Finance and Funding in the Travel and Tourism Industry: A Report

This report delves into the critical role of finance and funding within the travel and tourism sector, examining various aspects such as cost importance, pricing methods, and factors that influence profitability. It begins with an introduction to the significance of finance in business operations, particularly within the rapidly growing travel and tourism industry, emphasizing its role in decision-making and achieving organizational objectives. The report then analyzes different costing methods like direct and indirect costs, variable and fixed costs, and techniques such as break-even analysis and scale economies. It also explores diverse pricing strategies including cost-led pricing, price-led costing, season costing, and market-based costing. Furthermore, the report investigates the factors affecting profitability, including seasonal variations, political and economic environments, current trends, and social influences. The analysis extends to the interpretation of financial statements, specifically focusing on ratios like quick ratio, current ratio, return on capital employed, net profit ratio, and gearing ratio. Overall, the report highlights the crucial role of financial management in the success and sustainability of businesses within the travel and tourism sector.

Finance and Funding in the
Travel and Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Cost Importance....................................................................................................................3
1.2 Analyse of pricing methods used in travel and tourism sector.............................................4
1.3 Analysis of different factors which influence profitability of travel and tourism ................5
TASK 2............................................................................................................................................6
Covered in PPT...........................................................................................................................6
TASK 3............................................................................................................................................6
3.1 Interprate financial statement................................................................................................6
........................................................................................................................................................10
TASK 4..........................................................................................................................................11
4.1 Covered in Leaflet...............................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Finance is one of the paramount component which is importance for functioning various
business activities. A company can render effective and better services for their consumer but
this is require to balance their financial resources of enterprise cause in case if failing ion proper
management, the firm may have to face various problems and issues (John and Susan, 2015).
Sector of travel and tourism have seen rapid and drastic growth in last few decade. In absence of
proper funds and monetary resources, individual would not be able to satiate their desires and
longings. The major aims of their report is to analyse the finance purpose and its role in decision-
making to meet objectives. This will also evaluate financial decision for making effective
judgements.
TASK 1
1.1 Cost Importance
Cost is the main elements which aid to identify the organisational benefits. However,
there are several cost which are utilised by organisation for analysing the business objectives and
issues in meeting them. Without management of cost, Carnival Plc. can not handle their services,
However this is essential for delivering consumer services in regard of dealing and promotion
related with other resources. There are mentioned some sort of cost which is mentioned here:
Direct costs: this is the cost which directly relates to the production of goods. However,
this is the costs which directly add costs to the company’ products. There are some of the factors
which are covered in the direct costs. These are direct material, direct labour and the direct
overheads. Hover, there is a strong need to make certain tools in order to evaluate the costs of the
products. After adding the direct cost in the product, prime cost is calculated.
Indirect costs: This is the costs which does not connect directly to the cost of the product.
Although, there is a strong need to know calculate the cost of the product (Koutra and Edwards,
2012). Various overheads which are indirectly related to the product cost are considered under
this. Factory overheads and other administrative overheads are covered under this.
Variable cost: this is the cost which changes according to the change in the production.
This vary with the change in the production
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Fixed Cost: This is fixed rate which does not change even after the decrease in output.
Rent paid through Carnival Plc is an fixed cost example. Weather they render service to shrink
operations dan people, this cost dopes not fluctuate.
Apportionment and Allocation: The expenses which are overhead not linked with any
material and direct labour or worker. There are several techniques and approaches of cost
allocation such as absorption and marginal costing.
Break Even Evolutional: This financial administration tool concentrate over the outcome
of determined unit amount that should be traded by the company (Ma and Hassink, 2014). This is
point of making benefits and covering the expenses which can be organised quarterly, monthly
and yearly.
Scale Economies: When a company gain their output, the product expenses decrease
cause of several elements such as fixed cost of allocation. This respected concept is also popular
as the scale economies. The major cause behind the Carnival Corporation Plc achievement is
focused over outcome in enhancing entire cost.
Scale Diseconomies: This concept is linked with the marginal cost after the increment in
output. For e.g. if there are more than 2 operation engaged in the whole trip, the organisation
decrease he one activity speed then they also make the process with more pace.
1.2 Analyse of pricing methods used in travel and tourism sector
Determining the effective cost is complex task for several organisation. There are time,
when Carnival Corporation Plc, when company felt the imbalance in the costing management
strategies cause of feeling some losses. Through opting these methods costing, the company can
meet revenues:
Cost-led Pricing: It is one of traditional method in which initially they make the net cost
of produced units and then expected benefits is added for meeting the final cost of products
(Morrison, 2013). The Carnival Corporation Plc is utilising the same techniques for evaluating
the price in cruise for ascertaining the cost they has to make from clients.
Price-led Costing: Nowadays, enterprise consider the strategy of purchasing the products
of consume. Service rates is determined through analysing the amount that consumer are
prepared to pay. Carnival Corporation's clients are willing to make the investment of their capital
willingly as the company has goof positioning in the market. The company first target to clients
and their buying power and then make the changes according to this.
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Season Costing: Each and every organisation who are functioning business in travel and
tourism sector. In the season time, the company increase the cost of products as per the higher
and increased demands of services. But as the season is down, the company make the changes in
price of service to sustain in market and retain the potential buyers.
Rack Rate: It forms the costing which is very famous in the sector of travel and tourism.
Under the techniques of pricing (Murphy, 2013). A company such as Carnival Corporation Plc.
Determine their services cost but these rates are often negotiable.
Market Based Cost: This is also known from its competition name based on the pricing.
The services are determined by Carnival Corporation Plc determine their facilities cost that exists
in the trade. Evaluation of costing of competitors which is indispensable for this method.
1.3 Analysis of different factors which influence profitability of travel and tourism
Tourism industry is majorly influenced by season , profit of Carnival association and plc
which can more in one quarter and it can going several down in others because of off season. In
UK political support, health of economy, social culture and many other factor that can make high
impact on profitability. There are factors which are detailed explained as under: Seasonal variation: It is important for any person is to shows the impact of season in
tourism sector. The company at current time period in some countries like UK, USA,
German etc. in certain nations, the demand of cruise is high in summer season while in
some nations is high in winter. Political environment: The major incident such as Brexit make negative impact on
profitability of the firm who are smoothly running the business in tourism sector. The
important amount of income of carnival corporation and plc which comes from Britain. Economic environment: The economic growth in European nation is very slow in each
manner. The total demand in such countries is going down and people are mainly spend
their money on required products and services(REPORTS, RESULTS AND
PRESENTATIONS, 2015). The main factor have negatively impact on growth of firm and
its impact of their profits is unfavourable in nature. Current Trends: The billionaire and millionaire numbers are continuously increasing.
This refer to enhancements of luxury demands such as rending and cruise trip will
increase. Earlier cruise got people thinking weather the organisation will produce the
products for elite people only but after the recent alternation, there are various current
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trends which can help organisation in increasing the productivity and profitability for the
cited corporation (Nielsen and Spenceley, 2011).
 Social environment: This have the power to affects the firm in a positive manner. Overall
market trends is varying and instead of going on the road trip, people are considering
their family on the cruise trip for entertainment. This kind of change in culture
incorporate a positive affects on revenue of mentioned enterprise and they earned more
profit via it.
TASK 2
Covered in PPT
TASK 3
3.1 Interprate financial statement
Under this distinct ratios would be analysed and for which the statements will be needed. This is
mentioned as below:
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7

