Strategic Finance and Funding in the Travel and Tourism Industry

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Added on 2024/07/29

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This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, utilizing case studies of Carnival Corporation & plc and Dalata Hotel Group plc. It explores the importance of cost and volume in financial management, analyzes pricing methods and factors influencing profit, and examines different types of management accounting information used for decision-making. The report also interprets financial accounts of Dalata Hotel Group plc, analyzes sources and distribution of funding for capital projects, and discusses the interrelation between cost, volume, and profit through CVP analysis. External factors such as political, economic, and environmental conditions, along with internal factors like staff efficiency and cost of services, are considered for their impact on profitability.

Finance and Funding in the Travel and
Tourism Sector
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Table of Contents
Introduction:.................................................................................................................................... 3
Task 1...............................................................................................................................................4
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...................................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.......................................8
P1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc. Cruise brands as your case study..................................................................9
Task 2.............................................................................................................................................11
P2.1 explains different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc. as your case study.....................11
P2.2 assesses the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc..............................................................................................................17
Task3..............................................................................................................................................25
3.1 Interpret financial accounts of Dalata Hotel Group plc. for the year ended 31st December
2017 showing at least two years of performance (for example comparing 2017 to 2016)........25
Task 4.............................................................................................................................................29
4.1 analyze sources and distribution of funding for the development of capital projects
associated with tourism.............................................................................................................. 29
Conclusion:.................................................................................................................................... 31
References......................................................................................................................................32
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Introduction:
In the changing environment, there is the increasing scope for the tourism and it is required that
it shall be managed in an appropriate manner. There will need to have the understanding of
various aspects which are involved in this. For that, this report is being prepared in which the
cost volume relation will be discussed and also the factors which are affecting the business will
be considered. There will be an evaluation of the strategies by which price will be set. Then the
management accounting information and systems will be undertaken by which decisions will be
made. There will be the calculation of the ratios by which the evaluation of the performance of
Dalata will be made. The last part will be concentrating on the capital projects and the sources
which will be used for their funding.
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Task 1
Report:
Introduction:
This report will be covering all the elements of the cost and the CVP analysis will be undertaken.
There will be the identification of the methods which will be used for price setting and also the
factors which impact the profitability of the business will be covered.
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
The business undertakes various activities and in that cost will be incurred and so it is required
that all the components which are related to it shall be understood and so that is provided below:
Cost: The operations which will be carried out at the carnival corporation will be requiring the
cost to be incurred. In that, there will be various types which will be involved such as the direct
and the indirect cost. The ones which will be incurred in relation to the production in a direct
manner will be covered in direct cost such as the charges of the accommodation and food which
is supplied to the tourist and the cost which is indirectly incurred for the activities will be an
indirect cost. The example of this is the other overheads which are incurred such as the cost of
the fuel and other facilities (Novák and Popesko, 2014). There will be two elements of all the
costs and they are variable and foxed and the further classification will be made in accordance
with that. For that calculation of the total cost they will be used and the formula that can be used
for the same is as follows:
Total cost = Total Fixed cost + (Variable cost per unit * Number of units)
Volume: the total quantity of the activities which is undertaken in any business is identified as
the volume. There will be aa number of the products for the manufacturing concern which are
sold and by which revenue is earned. As the company in the given case is involved in tourism
business so that volume here will be determined on the basis of the number of tourists which
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avail the services of a carnival. That will be in units and to convert it in values it will be needed
that they shall be multiplied with the value which is charged from them for the facilities that are
provided. This will be calculated by the equation which is provided below:
Revenue/Volume = Sales price per visitor * Number of visitors
The volume in the carnival is also represented in the report which has been made. There are
various aspects which are provided in this. The revenue and the number of the passengers which
are carried by the company have been provided in this for various periods.
Profits: The Company in any sector is required to maximize the profits and this is the main aim.
For that, there is the need to maintain the proper revenue and the cost which is incurred in
relation to it. There is the need to calculate it in the proper manner and for that, the expenses will
have to be deducted from the revenue which is made so that net amount which is earned is
identified (Moaveni, 2014). The same is done by the carnival and it made the income statement
in which the consideration for all is provided and the profit of $2606 is made.
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In the graph above the relation which exists between the cost, volume and profit are analyzed
and this is done through the use of CVP analysis. It can be noted that there is the interrelation
which exists among them (Cutler, et. al., 2015). The cost and the volume are directly in relation
to one another and due to that, the cost will be raised with the increase in the volume which is
there in the carnival corporation. The profit will also be based on this as the profit will be more if
the cost will be less and the more cost will be resulting in fewer profits.
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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.
The pricing methods which will be used by the company are as follows:
Cost-based pricing: In the business, the cost is to be identified and in this method, they will be
used for the determination of price that will be set. The company is required to take this and then
add the amount of the profits which are to be made by them. By this, the final amount will be
ascertained and carnival will be charging that on the facilities which are provided by it.
Competition based pricing: In the travel sector it is very necessary that the competition shall be
dealt with in a proper manner. For that, the price which will be set will be by taking all the
competitive factors into consideration (De Toni, et. al., 2017). The price will be set at such an
amount which will be bringing the profits for the Carnival.
Value-based pricing: The services which are provided in the travel sector are of various quality
and in them, it is required that there shall be proper consideration of all the factors which are
included. If the best services will be provided then the amount that will be taken will also be
more and vice versa.
Demand-based pricing: The tourism sector is experiencing growth and in that the demand is
fluctuating. It has to be taken into account in the deciding of the price (Nagle and Müller, 2017).
The company will be analyzing the demand they will be charging the price from the customers.
Rival’s pricing: The policies and the practices which are used by the other rivals will be
considered and then the decision in respect of that will be made. By this, all the factors will be
analyzed and this will be making the proper conclusion and the price which will be selected will
be covering all of those areas by which the additional benefit on the other rival will be taken.
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P1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc. Cruise brands as your case study.
All of the factors by which the profits in the company are affected are as follows:
External factors:
Political factors: The political aspects of the environment will have to be considered and for
that, it is required that they shall be considered so that the negative impact of them can be
controlled. There will be a proper analysis of the laws and the regulations which are applicable
so that the company can deal with them in an effective manner.
Economic Factors: The position in the economy also affects the company. For that, there will
have to be proper evaluation and there is the need that they are considered (Ansari and Riasi,
2016). The recession will be making the profits to reduce as the adverse impact will be faced by
the company due to the reduction in demand and the situation will be reversed in the coming
period.
Environmental factors: The time at which the weather will be favorable will be the period in
which the profits of the company will be rising as the more visitors will be there. There will be a
requirement to consider this while making the decision and offer better facilities in peak season.
Internal factors:
Staff efficiency: The Company shall recruit such staffs which are efficient as then only they will
be dealing with the issues in the business in an effective manner (Dahmash, 2015). They can
resolve the conflicts and make the business a success by meeting the needs of the customers.
Cost of Services: The Company provides various services and the cost which is incurred on
them affects the profitability. This is because of the relationship that exists between the cost and
profit and this has been identified that it is inverse.
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Conclusion:
The report above explains all the aspects of the profits and cost and the relation among them.
With that, all of the factors that affect profits are also identified and the strategies that are used in
the setting of the price.
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Task 2
P2.1 explains 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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