A Comprehensive Report on Finance and Funding in Tourism Sector

This report provides a detailed analysis of finance and funding within the travel and tourism sector, focusing on Carnival Corporation and Plc as a case study. It examines the importance of costs and volume in financial management, analyzes pricing methods used in the industry, and identifies factors influencing profit for travel and tourism businesses. The report also explores different types of management accounting information and their use as decision-making tools, including forecasting, financial statements, and budgeting. Furthermore, it investigates sources and distribution of funding for capital projects associated with tourism, highlighting the impact of seasonal variations, current trends, and the political environment on profitability. Desklib offers a wealth of similar solved assignments and past papers for students seeking to deepen their understanding of business and finance.

FINANCE AND FUNDING
TRAVEL AND TOURISM
SECTOR

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P 1.1 Explain the importance of costs and volume in finance management of travel and
tourism businesses.......................................................................................................................1
P 1.2 Analyse pricing methods used in the travel and tourism sector.........................................2
P 1.3 Analyse factors influencing profit for travel and tourism businesses................................3
TASK 2............................................................................................................................................4
P 2.1 Explain different types of management accounting information that could be used in
travel and tourism businesses......................................................................................................4
P 2.2 Assess the use of management accounting information as a decision-making tool..........5
3.1 travel and tourism financial accounts....................................................................................5
4.1 analyse sources and distribution of funding for the development of capital projects
associated with tourism...............................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Finance and funding in hospitality business is most necessary terms which must be taken
in account of manager of organisation in proper way. Various financial management and
accounting approach can be utilised by business manager in order to managing finance activities
in business. In the report, the company has been selected which is Carnival Corporation and Plc,
which is UK based the largest hotel organisation. In addition to this, it can be said that, the report
will be discussed about importance of costs, volume in financial management in the hotel and
also analysis of pricing method used in travel and tourism sector. Different types of management
accounting information that can be used in the hotel and also management accounting
information for decision making tools. Apart from it, the investigation will also be discussed
about sources and distribution of funding for the development of capital projects associated with
the hotel.
TASK 1
P 1.1 Explain the importance of costs and volume in finance management of travel and tourism
businesses
In order to managing finance in Carnival Corporation and Plc, there are numbers of
costing and volume computing approaches are being used by its manager in case of reduction of
costing in the firm.
Importance of costing: This is one of the crucial element in the business as they provide
are using several types of costing in the business in order to examining proper costing of the firm
and apart from it, different types of costing is being used by the company for different-different
purpose in business (Airey and Chong, 2010).
Direct costs: Direct costing are those costing which is related products and services direct
occurs in Carnival Corporation and Plc , in case of functioning its various operational functions.
In the hotel some direct costing incurring which is, Direct labor, direct materials, commissions,
some rate and wages of employees. These are some essential direct costing which occurs at
workplace while various types of operational activities running in the hotel, its manager can use
managerial approached to cutting cost down in firm to gaining appropriate profit (Benson and
Henderson, 2011).
Indirect costing: These types of costing can be fixed and variable form. In Carnival
Corporation and Plc , some indirect costing are associated with its operational activities and
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indirect costing can be used for examining expenses of business activities. The hotel is bearing
indirect costing for such activities, advertising, computing, maintenance, security, supervision
etc. all these activities contain large amount of expenses for the firm. So its manager need to
computing it's at workplace by using managerial accounting systems.
Volume:
Break even analysis: Break even analysis is an effective approach which can be used by
Britannia business manager widely by production management and management accounting
terms in order to comparison of total variable costs to fixed costs for total sales revenue of the
business in order to determining the level of sales volume in the enterprise (Buckley, 2012). The
company professionals need to analyse different price levels relating to various levels of
demands to reaching to the break event point of the business, where the firm can gain desired
profit in industry.
P 1.2 Analyse pricing methods used in the travel and tourism sector
Market lead pricing: The company is using the costing method in order to analysing
pricing and also gaining proper profitability as well. The organisation has been set up a pricing in
specific hotel services, as per its standard so all other business also have to follow its standard
which does not provide opportunity to the company to let it down standard of pricing in market.
It helps them to meeting to their desired profitability in the market (Chaisawat, 2012).
Marginal costing: This cost is calculating by Carnival Corporation and Plc manager
where the company reaches to break even point. Marginal costing inclusion some items which is
associated to direct material costs, direct labour costs, direct expenses costs and variable
production overhead costs. All these costing can be included in computing various costs of
business in industry.
Return on investment: return on investment is a performance measure, used to evaluate
the efficiency of an investment or compare the efficiency if a numbers of different investment
(Dwyer, Forsyth and Dwyer, 2010). It can be said that, in the hotel, multiple numbers of
investors are investing on its various section, which can bring out appropriate amount of money
as per their proportion of investment.
Absorption costing:This is a managerial accounting cost method of expensing all costs
associated with manufacturing a practical product and it demands for basically adoption of
accounting principles in order to gaining proper issues in business. In this pricing statements,.
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All type of costing has been included which is associated with direct costs in producing a good
as the cost base.