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Here is the calculation and its ration which is mentioned as below:
Quick Ratio: Through utilising the respected ratio, firm's liquidity is evaluated. This is
considered which weather enterprise is on place to meet the needs of finance or not (Pike, 2012).
The company is keeping the position of sound and this rightly state the gained ratio from 0.23-
0.32.
2015= 31.61/136.4 = 0.23
2016 = 44.18/139.91 = 0.32
Current Ratio: this demonstrate relation between current liabilities and asset. The proper
ration should be 2 that shall be double to liabilities, this is scaled at 0.36 and 0.28 in 2016 and
2015.
2015 = 38.01/136.4 = 0.28
2016= 49.81/139.9= 0.36
Capital employed return: Through this assistance, sales is earned on employed amount.
2015 = 99.60/307.21*100 = 32.44%
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Social environment: This have the power to affects the firm in a positive manner. Overall market
trends is varying and instead of going on the road trip, people are considering their family on the
cruise trip for entertainment. This kind of change in culture incorporate a positive affects on
revenue of mentioned enterprise and they earned more profit via it.2016 = 286.89/256.52*100 =
111.84%
Net ratio profit:
2015 = 68.89/483.778*100 = 14.24%
2016 = 39.52/96.98*100 = 40.75%
Gearing ratio: The equity and debts proportion need to be preserved so that benefits can
be achieved (Song and Lin, 2011).
Particulars 2015 2016
Acid test ratio 0.23 0.32
Current ratio 0.28 0.36
Return on capital employed 32.44% 111.84%
Net profit Ratio 14.24% 40.75%
TASK 4
4.1 Covered in Leaflet
CONCLUSION
It can be summon from the mentioned report that finance is one of the paramount
component which is importance for functioning various business activities. Without management
of cost, Carnival Plc. can not handle their services. Determining the effective cost is complex
task for several organisation. There are distinct management accounting information which can
be utilised for developing organisational performance and support them long term and effective
development and growth Financial funding is essential relatively a concept that is render by
concern Dept. development and welfare of travel and tourism sector. Improvement and
development of integrated foot-print of such areas would help organisations and people to keep
the appropriate foot in rights way.
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REFERENCES
Books and Journals
John, S. and Susan, H., 2015. Business travel and tourism.
Koutra, C. and Edwards, J., 2012. Capacity building through socially responsible tourism
development: A Ghanaian case study. Journal of travel research. 51(6). pp.779-792.
Ma, M. and Hassink, R., 2014. Path dependence and tourism area development: the case of
Guilin, China. Tourism Geographies. 16(4). pp.580-597.
Morrison, A.M., 2013. Marketing and managing tourism destinations. Routledge.
Murphy, P.E., 2013. Tourism: A community approach (RLE Tourism). Routledge.
Nielsen, H. and Spenceley, A., 2011. The success of tourism in Rwanda: Gorillas and more. Yes
Africa Can: Success Stories from a Dynamic Continent. pp.231-249.
Pike, S., 2012. Destination marketing. Routledge.
Song, H. and Lin, S., 2011. Impacts of the financial and economic crisis on tourism in Asia.
Journal of Travel Research.49(1). pp.16-30.
Spenceley, A. ed., 2012. Responsible tourism: Critical issues for conservation and development.
Routledge.
Spencer, J.P. and Zembani, P., 2011. An analysis of a national strategic framework to promote
tourism, leisure, sport and recreation in South Africa: tourism, leisure, sport and
recreation. African Journal for Physical Health Education, Recreation and Dance.
17(2). pp.201-218.
Tribe, J., 2015. The economics of recreation, leisure and tourism. Routledge.
Vanhove, N., 2011. The economics of tourism destinations. Routledge.
Wong, E.P., Mistilis, N. and Dwyer, L., 2011. A framework for analyzing intergovernmental
collaboration–the case of ASEAN tourism. Tourism Management. 32(2). pp.367-376.
Online
REPORTS, RESULTS AND PRESENTATIONS. 2015. [Online]. Available through;
<http://dalatahotelgroup.com/investors/reports-and-presentations/?date=2017>.
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