Finance and Funding in Travel and Tourism: Merlin Entertainments

This report delves into the financial aspects of the travel and tourism industry, using Merlin Entertainments plc as a case study. It explores the significance of costs and volumes in financial management, different pricing methods employed, and factors affecting profitability, such as currency fluctuations and government investment. The report also examines the role of management accounting information in decision-making, financial account interpretation, and the sources and distribution of funding for capital projects within the tourism sector. The analysis covers cost structures, pricing strategies (cost-plus, demand-based, and competition-based), and the impact of external factors on financial performance, providing a comprehensive overview of financial management in the context of a major tourism company.

Finance and Funding
in travel and tourism
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Importance of costs and volumes in financial management of Merlin Entertainments plc...3
1.2 Pricing method used in tourism sector...................................................................................5
1.3 Factors effects profits for Merlin Entertainment plc tourism................................................7
Task 2...............................................................................................................................................8
2.1 Different types of management accounting information used in Merlin Entertainment plc. 8
2.2 Importance of management accounting information as decision making tool for Merlin
Entertainments Plc.......................................................................................................................8
TASK 3............................................................................................................................................8
3.1 interpretation of financial accounts for decision-making in travel and tourism....................8
4.1 Sources and distribution of funding for DEVELOPMENT of capital projects within
tourism.......................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCE.................................................................................................................................15
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INTRODUCTION
Finance refers as provision of money which is related with investment and management
of costs. It is activity of fund allocation and financial management of money to achieve
organization's effectiveness. In this regard, funding terms as analyzing financial resources to
allocate funds and for short term and long objectives of entity. The present report is based on
finance and funding of Merlin Entertainments plc in travel and tourism sector. It is public limited
tourism of UK provides traveling and accommodation services to customers at high level.
Including this, there are million employees working for tourism services at workplace and large
number of branches are available for business operations. Through this study, Significance of
costs in financial management and pricing methods used in tourism can be determined.
Moreover, various types of management accounting information and decision-making tools for
fund allocation can be expressed. In addition to this, the report will effectively present the data
interpretation regarding funding for tourism financial accounts. However, proper analyses of
sources and distribution for financial management can be understood here.
TASK 1
1.1 Importance of costs and volumes in financial management of Merlin Entertainments plc
Merlin Entertainment is the wide spread entertainment company and has different
branches around 23 countries in four contents. It has expanded its business and makes place in
global market through effective financial as well entire management of organization to operate
the entity efficiently. In this regard, management related to fund allocation includes economic
tools such as costs, volumes (Frittelli, 2013). There are different kinds of costs which includes
direct, indirect, fixed and variable costs which are valuable for effective business operations. In
accordance to this, manager of tourism prepares plan to allocate fund for the financial
management. Price determination regarding actual expenditure Including cost of raw materials,
advertisement expenses, price obtained during marketing of services. It is useful for cost
effectiveness and proper funding for traveling and tourism operations. However, manager of the
industry concentrate on different costs which includes retained earnings, expenses and
investments, price of materials, tax and other tools on which business activities are operated.
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Therefore, manager of Merlin Entertainment tourism manages funds to operate business
activities effectively. It is considered that cost effectiveness is valuable to increase efficiency of
organization's services including traveling and accommodation for its effectiveness. Thus, cost
plays crucial role in financial management of the fund allocation (Clark and Das, 2015). It
includes analyses of tourism services' price as sources and investments for the business
operations. Through recognition of proper fund allocation, financial manager of tourism makes
decisions for business activities. Moreover, volumes plays vital role in financial management
which includes break even analyses, economics of scale. It is the activity related to identification
of fund allocation and effective cash flow and fund flow tools. In relation to volume, actual
performance of tourism is determined on behalf of which the manager of entity makes decision
for effectiveness and efficient market position. Hence, under cost and volume structure,
systematic structure of economic position is determined which leads in generating idea for
source and investments. Thus, cost and volume is considered as essential tools for financial
management of Merlin Entertainment tourism services (Hanna, 2014). Some of the significant
role of cost and volume in financial management can be expressed as follows:-
Effective cost structure: -Financial management of Merlin Entertainment Plc is analyses
through recognizing cost structure for tourism services (Merlin Entertainment Plc, 2016). It
includes identification of balance between expenditure and revenue on behalf of which manager
implements financial management of funds. It is valuable to prepare plans for further business
activities such as expansion, developing balance between demand and supply of resources and
increasing profit earning capacity of the firm. Moreover, it is able to identify accurate market
position and demand for service qualities. It influence in making decision for balanced economic
structure. It is helpful in generating ideas for sources and investments related to cost efficiency.
