Finance and Funding in Travel and Tourism: A Case Study Approach

Desklib provides past papers and solved assignments for students. This report analyzes financial management in the travel and tourism industry.

FINANCE AND FUNDING IN TRAVEL AND TOURISM
Name of the student:
Name of the university:
Student's ID:

Contents
INTRODUCTION......................................................................................................................3
TASK 1.....................................................................................................................................3
Introduction............................................................................................................................3
TASK 2.....................................................................................................................................7
Task 3.......................................................................................................................................11
Task 4.......................................................................................................................................17
Conclusion................................................................................................................................21
Reference:................................................................................................................................22

INTRODUCTION
Nowadays, finance and funding occupy a huge aspect in all the sectors and segments of every
business. In short or as an outcome, financial management is very essential for businesses,
one common factor, which holds the profit and success of the company or businesses is its
financial management and also the properness of the financial resolution made within. In this
case, a deep conversation will be made on the part and significance of finance and funding
inside travel and tourism enterprises together with deliberation how management accounting
data and financial account interpretation could also be used for creating financial
deliberation. This also shows the various origin which can be worn for capital project
development in tourism industry.
TASK 1
Understand the importance of costs, volume, and profit for management decision
making, in travel and tourism
Introduction
This data is going to assess how financial management does its part in the context of traveling
and tourism enterprises and affects the cost of technique business can use.
Explain the importance of cost and volume in financial management of travel and
tourism business using carnival corporation and plc as your case study.
It is very essential for all the journal, traveler and tourism enterprises to handle its finances.
Gean and Gean(2015) also talk briefly that financial and management is very skilfull for
tourism enterprises and can also be made by measuring prices, volumes with a huge profit.
Although, for financial management identifying costs are very inevitable (smith.2015)

For understanding how costs can be identified in a tourism enterprise, carnival corporation
and plc can also get used as a sample. Carnival Corporation and plc is a prominent and a
huge tourism brand among all the tourism brand providing leisure tourism to tourists all
over the world (carnivalcorp.com, 2019) this association has various kind of costs to spend
throughout , straight cost can be identified as the cost whose units can get tracked straight to
cost, on other hand straight costs are simple converse ( Banker and Byzalov 2014) for
example, carnival corporation and plc works with wages to all its employees and hence they
can be located. They are the examples of own insurance surcharge that the enterprise works
cannot be tracked simply and are given as carnival corporation and plc’s in simple costs.
Cost of a company also can be split into fixed, variable and semi-variable. The fixed cost of
an enterprise is who do not fluctuate rapidly even after a huge period of time. (Gu et al.,
2014 ) opposing to, the variable price is the one that keeps fluctuating with several factors
any moment. like rapidly fluctuating levels of working ( Ding et al., 2013 ). While the too-
let which Carnival corporation and plus works are like of it came to price. The worker costs
that it gives can look at the variable cost. MacMillan (2014) described the costs that are half
variable and half fixed costs. Like the electricity bills paid by Carnival Corporation and plc's
are its half variable costs, breakage, and the telecommunication.
Although the capacity sold in a company is also very important to be examined, Carnival
Corporation and plc can be measuring the capacity sell by it via-
Economies of scale- the advantages that businesses appreciate for accessing at huge plates is
economics of plates ( Tegtmeier, 2013 ) carnival corporation and plc enjoy economies of the
plate. Like less cost of inputs and work cause of economies of the plate.
Breakeven analysis – Morano and tajani (2017) explained breakeven examine as the best
one is used for identifying the margin of safety of a company and the sales are required for

