Tourism Finance and Funding: Case Study of Carnival and Fulham Shore

Desklib provides past papers and solved assignments for students. This report analyzes tourism finance and funding strategies.

1
Finance and Funding in the Travel and
Tourism Sector
Student name:
Student id:
Assignment code:

2
Table of Contents
Introduction.................................................................................................................................................3
Task 1:.........................................................................................................................................................4
Introduction:............................................................................................................................................4
1.1: Importance of the volume, profits and the cost analysis of the Carnival Corporation Plc:................4
1.2: Evaluation of the various pricing strategy adopted in the tourism industry......................................6
1.3: Factors influencing the profitability of the Tourism Industry:..........................................................7
Conclusion:..............................................................................................................................................8
Task 2:.........................................................................................................................................................9
Introduction.............................................................................................................................................9
2.1: Explanation for the various types of MIS used as the decision-making tool in the tourism industry:
.................................................................................................................................................................9
2.2: Use of the MIS as the decision-making tool of the Fulham Shore Plc............................................10
Conclusion:............................................................................................................................................12
Task 3:.......................................................................................................................................................13
Introduction:..........................................................................................................................................13
3.1 interpreting the financial statements of the Fulham Shore Plc for the year ending march’ 2018:....13
Conclusion:............................................................................................................................................18
Task 4:.......................................................................................................................................................18
4.1: Sources of funding for the development of the tourism sector:.......................................................18
Conclusion:...............................................................................................................................................19
References:................................................................................................................................................20

3
Introduction
Funding and the financing can be termed as the essential concept which requires the appropriate
attention and the timings in the business for the better and the proper growth of the business
organization and economy too. The current report is making the presentation for the “Finance
and the funding of the travel and the tourism sector” for the proper growth of the economy. For
the development of the tour and travel industry proper need of the funds are required so the
present assignment is making focuses in the same direction. The assignment is also present the
discussion over one of the tourism company names Corporation Carnival & plc which is
planning the tourism strategy, so various cost profit and the volume strategies are applied for
developing the appropriate pricing strategy for the same. All the factors which constitute the
profits in the company are also analyzed in the report. Investment appraisal and the management
accounting reports are also prepared in the given report for supporting the future transactions of
the company. Ratio analysis of the data of the company Fulham shore Plc is also presented in the
following report.

4
Task 1:
Introduction:
This section of the report is making the discussion over the importance of the CPV analysis of
the Carnival Corporation plc. The report is also presenting the various pricing strategies adopted
by the company to determine the prices of the services of the company (Bharwani and Butt,
2012). The factors also influencing the profits of the company is also discussed in the given
report.
1.1: Importance of the volume, profits and the cost analysis of the Carnival Corporation
Plc:
Carnival Corporation plc is the largest cruise operator in the travel and the tourism sector of
British America. The company is operating around 100 vessels in the name of the 10 brand name
of the cruise.
The cost of the company can simply be termed as the total amount of expenditure incurred in the
company for providing better services and the products to the customers for the satisfaction of
their needs. For the effective operation of every business organization, the management of the
company needs to make the balance between the various expenditures that is taking place in the
organization. The cost of the company basically includes the:
Direct cost: These are the cost which is incurred as the compulsory expense of the Carnival
Corporation Plc in respect to that of the direct expense, material and the labor expense of the

5
company (Bhatia, 2012). This type of cost forms the base for the other cost which is incurred in
the company.
Indirect cost: It is the type of the cost incurred in the Carnival Corporation plc, in respect of the
cost which is not related to the direct and the compulsory expenditure of the company. These
expenses basically include the expense in relation to that of the property rent, energy cost and the
other overhead expense of the company.
Fixed cost: These are the costs which are compulsorily incurred in the Carnival Corporation Plc
irrespective of the number of services delivered by the company. Rent expense and the insurance
expense forms the part of the fixed cost of the company (Boella and Goss-Turner, 2013).
Variable cost: These can be termed as the costs of the Carnival Corporation which rises with the
rise in the sales and the production volume of the company. These costs of the company are
directly linked with the production capacity of the company.
Appropriate allocation of the cost: Proper development of the understanding of the cost
mentioned above, the corporation carnival can make the proper allocation of the cost in the
company in relation to that of the traveling and the tourism funding in the company. This
allocation is necessary for smooth operation of the company.
Volume analysis:
Economies of the sale: Carnival Corporation can reduce their cost by making the use of the
economies of scale making the increment in their cost saving with the direct rise in the volume of
the production of the company.

