Financial Analysis and Funding Strategies: Travel and Tourism Sector

This report delves into the critical aspects of finance and funding within the travel and tourism sector. It begins by highlighting the significance of cost, volume, and profit for management decision-making, followed by an analysis of various pricing methods employed in the industry. The report then explores the factors influencing profit for tourism businesses, encompassing both internal and external elements. A key component involves an interpretation of the financial accounts of the Dalata Hotel Group plc for December 2016, providing a two-year performance analysis. Furthermore, the report examines the sources and distribution of funding for the development of capital projects within the tourism sector, offering a comprehensive overview of financial strategies and their impact on the industry's sustainability and growth. The report offers a detailed analysis of the tourism sector's financial landscape.

Finance and Funding
in the travel and
Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Importance of costs, volume and profit for management decision making in travel and
tourism.........................................................................................................................................3
1.2 Analyse Pricing methods used in travel and tourism sector ................................................4
1.3 Factors influencing profit for tourism business ...................................................................5
TASK 2 ...........................................................................................................................................6
2.1 and 2.2 covered in ppt...........................................................................................................6
TASK 3............................................................................................................................................8
3.1 Interpret financial accounts of Dalata Hotel Group plc for December 2016 highlighting
two years performance ...............................................................................................................8
TASK 4 .........................................................................................................................................16
4.1 Sources and distribution of funding for the development of capital projects of tourism
sector.........................................................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Travel and Tourism Plays a very important role in any of the economy as it contributes in
increasing growth and revenue. Along with it, finance and funding of this sector constitute
prominent part. This report highlight importance of cost and volume in tourism business. There
are number of factors that have huge impact on pricing methods and profits of travel and tourism
sector. Management accounting information (MIS) is one of the concept of decision making
element. There are number of ratios that have to calculated in order to measure the financial
performance of any business organisation. This assignment focuses on important role played by
department of culture, sport and media (Buhalis, D., Darcy, S. and Ambrose, I. Eds., 2012). The
institution which is highlighted in this project is Carnival corporation & plc,it is situated in
Ireland consider as largest company and other unit is Dalata Hotel group plc. Both these hotels
have large number of share in market place (Petrova, P. and Hristov, D., 2016).
TASK 1
1.1 Importance of costs, volume and profit for management decision making in travel and
tourism
Cost is something which refers to total expenses incurred in carrying our transaction and
operations of business institution. There are number of work process related to purchase of raw
materials, maintenance, salary etc. all these elements include various finance aspects. Cost is also
of different type and nature, which has to be taken into consideration by every industry in
effective and efficient manner. It plays a very important role in reaching heights in given time
frame. All organisations of tour and tourism sector have to include volume, cost, and profit
which have to be regarded in managing decision making process which is described below:
Cost: This view all those expenditures in the form of indirect, direct, variable and fixed cost.
Direct cost involves any expenses happen in delivering services to customers in form of
accommodation facility, safety measures etc. on the other hand indirect cost incorporate actions
related to arrangement of tourist buses, and guides for visitors so that they do not face any
problem related to travelling places. Hence, this is necessary to formulate outline to minimize
cost and increase profitability. Fixed cost remains rigid throughout the business life, it possesses
cost purchasing in plant or machinery like land, buildings. Carnival corporation & plc have

proper system to calculate cost system which concentrates on cutting extra cost and maximize
their efficiency.
Profit or outcome: This is the basic aim of any business which is set up in the market area. They
exist to earn more and more profits in their life. These net income helps in running their business
smoothly without any hindrance or obstacles. High financial gains should be attained to act in
best effort. It is the result of services that are deliver by this industry to their customers by
fulfilling their demands and wants. There can be cases when profits are not earned to strategic
level. Thus, outcomes should be calculated by the company in appropriate mode (Sharpley, R.
and Telfer, D.J. Eds., 2014) .
Volume: Tourism industry is dependent on climate environment of particular area. It is essential
to look after the business volume in favourable manner. As proper scheme and plans have to be
implemented to excel in their working area. Volume basically involves the amount of finance is
available with the organisation system. It is expressed in monetary terms. Due to characteristic
attached to this sector, it is of seasonal nature. Travellers visit any place according to pleasing
climatic condition of that tourist place.
1.2 Analyse Pricing methods used in travel and tourism sector
Pricing method is a very important concept that has to be taken into consideration to
render final services to prospective buyers. Today's business environment is dynamic in nature
and keeps on changing in frequent time. Hence, in order to keep a apace with these changes it is
crucial to take such methods that will help them to grow in competitive world. Pricing process is
a primary conception of this type of industry as it is directly linked with source of revenue
generation of that particular country. Besides, it contributes some percentage in GDP. Pricing
method involves calculating the prices that involve framing of various packages that this
company delivers to their customers. There are several pricing method, few are mentioned
below:
Cost plus method of pricing: In this, organisation have to adopt such pricing in which value is
measured by pertaining indirect and direct cost together, and after that some percentage of
outcome is added to it. Break even point is also taken into circumstance by them. This point is a
level of no profit and no loss. Every company exist to earn high profits by cutting cost at
maximum level.