preparing for income profits. Carnival and corporation and plc can take advantage of
examining to describe its sales target and also the safety margin
Analyze pricing methods used in the travel and tourism sector. You should use the
relevant examples from different cruise brands of carnival corporation and plc.
Pricing technique is of various kind and various companies can be using various pricing
technique for fixing product costs. The costs methods help in accomplish business in huge
profits. The pricing technique mostly adopted in travel and tourism companies are as follows:
ROI Pricing method –the technique by which commodities sell by the company are price
based on the refund wishes to be earned from their plates is known as ROI pricing method
( Baker et al., 2017 ). The P&O Cruises of carnival corporation and plc is a well-known
example of travel and tourism companies using the ROI pricing.
Market-led pricing method – some companies fix their stocks for services and goods by
analyzing and filtering prices of same commodities given by rival companies .this kind of
pricing technique is know as market-led pricing ( Hsieh et al., 2014 0. For example, carnival
corporation and plc are a famous brand Holland America line take use of market-led pricing
to examine the price for journey packages.
Cost-plus pricing method- the pricing technique from which a company products by
commonly summing a markup percent to the whole costs invested for manufacturing or
acquiring is known as cost-plus pricing ( Yang, 2017). carnival corporation and plc its brands
like AIDA cruises also use this pricing technique for fixing prices its sail packages.
Other different technique like the cost led pricing method, marginal costing, contribution
costing, and also others can be taken use for fixing prices of products in the business of travel
and tourism company as well.

Analyze factors influencing profit for travel and tourism businesses using carnival
corporation and plc cruise brands as your case study
The main aim of nearly all the businesses assessing all over the globe to earn and boost its
profit. According to obrinsky( 2015 ) profit can also be explained as the financial or
monetary advantages that a company earns. Although in every case of industry sector,
profits of a company are altered through its large environmental factors. The simple
element which can be acting an impact over the profit received by carnival corporation
and plc, are the following –
Current trends – the current trends, which beat in the company, have a blunt impact
over the gain that the businesses action within it received one of the important company
that are affected due to new trends in the travel and tourism company, for instance, the
new trend of travel and tourism department also takes adventure in the tourism company.
Like the carnival corporation and plc are capable to give experience tourism and
ecotourism ability thereby influencing its profits.
Seasonal variation – Guzman –parra and Quintana – Garcia (2015) stated that occasional
variation is a simple problem in nearly all travel and tourism company .for example
carnival corporation and plc mainly deals with problem traveling. Although the sea cause
to chances of bad weather condition and the mishap that often occur in the sea because of
cyclones. As a conclusion, the gain of carnival corporation and plc are majorly affected
period the monsoon season.
Economic environment - the major significance aspect that has a reaction to the gain of
the company is the economic effort in a nation ( Briassoulis and van der straiten, 2013 ).
The gain and action of a nation are because of the economic situation along the nation.
For example, in the case of carnival corporation and plc, the gain of the company lesser

when their tourist has to give an extra price for their tours. P&O Cruises is a simple
instance of facing like a condition in the UK.
Conclusion –
Therefore, from this case study, it can appraise that financial management works a huge
role in the text of travel and tourism company . in situation to control a less authority of
finance in a travel and tourism company its pricing are needed to identify the forms in
which gain of travel and tourism company is affected and what are the costing technique
these businesses can use
TASK 2
Understand the use of management accounting information as a decision-making tool
in the travel and tourism business
explain the different types of management accounting information that could be used in
travel and tourism businesses using the Fulham Shore plc as your case study
In every travel and tourism company management accounting technique works an important
role. this is due to the judgment making in these industries are more reversed by the
management action news. The more frequent types of management accounting news, which
travel and tourism company can also be used are as follows –
Budget – as per to Bogsnes (2016) budgets works as an important role in one of the
major effectual origin for describing the management accounting news. Via means of
budgets, travel and tourism companies can also be describing news parallel to allocating
of revenues. Sources amount and working required being finished. The news described
from the Fulham Shore plc's budgets can be taken in work for safety budget control