6
Break-even analysis: It is the point where all the fixed cost of the carnival corporation is get
recovered by the sales delivered by the company (Evans, et. al., 2012). At this particular point,
the company will not generate any profit and the loss in the company.
Diseconomies of scale: In the situation when the economy of scale is not operating well in the
carnival corporation. This type of volume analysis in the company discloses the performance and
efficiency of the company.
1.2: Evaluation of the various pricing strategy adopted in the tourism industry:
Cost led: It is the type of the pricing method which is used in the carnival corporation for
determining the selling prices of the services delivered by them. In this type of the method the
total cost (fixed, variable, direct and the indirect cost) incurred in the company taken as the base
for setting the selling prices of the services of the company i.e. add the fixed mark up in the cost
to determine the sales prices of the services (Georgiev, 2014). The cruise brand of Holland
America makes use of this pricing strategy for their services.
Seasonal pricing method: The Princess cruise of the Carnival Corporation in determining the
pricing strategy as per the seasonal strategy. In the winters generally, people like to travel to the
places to see the snowfall so the cruise is determining the prices accordingly. And in the summer
season, people like to go to the beach sites to the company determines the prices of their services
accordingly.
Competitive pricing: It is the pricing strategy which is adopted in the Holland American cruise
of the Carnival Corporation (Gotze, et. al., 2016). In this type of pricing strategy, the company

7
determines the prices of the product and the services as per the prices of the services of their
competing companies in the market.
Value-based pricing method: It is the type of pricing strategy adopted by the P &O cruise. In
this type of the pricing method, the cruise of the carnival corporation determine the prices of the
products and their services as per their opinion to make the judgment that how much the
company makes the value of the prices and services. By making adoption of this method they
developed the understanding that what best price customer like to pay for their services.
Skimming pricing method: This specific method allows the company to maintain the higher
prices for the services and the products of the company. This method is used in Carnival
Corporation they high prices for their products and services to make the easy recovery of the
fixed cost that is incurred in the organization.
1.3: Factors influencing the profitability of the Tourism Industry:
Political Environment: Political stability of the company majorly influences the profitability of
the corporate corporation plc (Gurtner, 2016). Political instability in the country directly affects
the tax rate and the other charges charged by the government this directly influences the pricing
of the carnival corporation plc.
Availability of the substitutes: The competing companies of the corporation carnival that are
providing the same services as that of the corporation carnival also influence the profitability of
the company.
Social and the Cultural factors: Sociological and the cultural factors of the country in which
the Cruise of the Carnival Corporation is operating influences the labor and the working

8
environment and the operation of the Cruise and thereby also influences the profitability of the
company.
Seasonal variation: The business of the traveling and tourism sector is completely based on
seasonal factors. Various seasons influences the profitability of the tourism sector. Normally in
the peak season, the carnival corporation is making the high sales of the services for increasing
their profits (Kimbu and Ngoasong, 2013). The business of tourism changes with the change in
the seasons like autumn, spring, winters and the summer.
Staffing: This is also the essential factor which influences the profitability of the tourism
industry as the customers are attracting to those companies only who are providing better
services to the customers. So this factor of the Corporation Carnival also influences the
profitability of the company.
Conclusion:
This part of the report is making the conclusion over the CPV analysis and the factors which are
influencing the profitability of the company “Carnival Corporation Plc”.

