Finance and Funding: Management Accounting in Travel & Tourism Sector

This report delves into the application of management accounting information within the travel and tourism sector, emphasizing its crucial role in financial management and strategic decision-making. It examines various types of management accounting information, including financial statements, variance analysis, budgets, forecasts, and Management Information Systems (MIS), illustrating their utility in managing costs and enhancing business performance. The report further discusses the use of this information for informed decision-making, covering aspects like cost-benefit analysis, inventory management, job cost reports, and cash flow evaluation. It highlights the relevance of cost accounting in controlling costs and maximizing revenue, ultimately benefiting companies like Merlin Entertainments Plc by enabling them to create effective tour packages and enhance customer satisfaction. The document concludes with references to relevant academic works, underscoring the importance of financial analysis and operational management in the travel industry.

Finance and Funding in the Travel and
Tourism Sector

Discussing types of management accounting information in
travel business
• Management accounting information is much useful for travel and tourism business in
order to manage costs in the best possible way.
• The various types of management accounting information are as follows-
• 1. Financial statements
• The financial statements are quite effective tool for management.
• It includes important statements like cash flow statement, balance sheet and income
statement.
• These financials are useful for various stakeholders to take enhanced decisions. This is
essentially required in the business as it help them to analyse potential of business.
• Merlin Entertainments Plc is required to perform well so that stakeholders may be
benefited.
• Thus, more investments may be made by them by seeking financial statements.
• Hence, financials of company are quite important tool of management accounting
information used by internal and external users.

Cont.
• 2. Variance analysis
• Variance analysis is useful for business so that improvements can be easily
done.
• Merlin Entertainments Plc makes targets for the future which are to be
attained.
• Actual results are obtained and then matched with budgeted one.
• If there exists variance, then corrective action is taken to remove the same.
• This technique of management accounting is known as variance analysis.
• With the help of variance analysis, Merlin Entertainments Plc is able to
take corrective action.
• This help to remove shortcomings and improvement is needed with much
ease.

Cont.
• 3. Budgets
• It is a financial goal which is made by the company in order to make
estimation.
• In this relation, estimation is made of expenditures to be incurred and
income to be earned.
• This help management to take enhanced decision by assessing requirement
of departments.
• This way departments are able to attain operational tasks in effective
manner.
• Thus, budgets guide business to attain desired goals in the best possible
way.
• Budgets are important so that costs may be controlled in a better way and
revenue can be maximised.

Cont.
• 4. Forecasts
• Forecasting is another useful type of management accounting
which is used to predict future.
• In simple words, future is predicted with the help of past trends of
organisation.
• Merlin Entertainments Plc may be benefited by forecasting sales and
business may be flourished.
• It help company to predict how many travellers will come in future and as
such, forecasting can be made.
• This will help organisation to have clear picture of attaining targeted
revenue and discharge activities in effective way.
• Thus, forecasting is quite essential to predict future trend of company in
the best possible manner.

Cont.
• 5. MIS (Management Information System)
• MIS is another useful tool for the company to maintain data with much
ease.
• Data is feed with the help of computer and related intelligent devices.
• Database is maintained of customers and management easily analyses the
same.
• This help it to take better and effective decisions in the best possible
manner.
• Merlin Entertainments Plc can utilise MIS to maintain database of
customers and decision-making can be easily done.
• Thus, MIS is modern tool for management to take effective decisions for
the betterment of company.

Use of management accounting information for
decision-making
• Management accounting information is relevant for Merlin Entertainments
Plc to take decisions.
• This will help company to analyse financial position of company and aids
in decision-making in the best possible way.
• This information is helpful for attaining cost benefit analysis. This means
that organisation is able to quote price with reference to benefit to be
attained.
• This implies that business is able to make revenue in the best possible
manner.
• Moreover, various costs such as advertising and related promotional costs
that are required to attain travellers' attention is achieved.
• It can be said that management accounting information is quite useful for
making enhanced decisions.

Cont.
• There are various reports which are prepared and imparted to management.
• It includes inventory management and job cost report.
• Inventory management report is maintained in order to initiate control over
the same.
• This is required so that wastage may be reduced up to high extent.
• Merlin Entertainments Plc is required to maintain inventory level in
effective way.
• This will help to eradicate surplus quantum in the best possible way.
• It will help company to maintain desired level of stock and that too with
reduced wastage quite effectually.

Cont.
• This is important as surplus quantity will inject handling expenditures and more
costs will be increased.
• Thus, inventory management report help manager of Merlin Entertainments Plc to
make enhanced decisions.
• Moreover, job cost report is another useful tool for management to track expenses
incurred on various jobs.
• This help business to analyse costs incurred on such jobs.
• Thus, unproductive jobs are easily extracted in order to cut -down expenses in the
best possible way.
• Merlin Entertainments Plc can assess unproductive jobs and reduce costs so that
funds may be utilised in productive ones.
• Thus, it helps management to decrease expenses in the best possible manner.

Cont.
• Cash inflows and outflows are also evaluated in order to seek
income earned and expenses incurred.
• This help management to assess liquid position of firm in
order to maximise cash position.
• This will help business to pay-off liabilities with much ease in
timely manner.
• Budgeting plays key role in estimating sales of Merlin
Entertainments Plc in the future.
• Consecutively, expenses to be incurred are also assessed in the
best possible way.
• Internal decisions can be made by the company in effective
manner.

Cont.
• In relation to this, cost accounting is much relevant to Merlin Entertainments
Plc to control costs.
• It is one of the essential tool which is used to manage costs.
• Controlling costs help business to maximise revenue quite effectually.
• Revenues are judged by the company so that new ways may be adopted to
increase the same with much ease.
• This is essentially required to control costs in the business so that maximum
revenue can be attained quite effectually.
• Expenses are required to be controlled in effective manner in order to achieve
desired results.
• This will help business to utilise resources with mich ease. Moreover, by
reducing costs, revenue may be maximised.
• This will impart benefits to Merlin Entertainments Plc to make effective tour
packages with reference to preferences of customers.
• This will enhance their level of satisfaction up to high extent.

REFERENCES
Robinson, P., Fallon, P., Cameron, H. and Crotts, J.C. eds., 2016. Operations management in the
travel industry.CABI.
Vogel, H.L., 2016. Travel industry economics: A guide for financial analysis. Springer.
Johnson, M., Singh, A. J. and Ma, Q., 2015. The impact of authorization of the Travel Promotion
Act on hotel firm stock returns. Cornell Hospitality Quarterly. 56(1). pp.29-40.
Ray, S., 2015. Infrastructure finance and financial sector development.