Market- led method of pricing: under this process, Institution examines the cost of packages of
their competitors and make strategy according to it. This concept is very essential in today's
world which is full of competition at highest level. So it becomes indispensable to evaluate
strategy of other company operating in same industry. For this research and development
department continuously keep check on other institution's policy or frame work, and analysing in
proper way, they set their price accordingly. This helps in delivering services at average prices
(Jayawardena and et. al. , 2013).
Marginal method of pricing: In this pricing method, company chooses strategy of fixing that
price of tour packages that also incorporate surplus expenditure that may occur in the process of
setting up that collection. This is rarely embraced by company now a days. There are number of
disadvantages attached to this concept (Tribe, J., 2015).
Return on Investment method of pricing: In this process of pricing, expenses of tour
combination is discovered on the ground of rate of return of expenses made by company in
rendering their employment. The proportion of financial gain which is earned helps in fixing
price of tour package.
Carnival and Corporation plc. Adopts all these strategies except market led pricing method. It is
possible to execute more than one pricing method but it should be executed well while taking
into consideration all the impacts that may influence it in different attributes.
1.3 Factors influencing profit for tourism business
There are number of factors that have direct impact on the organisation structure. It can
be present inside or outside the business environment. It is very dynamic in nature and keeps on
changing at very fast rate. Hence, it become very important to examine such factors properly in
respect to eliminate any risks that can be associated to it. These factors directly influence the
profitability of the tour company. Some components are mentioned below:
Issues related to act of terrorism: Visitors always want to go to that places which are safe and
do not involve nay kind of disturbances related to any terrorist attacks or misshapenness. This
have large influence on the profitability factor of Carnival and corporation plc.
Policies or rules framed by government body: Government along with tour establishment
make various rules and regulations related to tour operations. Like government make certain
policies and laws that is unfavourable for the tour company. This affect the profitability in
several ways.

Seasonal Factor: Tour and Tourism industry centres its operations according to seasons.
Favourable seasons always attracts more and more customers to that particular place. When it is
leisure time and vacations this business flourishes in significant way, as larger number of people
come to visit tourists places. But on the other side, if it is a off season business does not run at
that maximum level. Therefore, seasonal factor influences this business in many ways (Pastras,
P. and Bramwell, B., 2013) .
Monetary situation of that place: Monetary current situation of any country have impact this
sector in respective style. Economy faces situation of deflation and inflation which leads to
variation in currency.
Number of Competitors: Policies and strategy framed by competitor's company is influenced
by many ways. Carnival and corporation plc have to examine their rivals clearly and comely. It is
essential to assess their rules in momentous manner.
The above discussed constituents is categorised into external factors which are beyond the
control of company structure. There are number of internal influences too which have direct
effect some are :
Organisational structure: It constituents number of levels which are present in company. Any
changes or modifications in that can cause changes in present composition.
Mission and Vision: Every company have their vision and mission which is drafted by top
leaders of the company. Mission consists of rules and regulations that have to be followed by
everyone to reach final set targets. Vision specifies future goal that have to be accomplished in
given time frame of business organisation (Zapata, M.J. and Hall, C.M., 2012).
TASK 2
2.1 and 2.2 covered in PPT
INTRODUCTION
Management accounting information is very important tool is finding out the level of
performance of establishment. It is needed for Dalata hotel to find out their future action and
evaluate accordingly to find out the percentage of increment in their outcome level. On the other
hand it is necessary to formulate strategic decisions for long run. This aids in full-filling the final
and set target of company.

Management accounting Information: Managers or leaders use this accounting system to find
out that performance is according to set strategic targets. If there is any deviation is find out
proper attention is made to increase the level of productivity and performance to significant
level. This process pertains consideration of decisions related to financial and non financial
matters. It is very necessary to study data and information which is directly linked to business
operation ( Tolkach, D. and King, B., 2015).
There are different type of techniques available for management accounting. Some are
discussed as follows:
 Preparation of Budgets: Budgets are financial statement which is drafted for single
year. It involves all expenses that has to be made by institution in coming future time.
Hence, it is prepared to predict any situation that may arise in coming years.
 Calculation of different types of Ratio: There are different types of ratios that have to
be find out to measure the liquidity, profitability of various areas. Like current asset ratio.
Liquidity ratios, net capital employed ratio etc.
 Preparation of Financial outline: There are number of income statements that have to
be prepared annually to measure performance in significant level. Various financial
statements that are prepared are P&L account, balance sheet, Income statement etc.
Advantages of Management Accounting Information
 Management Accounting Information is a essential process to find out various factors
that influence organisational structure in many ways.
 It also provide guidelines in making essential decisions related to accounting operation or
concepts.
 It renders to strategy to make comparison between the current situation with the previous
ones.
 Budgets are also made according to this system of accounting (Mariani, M.M. and
Kylänen, M., 2014) .
CONCLUSION
In order to control various aspects and areas of important business operations Management
accounting system. It is very necessary in tour and tourism sector as they have to make certain

important and strategic decisions. The manager have to study such important issues that affect
any organisation in number of ways.
TASK 3
3.1 Interpret financial accounts of Dalata Hotel Group plc for December 2016 highlighting two
years performance