However, price determination and forecasting helps in increasing revenue and reduction of
unwanted expenses (Crépey, 2015). Therefore, actual cost structure is presented to enhance
working efficiency of the business organization.
Systematic allocation of fund: - Merlin Entertainment plc properly manage the by
creating balancing between expenses and investment. It is determined that fund allocation is the
key element to operate business entity effectively. It is vital for tourism to focus upon sources
and investment factors related to financial management influences expansion of business entity.
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Thus, costs and volume plays crucial role to manage finance as effective as possible. It is able to
gain optimum utilization of resources in production and distribution system of traveling and
accommodation services (Fowles, 2014).
Decision making tool for systematic business operations:- Merlin Entertainment
prepares plan for fund allocation on the basis of recognizing economic structure of tourism
services. Similarly, its is useful to achieve effectiveness of organization with increasing profit
earning capacity. In this regard, effective fund allocation and economic growth of tourism is
determined. Moreover, it generates creative ideas for providing systematic tourism services to
the tourists. It is useful technique used by manager to implement strategic plans for fund
allocation through financial management and economic growth of tourism (Ciplet, Roberts and
Khan, 2013).
1.2 Pricing method used in tourism sector
Merlin Entertainment plc determines . cost for influence tourism services. This pricing
includes cost of goods and services, expenses and investments etc. Therefore, financial manager
of the company decides price for effective business operations. In accordance to this, financial
manager of Merlin Entertainment Plc applies different pricing methods to determine cost of
tourism services. Such as; cost plus pricing, demand based pricing, competition based pricing
and other methods to decide price for product as well industry effectiveness. Some of the
important pricing methods can be determined as:-
Cost plus pricing: - It is one of the simplest methods to determine cost of tourism
services in which aggregate cost as income or profit is added to selling price of the product. For
instance, if Merlin Entertainment plc bears £ 100 per unit for providing traveling services and
adds £ 50 per unit to this price then, final cost of traveling service would be £150. Therefore,
cost plus pricing is effective determinant for deciding price of tourism services (Zhang and et.al.,
2016).
Demand based pricing: - Under this pricing method, financial manager of the company
decides cost for product by analyzing Cost for tourism services. Therefore, conducting market
research and demand for product is useful in deciding cost of tourism services. For example;
Heritage tourism of England determines price for tourism services according to demand based
pricing. It analyzes market research and customer opinion related to traveling and
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accommodation facilities of the organization. On behalf of which, manager of company decides
price for services (Valverde and et.al., 2016).
Moreover, under demand based pricing, various factors are recognized as price
skimming, price discrimination and price penetration. Where, price skimming factor is related to
very high pricing for products. It aims to provide qualitative services and maintain attraction of
high standard tourists for tourism demand. It influences customer loyalty for effective services.
In addition to this, Heritage tourism determines different price for same products on behalf of
demand. In price discrimination process, if customer demand for services for urgency then
manager fixes extra charge for emergency services. However, price penetration factor is different
form price skimming method, under which manager decides price on behalf of economic
condition of various tourists. Therefore, adequate costs for tourism is determined through this
process. Hence, manager of Heritage tourism decides tourism services price as per market
demand and tourists perception towards organization's facilities (Petty and et.al., 2015).
Competition based pricing:- This pricing method is related to determination of cost
according to market competition. In this regard, financial manager of company decides cost of
tourism services as per analyzing competitive strategy. It is related to set prices regarding market
position of products. Moreover, recognizing market research is able to change pricing on behalf
of identifying tourists attitude and perception towards tourism services (DRURY, 2013). For
example, British museum of UK is tourism provides services of traveling and accommodation
through determining cost for services to face competition. Therefore, organization determines
cost through market research and also changes price according to market position of goods and
services.
