Financial Analysis, Accounting & Funding in Tourism Sector

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, focusing on cost, volume, and profit management. It utilizes Carnival Corporation PLC as a case study to explain the importance of cost and volume in financial management and analyzes pricing methods and factors influencing profit. Furthermore, the report explores the use of management accounting information as a decision-making tool, employing Dalata Hotel Group PLC as a case study. It interprets the financial accounts of Dalata Hotel Group PLC, comparing performance over two years (2016-2017), and analyzes sources and distribution of funding for tourism development capital projects. The document aims to provide a detailed understanding of the financial dynamics and strategic decision-making processes within the travel and tourism industry.

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Finance and Funding in the Travel and Tourism Sector

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Contents
Introduction:...................................................................................................................3
L01. Understand the importance of cost, volume and profit for management decision making
in travel and tourism........................................................................................................4
P1.1. Explain the importance of cost 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 and PLC............................5
P1.3. Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation and PLC Cruise brands as your case study......................................................6
L02. Understand the use of management accounting information as a decision making tool in
travel and tourism businesses...........................................................................................7
P2.1. Explain different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group PLC as your case study..................7
P2.2. Access the use of management accounting information as a decision making tool for
Dalata Hotel Group PLC..................................................................................................9
LO3 be able to interpret financial accounts to assist decision making in travel and tourism
businesses.....................................................................................................................11
3.1 interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2017 showing at least two years performance (for example comparing 2017 to 2016).........11
L04. Understand sources and distribution of funding for public and non-public Tourism
Development.................................................................................................................14

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4.1. Analyse sources and distribution of funding for the development of capital projects
associated with tourism..................................................................................................14
Conclusion:..................................................................................................................16
References....................................................................................................................18

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Introduction:
The growth and development of any sector depends upon the degree of financial freedom and
funding capabilities. The emergence of travel and tourism sector in global business scenario
controlled and monitored by appropriate funding and financial capabilities. The travel and
tourism sectors acquire a significant position in the regional revenue generation system.
Therefore the significance of the travel and tourism sector in modern business perspective is
undeniable. The decision making processes and factors encompassing funding and financial
influences need to be comprehended properly to develop a vivid concept of the contextual
sector. The financial volume, costing and profit generation would be elaborated in below
section in context with case scenario depicting the financial and funding analysis of Carnival
Corporation & plc. Management accounting has been playing an important role in
organisational decision making process where managers uses various information sources to
evaluate the funding and financial condition of the organisation to formulate the decision
making process essential for functionality and growth prospective. The second half of the
assignment significantly elaborates the management accounting methodologies in context
with the various decision making processes of Dalata Hotel Group plc. There is a great
influence of the financial and funding aspect in the travel and tourism sector fundamentals.
Detailed analysis of the financial reports including the summery of the accounting process in
the fiscal years would be discussed in the assignment in later section for developing an vivid
understanding of the influences and importance of the financial accounting in the business
perspective. The consecutive discussion encompassed various aspects and method of funding
sources and distribution processes in travel and tourism sector which contributes to the
overall industry development and future growth.

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L01. Understand the importance of cost, volume and profit for management decision
making in travel and tourism
P1.1. Explain the importance of cost and volume in financial management of travel and
tourism businesses using Carnival Corporation PLC as your case study
The importance of costs and volume in financial management is an analysis in which the cost
and volume are being analysed in relation to breakeven point. The various equations are used
for this analysing purpose. Side by side for finding cost and volume various assumptions are
also considered. Certain assumptions like the sale of all the units, there are two types of costs
such as fixed and variable and sales, vary per unit whereas fixed cost remain the same. The
cost volume profit or CVP analysis plays an important role in travel and tourism because it
helps to control and plan the financial matter of the company. Certain importance are being
carried by this analysis such as-
All the needs of the future are analysed and then planned efficiently in the travel industry
such as Carnival Corporation and PLC or Carnival PLC. It also helps to make effective
decision so that in future no chances of loss happen. This tool is very important and
beneficiary because it helps to understand the break-even point that finally helps to visualise
the important information that would help to gain the profit or absolutely no chances of loss
situation (Vanhove, 2017).
The most suitable combination of all the costs such as variable, fixed is taken into
consideration for efficient performance. Also the other important financial data is also re-
considered that helps the growth of travel business.