9
Task 2:
Introduction:
This task is presenting the use of management accounting information as the decision-making
tool in the tourism industry.
2.1: Explanation for the various types of MIS used as the decision-making tool in the
tourism industry:
The company names Fulham shore Plc is running a restaurant business in the country of U.K.
The restaurant and the hotels are operated by the highly skilled and talented entrepreneurs (Ma
and Hassink, 2014).
Various types of MIS in the companies are:
The system of management accounting in any organization helps the topmost management to
take effective and profitable business decisions in the company. The company names Fulham
Shore Plc is making use of the various types of the system of the management accounting to
develop an effective budget and the financial statements of the company. This type of accounting
system in the company also enables the company to prepare the forecast report and the variance
analysis report effectively and efficiently. This accounting information in the Fulham Shore plc
also helps in calculating the profitability, solvency and the liquidity ratios of the company. The
various reports by which the management accounting system of the company presents effective
reports of the company are as follows:

10
Financial statements: These are the statements prepared in the Fulham Shore plc, for
determining the current financial position of the company. These statements of the company
present the income statements, cash flow statements and the balance sheet of the company
(Morrison, 2013). These reports in the company present the financial status of the company at
the yearend date whether the company is operating profitability or not.
Management Information system: MIS is the type of software used in the Fulham Shore Plc
for processing, collecting and recording of the data in the company. This system provides
flexibility in conducting the various operations in the company and reduces the chances of error
in the company. MIS if adopted in the companies helps the companies to achieve the efficiency
and effectiveness in conducting the operations.
Variance: Fulham Shore Plc has adopted the strategy of Variance analysis for developing and
maintaining control over the budgeted and the actual performance of the company.
Financial Forecast: These are the reports prepared in the Fulham Shore Plc to develop the
strategy for the future expenses of the company for controlling and meeting the future unforeseen
expenses of the company. These reports in the company help to make the elimination of the
future risk of the company.
2.2: Use of the MIS as the decision-making tool of the Fulham Shore Plc:
The system of the management accounting can act as the tool in the process of decision making
in the organization named Fulham Shore Plc for the following information discussed below:
The MIS in the company helps the organizations to develop financial and non-financial data of
the companies. These are reports which are prepared by the company for measuring the internal

11
performance of the company (Namazi, 2013). These reports are not distributed to the external
stakeholders of the company. With the help of the management accounting information in the
company, the manager can get knowledge about the liquid assets of the company for the specific
time period.
Following are some more use of the MIS as the decision-making tool in the company:
Investment Decisions: The system of managerial accounting in the companies helps in taking
the various important decisions in the companies. The system of management accounting acts as
the tool for taking the various decisions in the organizations. Fulham Shore Plc makes use of the
MIS as the investment decision-making tool in the companies.
Operational decisions: The management accounting system in the company also helps in
taking the decisions in the company which helps in taking the profitable and the operational
decisions in the organization. For taking the operational decisions in the organization the Fulham
Shore Plc makes use of the Net Suit Software in the company.
Strategic decisions: These are decisions used in the Fulham Shire Plc which influences the long
term strategies and the visions of the company. The effective use of the management accounting
system in the company allows the company to set the long term objectives of the company and
allow making the adjustment in the short term objectives of the company (Pitoska, 2013).
Fulham shore Plc makes use of the SAP ERP as the tool of the management accounting to take
the strategic decisions in the company.
Tactic decisions: These decisions of the Fulham Shore plc make use of the management
accounting information for determining the future goals of the company. These decisions of the

12
company make the strategy for the overall profitability of the company for a long duration. For
taking the tactical decisions the Fulham shore Plc makes use of the software named Quick book
as the accounting tool in the decision making.
Decisions for making the comparison of a trend of the company: The system of
management accounting is also used in the Fulham Shore Plc to make the comparison between
the past year and the current year performance of the company. The financial statement prepared
in the company can be used as the tool for making a comparison between the past and the current
performance of the company. These financial statements are also used by the Fulham Shore Plc
to make the comparison in the performance of the company with that of their competing
companies.
Forecasting: The Budgeting tool of the management accounting information helps the Fulham
Shore Plc to make the future forecast of the financial expense of the company. This tool helps the
Fulham Shore Plc to prepare the preventive measures for the avoidances of the chances of the
losses in the future time of the company. This forecasting decision helps the Fulham Shore Plc to
make the improvement in the future performance by learning the experiences from the past
records of the company (Theobald, 2012).
Conclusion:
The specific task is making the presentation over the need and the importance of the various
management accounting tools in the organization for taking the various decisions in the company
to make it profitable.