Financial Management in Travel and Tourism: A Comprehensive Analysis

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector. It begins by examining the importance of costs and volume in financial management, exploring various pricing methods such as cost-plus, skimming, and penetration pricing, and identifying factors influencing profitability, including tourism seasons, terrorism, political stability, climate, social factors, and economic conditions. The report then delves into the financial performance of Dalata Hotel Group plc, including an interpretation of financial accounts, ratio analysis (profitability and liquidity), and a review of the company's balance sheet and income statements. The report uses the case studies of Carnival Corporation & PLC and Dalata Hotel Group PLC to illustrate financial concepts and strategies, providing a detailed overview of financial management in the travel and tourism sector, and offering practical insights into cost analysis, pricing strategies, and performance evaluation.

Finance and Funding in
the Travel and Tourism
Sector

Table of Contents
INTRODUCTION...........................................................................................................................1
CARNIVAL CORPORATION & PLC...........................................................................................1
TASK 1............................................................................................................................................1
1.1: Importance of costs and volume in financial management of T&T....................................1
1.2: Analysing various pricing method that are being related with travel and tourism..............2
1.3: Analyse all factors that are influencing gains for travel and tourism..................................3
DALATA HOTEL GROUP PLC....................................................................................................4
TASK 2............................................................................................................................................4
Poster...........................................................................................................................................4
TASK 3............................................................................................................................................4
3.1: Interpretation of financial account of Dalata Hotel group plc.............................................4
TASK 4............................................................................................................................................8
leaflets.........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
According to this project which is entirely based on Travel and Tourism sectors. The
main aim of this module is to analyse all important aspects which are helpful to an individual to
gain essential knowledge, skills and techniques those are useful in future decision making. This
project draw the attention toward significant aspects of costs, volume and profit for effective
operation in travel and tourism and process to evaluate skill needed to determine financial data of
“Carnival corporation plc”. Evaluating pricing method that are used in travel and tourism sectors
also certain factors those are affecting the profitability position of tourism sector are discussed
under this report. In the other part of the report is explaining crucial matter regarding various
types of management accounting information that are use by “Dalata Hotel group plc”. Apart
form this, a well structure financial report is prepared to analyse the performance of the
company. At last, all those sources and distribution of capital for the development of capital
project are mentioned effectively (Morrison, 2013).
CARNIVAL CORPORATION & PLC
TASK 1
1.1: Importance of costs and volume in financial management of T&T
As per the mentioned case study of Carnival corporation plc which is known as one of
leading leisure travel industries with wide portfolios of cruise brand in different part of the
nation. They are held responsible for providing joyful vacation facilities and delivery
shareholder return through exceeding customer satisfaction and leveraging their sectors are large
scale. There are various types of costs which are required to be analyse by Carnival corporation
while making any travel planning (Wong, Mistilis and Dwyer, 2011).
Cost: It is one of the most important aspects for every company which will directly make
impacts on the overall productivity of the company. It consists of various types of costs such as:
 Direct costs: These are said to be one of the cost which are directly associated with
cruise line impose fees and services costs. All travelling related expenses are taken into
account from carnival which would grants unlimited access to various service delivery
those are provided by the company.
 Indirect costs: These are said to be those costs which are indirectly associated with the
company while providing services to various customers. Such as maintenance cost,
supervision expenses and repair costs (Pike, 2012).
1

 Variable costs: It refers as one of the main costs which get change from production of
one units of product and services. In case of Cruise line travelling some direct cost
associated with them are ticket fare, rent and other cost.
 Fixed costs: According to this particular cost that remain fixed during the production of
product and services. Just like, in case of carnival corporation and plc they need to bear
some fixed cost such as cruise fees, machinery cost and so on.
Volume: It is known as one of the primary analysis which is needed to be done by using break-
even point, economic of scale and other aspects (Evans, Stonehouse and Campbell, 2012).
 Break-even analysis: It is one of the effective objective of an organisation to determine
that every point where Carnival corporation can easily be able to recover their costs that
are incurred and from that point of time they are able to earn adequate amount of profits.
 Cost volume profit analysis: According to this particular analysis is done for the purpse
of adetermining various modification related with cost and volume those are effecting the
performance of Carnival cooperation and plc. There are certain assumptions that are
made withuin this particular process as appropriate sales those are remain constant as
well as total fixed costs remian unchanged with an accounting period of time.
1.2: Analysing various pricing method that are being related with travel and tourism
These are said to be one of the crucial method which would provide appropriate guidence
to an organisation like Carnival plc to plan their travel in more reliable and effective manner. In
order to set prices for their various services related with tourism areas which will get paid by
customers more easily and organisation would achieve sufficient amount of profit from that
particular investments (McCabe, Minnaert and Diekmann, 2011). Below mentioned are various
pricing techniques that are followed by various companies in order to set their economical costs
such as:
 Cost plus pricing method: Carnival plc taken into account various pricing method in
order to set their prices for all those services those are being served by the company.
According to this particular techniques that are make effective of all the present cost
which consists of variable cost and fixed costs. Once they are include all cost that are
included into the mark-up amount in their which is their profit share.
 Skimming pricing method: It is known as one of the primary pricing method as
according to this carnival company used to set high prices for their respective travelling
2