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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 and PLC
Only when the business gains profit from the cost it spend on its product and service then
only it is said to survive and sustains in the market. So, to gain the profit in the business it is
important to determine the aspect of pricing the product or services. There are different types
of methods in this respect. Such as market oriented pricing, cost oriented pricing, target
pricing, going rate pricing, and also Transfer pricing. The Carnival PLC make use of one of
these method for their business.
Market oriented pricing method: In this method as per the prevailing competition in the
market whether the prices are high or low of the competitors the price is determined. The
Carnival PLC is the world's most recognised Cruise brands. When Carnival PLC plans for the
vacation Cruise it makes a detailed plan of the charges of accommodation ,meals as per the
tourist taking into consideration the prices charged by its competitors. In this travel business
the cost oriented pricing is used because this method help to adjust the best margin for the
business that helps to gain profit in the business even though this method is simple and easy
to understand by all the party related. To be able to survive and sustain for a long time in the
competitive market, the market oriented pricing method is used to compare the prices with
the leading competitors (Armenski et al. 2018).
Cost oriented pricing method: Certain margin is added to the cost in the cost oriented pricing
method that helps to gain profit from the business operation. The method of pricing is very
easy to understand and simple hence this is the easy method to analyse the profit. All the data
in this method is analysed by simply applying formula to get the answer hence this technique
is easy and very simple. No extra effort is required to make this technique a simple one.

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P1.3. Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation and PLC Cruise brands as your case study
There are many factors that influence the profit for travel and tourism business especially for
Carnival Corporation and PLC.
The first and the foremost factor that influence the profit is the best and efficient management
strategy in any business to earn maximum profit. If there is an efficient planning and effective
implementation of that planning is done then definitely profit will be earned in an effective
manner.
The promotion campaign and the advertising is also very important factor in today’s
competitive market that helps the Businessman to earn maximum profit in their business
against their competitors. This is very important marketing planning to increase business
profit (Van der Sterren, 2017).
The travelling expenses is also very important in the travel and tourism business. The
travelling expenses helps to understand that if fare is higher in any other mode of transport
then profit would surely decrease.
To earn profit in the business, the better accommodation facility is also very important. If the
charges of the hotels where the travellers stay are affordable by the travellers then there is
less chance of any problem in the business.
The Carnival PLC evaluates the full trip charges and also both the fixed and variable cost to
analyse its profit or loss such as accommodation charges, the variable meal charges. All the
charges are considered to analyse what the business has to charge per tourist so to gain
desired profit (Shahbaz et al. 2017).

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L02. Understand the use of management accounting information as a decision making
tool in travel and tourism businesses
P2.1. Explain different types of management accounting information that could be used
in travel and tourism businesses using Dalata Hotel Group PLC as your case study
It is with the help of Management Accounting that the management is able to collect as well
as manage time to time all the internal working of the data. This also helps to solve the future
problems which arise by chance. Any aspect that can affect the business like default or flaws
are analysed critically before any penalty. The following are different types of Management
Accounting.
Job cost report: In this method all the major profit area is targeted from where maximum
profit can be gained and so extra time and effort are not wasted in non-profitable projects.
Cost allocation report: In this report, to avoid the rise of any non-obvious situation in future,
the allocation of every resources present in the business is done at an early stage. By doing
this the manager is able to keep a record of the business functioning and its outcome.
To manage the internal working of data from time to time, the Dalata Hotel Group plc also
makes use of Management Accounting. This proves very helpful for them to evaluate their
hotel business and its outcome. So, the Dalata Hotel Group PLC chooses the best technique
for the purpose of accounting to earn the profit (Pierce, 2016).