It creates interrelationship between pricing tools and competitive strategy to maintain
good reputation of entity in competitive market. Regarding this, financial manager of tourism
creates changes in price determination for effective services (Cole and et.al., 2013). It is valuable
for proper management of resources and aware society for tourism services attractively. Thus,
competition based pricing is useful for effectiveness and sustainability of effective tourism
services to face competition. However, it is determined that entity can increase its efficiency to
be prepare for benefited in competitive marketing issues. Therefore, financial management of
firm is done through determining cost as per competition to maintain good reputation in market.
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Other pricing methods:- Except all above mentioned pricing, organization decides cost
of tourism services such as value pricing, target return and transfer pricing to determine cost of
products. According to value pricing, manager of firm decides cost of tourism services through
analyzing value and quality of products. Therefore, qualitative tools used in manufacturing and
work in process are bases to fix price of tourism services. Moreover, financial manager of
Nation Maritime Museum decides cost of traveling and accommodation facilities by applying
transfer pricing in which cost is determined on behalf of exchanging goods and services. It
includes analyses of past performance in production and distribution system of tourism services
(Baños and et.al., 2014).
1.3 Factors effects profits for Merlin Entertainment plc tourism
Tourism sets target to increase revenue of organization for economic development. It is
financial management term that impacts on monetary structure of Merlin Entertainment tourism.
There are different factors which effects on gaining profit for entity such as currency fluctuation,
role of government in economic stability of entity, travel season. Therefore, these factors are
useful to analyze profit earning capacity of tourism (Lusardi and Mitchell, 2014). It impacts on
environment of tourism to present economic structure and implements strategies for financial
management. In brief, these factors can be determined as below:-
Currency fluctuation:- Changes in currency of different countries impacts on financial
development of tourism. In this regard, tourists from other countries visit to Merlin
Entertainment for several purposes like research and education, entertainment, visiting and other
targets. Therefore, providing tourism services to different nations people influences currencies
and other economic tools. Due to changes in currency either company increases revenue or gets
loss. Hence, changes in currency rates impacts on profit earning capacity of tourism for
providing traveling and accommodation services to different countries' tourists.
Currency fluctuation considers as external environmental factor impacts on tourism profit
to implement actions to create economic structure of organization. It is atmospheric tool remains
beyond control but effects environment of tourism. Therefore, it impacts on profit of industry to
present economic structure and monetary profile to increase efficiency of tourism services
(Ciplet, Roberts and Khan, 2013).
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Government investment:- Merlin Entertainment plc is public limited tourism sector in
which government interferes by providing rules and regulations to entity. Government prepares
budget to invest in tourism sector to increase nation's efficiency. Therefore, its intervention and
support effects on profit of tourism. It is related to fund allocation tool on behalf of which
financial manger of company makes plan for effectiveness of tourism services. Moreover, it
effects profit and tourism marketing for travel destination and accommodation facilities to attract
tourists.
Travel trend:- It considers as planning process and forecasting for future trend. Under
this factor, according to current traveling and accommodation services, manager of Merlin
Entertainment makes plan which effects on profit to run tourism effectively. Moreover, media
and marketing professionals plays effective role in tourism sector to advertise and presenting
value of services in attractive manner. Thus, these trends are occurs to analyze expected position
and criteria for travel and tourism. In accordance to this, it is useful factor which influences
profit of tourism to present financial profile of business effectively also generates idea for further
business activities (Zhang and et.al., 2016).
TASK 2
2.1 Different types of management accounting information used in Merlin Entertainment plc
Management accounting information considers as provision of accounting information to makes
plans for organization's effectiveness. It is related to entire management of organization
including transaction of resources and other services of firm. Involves different management
systems such as strategic management, financial and performance management including risk
management. Therefore, financial manager of Merlin Entertainment plc prepares strategic plans
for implementing business activities.
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Cost allocation report:- It is primary function of management accountant. In this way,
accountant of Merlin Entertainment prepares report for cost allocation includes determination of
pricing for tourism services. Thus, manager of the company decides cost for tourism. According
to past costing and performance of product in market, prices are determines for travel and
accommodation facilities.
