINĂ, 2017).
Cost-plus pricing method- According to Boskov, et. al., (2016), the association of
travel and tourism uses this pricing method to set the prices by including the fixed cost
and variable cost of products and services. After adding the fixed & variable cost the
leaders of the association adds some more amount for increasing the level of profit by
selling them. By the use of cost-plus pricing method the managers and leaders of the
Akaglo Tours Company set the reasonable prices for their services and products so that
they can earn the adequate and perfect level of revenues and profits as well (Boskov,
et. al., 2016).
Per Person Pricing Method- According to Agba, et. al., (2014), this method gets
followed by some of the new entrants for evaluating the current trend of the market.
After finding out the current trend they tend to set the prices of products and services
according to the situation so that they can facilitate the customers in an appropriate
manner. In this method, the associations make charges according to the number of
6
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travellers. The managers or leaders of the association segregates all the charges or
prices among the children, senior citizens, couples, students and etc which greatly
helps in attracting the so many tourists towards the activities of the business. The
process helps in increasing the efficiency of the business in an effective manner (Agba,
et. al., 2014).
Penetration Pricing Method- According to Vogel (2014), this method of pricing gets
followed by some of the small association as it helps in setting up the low fares and
prices for facilitating the services and products to their customers. The lower rates
attract so many customers towards the services and products which greatly contribute
to increasing the number of sales. However it generates less number of profits but
because of a higher number of sales, they become able to earn the higher level of
revenue or profit (Vogel, 2014).
7
prices among the children, senior citizens, couples, students and etc which greatly
helps in attracting the so many tourists towards the activities of the business. The
process helps in increasing the efficiency of the business in an effective manner (Agba,
et. al., 2014).
Penetration Pricing Method- According to Vogel (2014), this method of pricing gets
followed by some of the small association as it helps in setting up the low fares and
prices for facilitating the services and products to their customers. The lower rates
attract so many customers towards the services and products which greatly contribute
to increasing the number of sales. However it generates less number of profits but
because of a higher number of sales, they become able to earn the higher level of
revenue or profit (Vogel, 2014).
7
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1.3 Analyse the factors that will influence the profit ATC will earn on the holiday
trip. [D1]
According to Mirza-Davies (2015), there are various factors which influence the profit for
tourism and travel business in Akaglo Tours Company. Some of those factors are well
discussed below-
Season of Tourism – In the peak times the tourism and travel business earn a higher
level of revenues and profits by the customers. The associations include various
business activities so that they can meet the customers’ needs and expectations in a
successful manner. They try their best for meeting their other needs, requirements, and
expenditure of the business as well. The increased number of tourist greatly helps in
expanding the business at next level. This is how the season of tourism greatly
influences the capacity of earning profit to the Akaglo Tours Company. As same it
affects the profit level of the business in an attractive manner (Mirza-Davies, 2015).
Climate- According to Ireland (2015), it is well known that people tend to visits only
those places which are perfect and attractive in terms of climate. The places which
follow the good climate and pleasant weather forecast highly attract a lot of customers
for visiting which helps the tourism industry in such a great manner for earning higher
amount of profits. As same, the bad weather or climate conditions affect the tourism
industry in such a negative manner in terms of success (Ireland, 2015).
Political Stability-It has been observed that people are more likely to visits those
places which carry the excellent political stability. The places, states or countries which
are quite disturbed in terms of political stability gets less visited by the people which
influence the success of the Akaglo Tours Company in a negative manner. At the other
hand positive situation of political stability helps in attracting the lot of customers which
highly contributes to the success of the business. Instability of political areas becomes
unable to finalise their actual prices of products and services which takes the business
into the situation of loss.
Terrorism- According to Becker (2016), it is the most important factor which highly
influences the business in either negative or positive manner. The places which are
8
trip. [D1]
According to Mirza-Davies (2015), there are various factors which influence the profit for
tourism and travel business in Akaglo Tours Company. Some of those factors are well
discussed below-
Season of Tourism – In the peak times the tourism and travel business earn a higher
level of revenues and profits by the customers. The associations include various
business activities so that they can meet the customers’ needs and expectations in a
successful manner. They try their best for meeting their other needs, requirements, and
expenditure of the business as well. The increased number of tourist greatly helps in
expanding the business at next level. This is how the season of tourism greatly
influences the capacity of earning profit to the Akaglo Tours Company. As same it
affects the profit level of the business in an attractive manner (Mirza-Davies, 2015).
Climate- According to Ireland (2015), it is well known that people tend to visits only
those places which are perfect and attractive in terms of climate. The places which
follow the good climate and pleasant weather forecast highly attract a lot of customers
for visiting which helps the tourism industry in such a great manner for earning higher
amount of profits. As same, the bad weather or climate conditions affect the tourism
industry in such a negative manner in terms of success (Ireland, 2015).
Political Stability-It has been observed that people are more likely to visits those
places which carry the excellent political stability. The places, states or countries which
are quite disturbed in terms of political stability gets less visited by the people which
influence the success of the Akaglo Tours Company in a negative manner. At the other
hand positive situation of political stability helps in attracting the lot of customers which
highly contributes to the success of the business. Instability of political areas becomes
unable to finalise their actual prices of products and services which takes the business
into the situation of loss.
Terrorism- According to Becker (2016), it is the most important factor which highly
influences the business in either negative or positive manner. The places which are
8

covered by the terrorist or terrorism earn less amount of profit. The increase the
terrorism affects the tourism activities which reduces the profits of the business. At the
other hand, the places which are less affected by the terrorism and terrorists get highly
visited by the tourists and increase the level of profit in the business of tourism (Becker,
2016).