Cost plus pricing: Costs plus pricing is one of the appropriate method to setting up the
pricing of goods and services. As per its approach, the hotel manager need to add up direct
material cost, direct labour cost and overhead costs for its various foods and accommodation
services in firm. So sufficient margin can be added in costing of several products.
P 1.3 Analyse factors influencing profit for travel and tourism businesses
Profit: Profit of a business can be defined as a form, in which total costs are deducted
from the total revenue, so profitability can be gained in business. Profit is a financial advantage
that benefit that is realised when the amount of revenue gained from a business activity exceeds
the expenses, costs and taxes needed to sustain the business activities (Fredman and Tyrväinen,
2010).
Seasonal variation: Seasonal variation affects the profitability of hospitality business in
industry, it has been seen that, many of hotels depends on sales of its various accommodation
and hotel services on some specific seasons. In case of Carnival Corporation and Plc , its
customer base increasing on some seasons in country. Mostly, in summer and winter time,
peoples loves to going outside and staying in hotel (Goswami, Mattoo and Sáez, eds., 2012). So
in these seasons the hotel customers comes in large volume which make impact on sales of
business accommodation services in market. So that's why company get extreme profitability on
seasons variations. In hotel demands of variety of services also boost up by its loyal regular
customers.
Current trends: Several types of current trends are celebrating by peoples of the country
in UK. So current trends plays vital role in order to increment in sales of hotel's accommodation
and facilities in industry. In UK different kinds of trends are generating and celebrating by
peoples of the nation. So some current trends such as, wedding ceremony, birthday party
business parties, religious festival. Christmas part etc. People chose unique location and places
where the celebration can be executed by peoples. So this factor also increasing the sales of the
business in market which boost up profit of hotel.
Political environment: Carnival Corporation and Plc is located in UK, where political
environment of the country has been changing frequently (Irshad, 2010). Various political parties
and organisations has been celebrating in the hotel by top political leaders and ministers in the
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industry. In addition to this, many other country's political leaders are arriving in the UK for
various political purpose. They arrive and stay in hotel and also use various types of hotels and
travelling facilities provided by the hotel. So it increases the sales of the firm in industry in
positive manner.
TASK 2
P 2.1 Explain different types of management accounting information that could be used in travel
and tourism businesses
In Carnival Corporation and Plc , its manager are using different kinds of management
accounting information system in case of determining and managing all financial terms in firm.
It assists the business manager to making focus on collecting several types of financial data in
the business in order to making appropriate and profitable business in the firm (Jucan and Jucan,
2013). Management accounting information comes in the form of financial ration, budget
forecasts, variance analysis and cost accounting at workplace.
Forecasting: All types of firms is needed to implementation of strategic planning in
order to stay competitive in market. This is the process of planing for future operation through
the use of forecasting in business. Forecasting is the planning for future operations through the
use of forecasting approach at workplace. This approach can be utilised by Carnival Corporation
and Plc manager to analysis of past revenue, sales and growth statistics and calculating out in
the future time period. Its manager need to analyse previous year data and as per its information,
they have to forecast for the future of the hotel profits and financial progress in industry.
Financial statements: Financial statements of Carnival Corporation and Plc can assist
its manager to identify the areas in which hotel is gaining less revenue and profit. Financial
statements can be used by the hotel managers for taking into account the all major financial
transaction which can assist them to identify those areas of entire financial transaction and
identify major sector in which company has been giving weaker performance (Kastarlak and
Barber, 2011). So as per financial assessment, they have to make decision in respect to gaining
sustainable growth in industry.
Budget:This is one of the appropriate financial terms which must be used by Carnival
Corporation and Plc manager in order to examination of budget for several types of business
functions. With the help of budgeting system, hotel financial department can distribution finance
among various business function such as, management, operational and accounting, human
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resource, production and marketing department etc. so profit standard can be set up as per
budgeting approach and organisation need to make efforts to gaining it within predetermined
financial period.
P 2.2 Assess the use of management accounting information as a decision-making tool
Management accounting information system can be used in business in order to making
proper decision in Carnival Corporation and Plc .
Investment: Various types of management accounting tools such as return on investment
and investment analysis approach can be used by the hotel manager in case of determining
proper amount of investment and also its appropriate proportion of return on investment. So it
assists the organisational manager to making decision about gaining desired profitability on
particular investment in the firm (McCabe, Minnaert and Diekmann, eds., 2011).
New product and services: Th business manager can make decision regarding to
launching new foods products and accommodation services in Carnival Corporation and Plc in
industry which can raise sales and revenue for the firm (Swarbrooke and Page, 2012). It can be
said that, the business manager need to formulate unique hotel products and services which can
boost up sales of the entity.
Raising capital: This approach also can be used by hotel managers in order to
overcoming form several types of financial issues in business. It can be said that, raising capital
can be used in the business in order to enhance criteria of business in respect to increment in
products and services of the business and also effective decision making (Witt, Brooke and
Buckley, 2013).