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P2.2. Access the use of management accounting information as a decision making tool
for Dalata Hotel Group PLC
For the purpose of earning profit and also to gain return from it the business invest their funds
in the capital projects. To analyse the different capital projects, to gain profit various
techniques are used. They are-
Payback period: To control the cash flow rather than the profits, this technique is used mostly
by the small business. The techniques shows the time during which the profit can be earned
by the business from the investment. The Dalata Hotel Group PLC is required to invest in the
capital projects to earn maximum cash flow.
Discounted cash flow: It is the discounted rate to gain return from future value taking into
consideration the present scene.
Accounting rate of return: The difference between the amounts invested in the business to the
amount it is liable to gain from the business is shown by accounting rate of return. To
perform the task this is very easy and simple approach. If for any PLC for example Dalata
Hotel Group PLC, if the desired profit estimation is not earned instead loss incurs then to
reduce it the formulation of best method has to be done (Airey 2015).
Investment risk and sensitivity analysis: In this method all the about to be made investment
related risk are efficiently analysed. This analysis is very important because then in future the
growth of the Business and its return would not be negatively affected by any risk factor.

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LO3 be able to interpret financial accounts to assist decision making in travel and
tourism businesses
3.1 interpret financial accounts of Dalata Hotel Group plc for the year ended 31st
December 2017 showing at least two years performance (for example comparing 2017 to
2016)
The contextual discussion encompasses various aspects of the financial accounting of the
Dalata Hotel Group plc for the fiscal year 2017 in the comparative module with the last year
financial performance. The concerning organisation is the one of the leading hospitality
provider in the Ireland region and currently operating in UK and Ireland. Founded in 2007,
the Dalata Hotel Group plc made the first public offering in March 2014. During this period
Dalata Hotel Group plc introduced their stocks in Enterprise Security Market which
encompasses Irish stock market and London Stock exchange. Till the end of the 2016, Dalata
Hotel Group plc introduced the ordinary stocks in the market which enables the Dalata Hotel
Group plc to enlist in the Irish stock exchange and financial conduct authority in UK. The
portfolio of Dalata Hotel Group plc encompasses 37 hotels and resorts. These properties are
managed or operated by the Dalata Hotel Group plc which is situated in various part of UK
and Ireland. In last 10 years, the growth is significant due to the efficient industry capabilities
and management capacities. There is a huge source of funding and finance contributes to the
development of the Dalata Hotel Group plc. Therefore, the significant growth could be
visible in last 10 years and currently the Dalata Hotel Group plc is one of the largest
functional hospitality providers in the province. In the contextual discussion the financial
report of the Dalata Hotel Group plc would be analysed for the 2017 fiscal year for the
understanding of the functional and industry efficiency in context with the business
development and financial capacity. In the following section, financial performance of the

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Dalata Hotel Group plc would be evaluated which encompassed trading review in the form of
comparative analysis of the last two performances in consecutive fiscal years (Castaño-Isaza
et al. 2015 ).
Segment wise trade analysis of Dalata Hotel Group plc
Particulars region 2017 2016
revenue earned from rooms
Dubli
n
14172
0
10730
0
revenue earned from food and beverages 46,200 35,300
other revalue generation 12700 9200
earnings before interest, taxes,
depreciation, and amortization 99,100 73000
Rents and loan refund 27,300 20,100
earnings before interest, taxes,
depreciation 71,800 52,900
revenue earned from rooms
Irelan
d 42,000 36000
revenue earned from food and beverages 26,000 24800
other revalue generation 8,000 6800
earnings before interest, taxes,
depreciation, and amortization 22,000 18,500
Rents and loan refund 1,200 2300
earnings before interest, taxes,
depreciation 20,800 16,200
In the above section two financial reports compiling Dublin and Ireland outcomes has been
illustrated which efficiently depicts the financial performance of Dalata Hotel Group plc in
context with 2017 and 2016 comparative analysis and growth evaluation. The complete
analysis has been done on the basis of 15 hospitality properties situated in Dublin and 12
residing in the Ireland region. The above financial performance depiction of Dalata Hotel
Group plc incorporates various revenue generation system from the room revenue to food and
beverages revenue. There are two important hotels have been managed in the Dublin sector
such as Clayton Hotel and Burlington Hotel. Therefore the total revenue generation before
interest, taxes, depreciation, and amortization exhibits 11% growth compared to last year
performance. The percentage margin from revenue in the Durbin sector is 49.3 % whereas for