For the viability of holiday trip for around 90 tourist’s books to go on the trip, the
calculation is counted below. It also includes the justification for earning the profit of at
least £ 100,000. In this calculation the net profit has been calculated including the cruise
yatech and beach chalets and meal charges as well. It helps in understanding the
overall expenses of conducting the tour in an appropriate manner.
Net profit which will be achieved
Particulars Particulars Amount
Revenue 7500*90 675000
Crusie yacht and beach chalets 5,00,000 -5,00,000
Meal charges 90*1250 -112500
Net profit 62500
To achieve net profit of £100,000, it need to increase
number of units by 16
Particulars Particulars Amount
9
terrorism affects the tourism activities which reduces the profits of the business. At the
other hand, the places which are less affected by the terrorism and terrorists get highly
visited by the tourists and increase the level of profit in the business of tourism (Becker,
2016).
For the viability of holiday trip for around 90 tourist’s books to go on the trip, the
calculation is counted below. It also includes the justification for earning the profit of at
least £ 100,000. In this calculation the net profit has been calculated including the cruise
yatech and beach chalets and meal charges as well. It helps in understanding the
overall expenses of conducting the tour in an appropriate manner.
Net profit which will be achieved
Particulars Particulars Amount
Revenue 7500*90 675000
Crusie yacht and beach chalets 5,00,000 -5,00,000
Meal charges 90*1250 -112500
Net profit 62500
To achieve net profit of £100,000, it need to increase
number of units by 16
Particulars Particulars Amount
9
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Revenue 7500*96 720000
Crusie yacht and beach chalets -500000
Meal charges 96*1250 -120000
Net profit 100000
Contribution per unit Sales-variable cost
6250
Break even unit Fixed cost/ contribution per unit
80
Number of units required to achieve profits of
100,000
Profit required/ contribution per
unit
16
This calculation helps in understanding that the revenue which will get achieved in the
business will be £ 675000. It will include the net profit of £62500.As same for increasing
the numbers of units by 16 the revenue amount will be around £720000 wherein the net
10
Crusie yacht and beach chalets -500000
Meal charges 96*1250 -120000
Net profit 100000
Contribution per unit Sales-variable cost
6250
Break even unit Fixed cost/ contribution per unit
80
Number of units required to achieve profits of
100,000
Profit required/ contribution per
unit
16
This calculation helps in understanding that the revenue which will get achieved in the
business will be £ 675000. It will include the net profit of £62500.As same for increasing
the numbers of units by 16 the revenue amount will be around £720000 wherein the net
10
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profit will be counted as £ 100000. It will include the sales variable cost of 6250 with the
breakeven point of 80 as contribution per unit.
11
breakeven point of 80 as contribution per unit.
11

Task 2
2.1 Explain the different types of management accounting information that could
be used in ATC.
It has been very well observed that the accounting information plays an imperative role
in all the aspects of enhancing the performance of the business. The management
accounting helps in forecasting the actual revenues and preparations of budgets for the
betterment of the association. The business of Akaglo Tours uses the management
accounting information to perform efficiently. The management accounting information
gets considers as one of the best tools which get used in the process of decision
making for gathering or collecting the required data from various departments. The
adequate information which gets collected by the management accounting helps the
management for taking the effective decisions. It also collates the data for the
respective users which becomes so efficient in determining the associational
effectiveness and efficiency. There are various types of management accounting
information which helps the business attractively; some of those are as follows-
Traditional cost accounting- According to Vogel (2016), this process helps in
allocating the actual cost of the various products which are based on the raw material,
labor, overhead expenses and etc. As same it also helps in finding out the actual cost of
all these.
Lean Accounting- It is known as one of the most popular methods or process which
greatly helps in reducing the prices and costs by eliminating all the wastage so that
business can reach on top by speeding up the various processes and activities. It also
helps in measuring and reducing the various kinds of errors from the business (Vogel,
2016).
Transfer Pricing – According to Lee, et. al., (2017), it is known as the unit of
association charges or prices of any kind of goods and services. It helps the association
in reducing production cost and increasing the sales.
12
2.1 Explain the different types of management accounting information that could
be used in ATC.
It has been very well observed that the accounting information plays an imperative role
in all the aspects of enhancing the performance of the business. The management
accounting helps in forecasting the actual revenues and preparations of budgets for the
betterment of the association. The business of Akaglo Tours uses the management
accounting information to perform efficiently. The management accounting information
gets considers as one of the best tools which get used in the process of decision
making for gathering or collecting the required data from various departments. The
adequate information which gets collected by the management accounting helps the
management for taking the effective decisions. It also collates the data for the
respective users which becomes so efficient in determining the associational
effectiveness and efficiency. There are various types of management accounting
information which helps the business attractively; some of those are as follows-
Traditional cost accounting- According to Vogel (2016), this process helps in
allocating the actual cost of the various products which are based on the raw material,
labor, overhead expenses and etc. As same it also helps in finding out the actual cost of
all these.
Lean Accounting- It is known as one of the most popular methods or process which
greatly helps in reducing the prices and costs by eliminating all the wastage so that
business can reach on top by speeding up the various processes and activities. It also
helps in measuring and reducing the various kinds of errors from the business (Vogel,
2016).
Transfer Pricing – According to Lee, et. al., (2017), it is known as the unit of
association charges or prices of any kind of goods and services. It helps the association
in reducing production cost and increasing the sales.
12
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