3.1 travel and tourism financial accounts
The travel and tourism financial accounts will include the better handling of the business
operations that will lay a very deep impact on the operations of a business organisation. The
better funding and management of financial resources will help in suitable rise in the
functionality and handling various business operations that will lay a very deep impact on the
travel and tourism sector. The effective assessment of cash flow, balance sheets, trading accounts
and account related to expenses and revenue generation will be taken in consideration. Other
than this, the balance sheet related to the operational expenses is been taken in consideration. To
measure the different financial factors, the return on net assets, capital invested, collection
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period, net profit percent, gross profit and stock turnover is been analysed, that is been practised
in travel and tourism sector (Becker, 2016).
The following of this approach will help in better handling of financial resources that will
impact the growth and development of cited enterprise. Besides this, the measuring of financial
performances will help in better handling of business operations that will help in suitable rise in
revenue generation of cited firm. Other than this, the assessment of financial account will help
the firm to plan its strategies to reduce the expenses and meet the operational requirements of the
organisation in a better way. Other than this, it will support the better rise in functional calibre of
the organisation (Vogel, 2016.).
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LO4
4.1 analyse sources and distribution of funding for the development of capital projects associated
with tourism
The travel and tourism sector will have a wide range of sources of funding or gaining the
financial resources to execute its business operations to have a better profitability and revenue
generation. The different sources of funding is as follows:
Department of
Culture, Media
and Sport: Such
bodies like
National Lottery
Commission will
take in
consideration for
better gaining the
financial support
in a better way.
Also, the
promotional,
measures that are
been taken in
consideration by
the various
service provide
will lay a very
deep influence on
the productivity
of business firm.
Renting By
leasing the
advantages of an
association for a
specific time
frame: renting is
considered as a
medium term
wellspring of
fund through the
organization can
win cash. It is one
of the better
methods for
raising fund and
additionally to
budget and then
again it can be
costly as well.
Exchange credit-
Trade credit is a
wellspring of
assets where an
association
purchases
anything which is
required without
bringing about
the instalment
quickly with an
exchange credit
cutoff of around 1
month when all is
said in done.
Contract buy It is
relatively same as
renting and
furthermore
considered as a
fleeting
wellspring of
raising assets with
a distinction that
the organization
holds the
privilege of
owing the benefit
simply after the
reimbursement of
cash.
Development of
tourism and non
tourist sites like
cycle storage will
also help in better
management of
wide range of
funding for the
travel and tourism
company
Equity: Another way through which sources can be accumulated is the issue of the share capital
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so that funds of the business can be increased. This the long but better way to accumulate funds
as compared to different sources. There are many alternatives in these options that can be
followed by the company for the purpose of collection of funds from different sources. This
method is known as capital stretch method. It is an easy and simple method which consist of
bills of exchange and many other receipts related to creditors of the business.
CONCLUSION
The above report has exhibited the financial considerations of tourism sector to administrate
it in the most effective way and avoid any future occurrences of loss. For this purpose, it has
hereby demonstrated the significance of costs, profits and volume for the purpose of decision
making and on its basis, take relevant set of decisions to frame appropriate budgets, etc. Another
section has depicted the usage of several management accounting related data as a tool for
effective decision making. Lastly, this unit has interpreted the financial accounts to aid in the
process of decision making in tour based organisations.
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REFERENCES
Books and Journals
Airey, D. and Chong, K., 2010. National policy-makers for tourism in China. Annals of
tourism Research. 37. 2. pp. 295-314.
Benson, A. M. and Henderson, S., 2011. A strategic analysis of volunteer tourism
organisations. The Service Industries Journal. 31. 3. pp. 405-424.
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Buckley, R., 2012. Sustainable tourism: Research and reality. Annals of Tourism Research. 39.
2. pp. 528-546.
Chaisawat, M., 2012. Travel and tourism education in Thailand. In Global Tourism Higher
Education (pp. 209-236). Routledge.
Dwyer, L., Forsyth, P. and Dwyer, W., 2010. Tourism economics and policy (Vol. 3). Channel
View Publications.
Fredman, P. and Tyrväinen, L., 2010. Frontiers in nature‐based tourism. Scandinavian Journal
of Hospitality and Tourism. 10. 3. pp. 177-189.
Goswami, A. G., Mattoo, A. and Sáez, S. eds., 2012. Exporting services: A developing country
perspective. World Bank Publications.
Irshad, H., 2010. Rural tourism–an overview. Rural Development Division, Government of
Alberta, Canada.
Jucan, C. N. and Jucan, M. S., 2013. Travel and tourism as a driver of economic recovery.
Procedia Economics and Finance. 6. pp. 81
Kastarlak, B. I. and Barber, B., 2011. Fundamentals of planning and developing tourism.
Pearson Higher Ed.
McCabe, S., Minnaert, L. and Diekmann, A. eds., 2011. Social tourism in Europe: Theory and
practice (Vol. 52). Channel View Publications.
Swarbrooke, J. and Page, S.J., 2012. Development and management of visitor attractions.
Routledge.
Witt, S. F., Brooke, M. Z. and Buckley, P. J., 2013. The Management of International Tourism
(RLE Tourism). Routledge.
Becker, E., 2016. Overbooked: The exploding business of travel and tourism. Simon and Schuster.
Vogel, H.L., 2016. Travel industry economics: A guide for financial analysis. Springer.
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