services (Swarbrooke and Page, 2012). By the help of this prices they become more
capable to get recovery of their cost as they set maximum gains in their value. In very
less period of time they used to get recover their cost and after that they used to enjoy
maximum level of gains.
 Price penetration method: It is one of the effective pricing techniques which will be
used by carnival company for delivering best prices for their services. In the initial stage
they set low prices for their respective product and services in order to attract maximum
number of customers and results into maximise their overall sales within an accounting
period of time.
 Per person pricing: According to this particular prices which will be implement for new
entrants in order to facilitated their customers. They used to charged normal of the
number of visitors those are coming to travel from one destination to another. They can
easily be able to separate charges as per the senior citizen, kids and couples that can assist
in drawing attention of maximum tourist towards their business state (Chaisawat, 2012).
1.3: Analyse all factors that are influencing gains for travel and tourism
Travel and tourism is one of the effective factors those are affecting the overall
performance of Carnival corporation and plc. It is consider as utmost important aspect that will
be lead to analyse every factors that are responsible for determine profitability position of cited
company in accurate manner. Some crucial factors are mentioned underneath:
 Tourism season: This seems to be one of the crucial factors those are affecting the
tourism sectors more badly. In case of peak season the carnival corporation earn
maximum level of revenues from their activities and easily meet their expenses during
the period of time. While in the off time they are not able to incur that much profit in
order to deal with fixed nature of expenses (Buckley, 2012). As tourism sectors used to
make huge impacts on earning capacity of Carnival plc.
 Terrorism: One of the major issue in nowadays is associated with tourism sectors.
Maximum period of time companies are affair of various terrorist attract which are
unforeseen. They used to charged sufficient amount for their services and collected
reliable level of gains with the all associated effects. Because of terrorism activities that
can lead to effective downfall in tourism associated events within a financial period.
3

 Political stability: To get more profitable business company need to face all effects those
are arises because of change in government rules and regulations. On the contrary to this,
the political parties is remain unstable then they can get fix rate of taxes because of
which they cannot get finalise their actual cost which are failing to draw attention of
tourist toward their business operations (Van der Sterren, 2017).
 Climate: It has been analyse that in case there is pleasant climate that would used to
attract plenty of people towards them. In this case, carnival plc become sufficient enough
in order to get more reliable profit during an accounting period of time. Whereas, in case
climate is not so pleasant then it might reduce maximum number of tourist.
 Social factors: There are certain aspects which will be essential enough to provide better
resource and security while moving from one destination to another one. The company
used to provide better services to their customers so that maximum opportunities in
accordance to get reliable results can be attained in near future time (Apostolopoulos,
Leontidou and Loukissas, 2014).
 Economy: in recent time of recession tourists will be more concern about the manner in
which money is spent on travelling. Saving incomes would be primary motive and
incomes will spend to concentrated on grocery instead of travelling. They do not have to
pay accommodation costs or other charged that were increased inflation by staying in
hotel for more than one day.
DALATA HOTEL GROUP PLC
TASK 2
Poster
TASK 3
3.1: Interpretation of financial account of Dalata Hotel group plc
According to the annual report of Dalata Hotel, it has been determine that carrying value
of other indefinite lived intangible assets as on 31st December, 2017 which is recorded as £20.5
million (Goswami, Mattoo and Sáez, 2012). Management used to reviewed that useful life of
asset and concluded on existence of renewal right. On the basis of all financial reporting front, it
has been analyse that the company seeks to advice of qualified independent experts to analyse
the value of property and other external accounting information.
Balance sheet of Dalata Hotel group plc:
4

Incomes statements of Dalata Hotel group plc:
5

Ratio analysis:
6

It is necessary for an organisation to make proper analysis of financial statements that are
being perpared by Dalata group plc (Dalata Hotel group plc, 2017). Some useful ratios are
needed to be calculated underneath:
Profitability ratio: It is used as appropriate measure which an organisastion used to
determine overall effectiveness and return they are generating on total sales and investments.
Ratio Formula 2017 2016
Gross profit margin Gross profit / Total sales *100 63.19438466 62.1877054287
Operating profit margin operating incomes/ total sales *100 24.9438982535 19.1384645037
Net profit margin Net profit / Total sales *100 13.5639961661 16.1586089878
From the above profitablity analysis, it has been sen that the position of Dalata hotel is
much more effective as compare to last year. They are able to generate maximum retun in 2017
in respect to last year.
Liquidty ratio: It is one of the effective financial analysis that is being used to examine a
companies overall ability to make payment of theri short term debt obligations. Mainly, the
maximum value of ratios, the largers will be margin of safety that a company possess to cover
mid term liabilities.
Ratio Formula 2017 2016
Current ratio Current assets/ current liabilities 0.4581465052 1.4351869342
Liquid ratio current asset- inventory / current liabilities 0.4369859729 1.4087851092
According to the above liquidity position of the company, it has been seen that the
current ratio of the company is reduce from last year which is more stronger than present time. It
is much below to their ideal ratios which is 2:1. In respect to liquid ratios, it more effective in
respect to last this year (Carlisle, Jones and Tiffin, 2013). In 2017, liquidity position of Dalata
company is not so effective.
TASK 4
leaflets
CONCLUSION
This particular project module is providing more relevant information about finance and
funding in travel and tourism sector. Various analysis is being made about the two important
companies mentioned in the above project report. By the help of financial statements, current
7

position of Dalata hotel can be determine by using ratio analysis. However, certain sources of
funding available for the purpose of constructing certain themes are taken into consideration.
8