together with fixing related to various types of technique and working that are required to
budget target.
Financial statement – companies can also describe management accounting news by the
statement ( Biddle, 2015 ) the news which is possible on the financial statement of a
company provides valuable news for making an easy and working judgment. For
instance, the news that the Fulham shore plc will be describing from its financial states
can be used for judging
Variance analysis:- the various kinds which are present in between the budget actions is
called the variance analysis ( Pollard 2014 ) the news parallel to budgetary various of a
travel and tourism company is working in it and trying to make it effectual judge as also.
For instance, the news described from the variance measuring held in the Fulham Shore
plc, can also be taken in work together with the business to make a judgment parallel to
its investing and costs together with giving continuous support to take different new
opportunities to sales. thejudgement taking which the budgetary variances of the Fulham
shore plc can be also be decreased deternming from the variance analysis.
Assess the use of management accounting information as a decision-making tool for
the Fulham shore plc.
As per according to the upper portion, the authority from which management accounting
news can be detailed has been conferring a consider . company all over the globe are
based on management accounting news for made different types of significance judge.
The major simple types which travel and tourism company can be deputy as a judge
making tool are as follows –
Raising capital – an effective judge making technique needs presence in form to increase
central in a company. management accounting held in an industry intakes the prepraring

of different kinds of cases . for instances different report, budget cases, and other different
cases. For example, the account related financial and the reported budget of the travel
and tourism company the Fulham Shore plc can be used for identifying the capital
increasing the capital of the company together with identifying the needs parallel to
increasing capital. The news turns out to be the main base for making a raising capital
judge.
Forecasting – Forecasting is another aspect of efficient management accounting
information. Various factors sales, expense levels, and many others can be accomplished
by The Fulham Shore. They will be able to predict its financial situation in the upcoming
years and make an impact in their profit levels
Investment – Investment is another important decision that an organization has to take.
These types of decisions are taken by the management accounting information (Xu,
2015). For example, in case if a hotel looks forward towards expanding its overall
business, open new resorts and places of luxury at new destinations, and various other
such decisions could be taken is dependent on the management accounting information.
In such type of cases, The Fulham Shore plc uses information from units like capital
budgeting, financial statements, and investment appraisal reports.
Thus, various decisions in a travel and tourism enterprise such as The Fulham Shore plc can
be made through management accounting information.

The most common ways, with which travel and tourism enterprises can be acting as a decision-making too
Investment decisions
Capital raising decisions
Forecasting

Task 3
Be able to interpret financial accounts to assist decision making in travel and tourism
businesses
Interpret financial accounts of The Fulham Shore plc for the year ended 25th March
2018 showing at least two years performance (for example comparing 2018 to 2017).
One of the main reasons behind the award winning scenarios of any certain company is their
financial management and efficient financial decisions. Howsoever, the leading part, as stated
by Vogel (2014), the most basic way to enhance the finances of a company is by evaluating
the finances. This is the same for all types of business, from lowest to the biggest. There are
various methods by which the accounts can be interpreted. Like, for example, the cash inflow
and outflow statements of a company can help us understand the net gain or loss of the
company.
On another level, the profit and loss statements can help understand the position of that
certain company in the market. The financial statements of the travel and tourism company
can help in understanding the net profit and operating profit of the company. The balance
sheet can be used to determine the assets and liabilities of the tour and travel company. It also
helps them review their capital and amount of equity held in the market.
However, the above-mentioned methods are not completely effective in maintaining the
proper records of a Tours and Travel agency. To attain proper financial performance of that
certain company is the method of ratio analysis. It is a method of analyzing the financial
performance of the travel and tourism industry. This method proves to very efficient when it
comes it measuring the overall financial performance of a Travel or a Tours company as it is
specially dedicated for that certain type only. According to Lakshmi et al. (2016), this is one

of the most effective metrics. For example, in order to measure the financial performance of
The Fulham Shore plc, ratio analysis can be used.performance. In the following section,
financial ratios have been applied for interpreting The Fulham Shore plc’s financial
performance -
Profitability ratios of The Fulham Shore plc
Key financial ratios 2018 2017
Return on equity (ROE) - 1.51% 2.52 %
Return on assets (ROA) - 0.91% 1.72 %
Return on capital employed (ROCE) 0.27 % 3.21 %
Gross profit percent 41.42 % 43.83 %
Net profit percent - 1.05% 2.29 %
Table 1: Table showing the profitability ratios of The Fulham Shore plc for the period
ending March 25, 2017, and 2018
(Source: Fulhamshore.com, 2019)
Return on
equity
(ROE)
Return on
assets
(ROA)
Return on
capital
employed
(ROCE)
Gross profit
per cent Net profit
per cent-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
2018
2017