Budget:- It is planning procedure for tourism's effectiveness. It includes forecasting and
decision making for further business activities. In this process, financial manager of Merlin
Entertainments prepares budget to control over excess and deficit of transaction of goods and
services. Including this, various decisions are taken to increase efficiency of tourism services.
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Forecasting:- Analyzing past years' transaction of resources and performance of
organization influences forecasting and making decisions for effective traveling and
accommodation services. In this form, manager forecasts business activities and future trend for
effective output and business operations to meet customer demand.
Fund allocation:- Manager of Merlin Entertainment plc prepares plan for fund allocation
includes sources and investment of money related to business activity. It includes proper
management of fund for financial management and economic growth of tourism. Moreover,
financial tools and techniques are determined through this process to implement strategic action
plans.
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2.2 Importance of management accounting information as decision making tool for Merlin
Entertainments Plc
Management accounting information is useful tool and technique for effective business
activity as planning and decision making process. Hence, manager of Merlin Entertainment uses
accounting information technique to present systematic economic structure for financial
management of tourism.
Optimum utilization of resources:- Management accounting information includes
analyses of current and past business activities. Thus, manager of Merlin Entertainment makes
plan for effective tourism services. Including this, increasing in productivity and profitability of
tourism is determined which influences optimum use of materials.
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Preparing strategic plans and forecasting further business activities:- On behalf of
recognition of tourism services, manager of the organization prepares strategic plans and
forecasts further business activities. Hence, management accounting information plays vital role
for decision-making and setting target to enhance organization's efficiency.
Financial and entire development of tourism:- Merlin Entertainment increases
efficiency of organization by applying methods for economic development which influences
other factors of tourism. For example; systematic production and distribution of goods and
services, qualitative services to attract tourists, implementing strategies plans. Thus, management
accounting information is useful for overall development of tourism.
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Organization's effectiveness:- Merlin Entertainment manager prepares strategies for
tourism effectiveness. It influences traveling and accommodation services of tourism for
entertain tourists and gain customers' satisfaction for qualitative services. Hence, manager takes
decision for tourism attractive tools remains able to increase attraction of tourists towards
traveling and accommodation satisfactory services.
TASK 3
3.1 interpretation of financial accounts for decision-making in travel and tourism
The restaurant Group (TRG) Plc analyses financial performance of organization through
ratio analyses. It presents profitability, turnover, gross profit and efficiency of tourism of 2014
and 2015. Therefore, liquidity and profit margin of both years are determined (Brigham and
Ehrhardt, 2013). According to this, current economic structure of TRG is performed on behalf of
which manager takes plans for further business activity. Thus, financial accounts' data
interpretation can be analyzed as:-
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Profitability ratio:- It represent profitability of TRG in 2014 and 2015. It includes
turnover, gross profit and net profit factors. In 2014, company's gross profit is 114 million which
increases to 127 in 2015. Therefore, profitability ratio analyses presents that organization's
economic growth is determined. It is due to optimum utilization of resources and increasing in
demand and productivity for TRG effectively. Thus, it can be analyzed that company can grow
in further years to maintain its good reputation in competitive market (Clark and Das, 2015).
However, gross margin in 2014 is 17.95% which increases in 2015 to 18.54% represents
effective financial profile of organization's effectiveness. Including this, net margin in 2014 is
10.55% which decreases to 10.07% due to imbalanced between export and import of resources.
Liquidity ratio and current ratio:- It presents liquidity and cash of organization on behalf
of which company takes decision for further business activities. Through data interpretation, it is
recognized company grows effectively. In 2014, TRG has current assets of 29 million which
increases to 38 million in 2015. Therefore, 9 million difference is arises, which influences
effectiveness of company. Similarly, current liabilities in 2014 is 122 million which increases to
136 million in 2015. Hence, ratio is recognized that entity is developed in monetary and other
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forms. In this regard, current ratio for for years impacted as 0.4% growth is arises due to
increasing in current assets and current liability of TRG.
Quick ratio:- It is determined by division of (current assets- closing stock) to current
liabilities of TRG. Hence, as per data interpretation, for both years, 2014 and 2015, organization
enhances its efficiency through attractive performance and tourists dealing. In 2014, acid test
ratio of organization is 0.19% which increases to 0.24% in 2015, it influences good reputation of
entity in market. Hence, it is recognized that firm enhances its efficiency through effective
economic structure and value added services in tourism sector (Baños and et.al., 2014).
Efficiency ratio:- It represents efficiency as working ability of TRG. It includes factors
as cost of goods and services, debtors and creditors. Thus, cost of goods and services in 2014 for
organization is 521 which increase to 558 in 2015. Therefore, high level of efficiency in
transaction of goods and services is impacted to present organisation's working structure. In
addition to this, debtors performance is 2 in both years 2014 and 2015. Therefore, it remains
constant to present organizational framework. However, creditors position in 2014 is 51 which
impected in 2015 to 56. Hence, TRG requires to focus on this factor for further effectiveness.
Inventory ratio:- It also terms as stock turnover ratio. It is determined by ratio of cost of
goods and services to inventory of the firm. As per data interpretation, in 2014 TRG gains
86.83% which increases to 93% in 2015. Therefore, it is determined that organization influences
its efficiency at high level. Thus, inventory-turnover-ratio presents that entity develops its
creativity through optimum utilization of resources as well reduces wastage of raw materials.
Solvency ratio:- It includes factors as debt, equity and capital gearing (Cole and et.al.,
2013). As per data interpretation, debt of TRG is 39 which decreases to 31 million in 2015
influences organization's effectiveness. It is achieved due to increasing in working efficiency and
qualitative services to perform economic structure effectively. Moreover, equity of entity is 245
which increases to 284 in 2015. It is determined that firm increases its earning capabilities
through this factors. It remains valuable to create developing environment of firm. In this regrad,
capital gearing in 2014 is 0.16 which decreases to 0.11 in 2015. Hence, TRG requires to focus on
this factor for effective tourism. It will be beneficial for entity to grow at high level by
implementing action plans.
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Debtors receivable period:- In 2014, debtors receivable period is 1.15 which decreases
in 2015 to 1.07. Therefore, TRG presents that it is necessary for organization to concentrate on
this factors for effectiveness and proper management of business activities. Thus, entity must
prepare plans for effective in economic sectors. It impacts on other tools of entity to gain
optimum utilization and increasing in productivity and profitability of organization effectively.
Creditors payment period:- It is determined through division of account payable to cost
of goods and services. According to data interpretation, in 2014, TRG creditors payment period
id 35.73 which increases to 36.63 in 2015. Thus, organization can achieve good performance in
further through taking advantage of creditors role in organization's effectiveness. It is useful term
for economic and other sectors' growth at high level (Crépey, 2015).
Total capital employed:- It is economic tool determines company's economic
performance. Under this factor, difference between total assets and current liabilities is
determined which influences organization's performance adequately (Hanna, 2014). In this
regard, as per data interpretation, it is determined that in 2014, total capital employed of TRG is
245 which increases to 284 in 2014. Therefore, organization is developed its efficiency at large
scale to perform economic structure of entity. It is expected that TRG can increase its value in
further years for proper market strategies and tourism services.
TASK 4
4.1 Sources and distribution of funding for DEVELOPMENT of capital projects within tourism
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CONCLUSION
The report is concluded that financial structure and effective analyses for economic
structure is helpful for entire development of Merlin Entertainment. Through this study, different
aspects of financial system and presentation data related to ratio analyses is considered.
Therefore, effective presentation of financial tools are determined for monetary terms related to
development of organization. In addition to this, TRG monetary tools are presented to acquire
knowledge about liquidity and efficiency of organization. Moreover, importance of cost and
volume is recognized to implement action plans for factors relates to finance and funding.
Regrading this, various kind of costs and pricing determination factors are determined to perform
organization's economic framework. In accordance to this, proper ideas are determined to
increase efficiency of organization through financial management. Moreover, financial
management systems and strategies are obtained to present methods for implementing tourism
services and effectiveness of entity. In addition to this, various tools and techniques are
determined to maintain good reputation of entity in competitive market. Thus, finance and
funding in tourism sector is recognized through this report to make effective position in market.
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Online
Merlin Entertainment Plc. 2016. [Online]. Available through:
<http://www.merlinentertainments.biz/>. [Accessed on 3rd February 2017].
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