UK College Finance and Funding in Travel and Tourism Sector Report

This report delves into the crucial role of finance in the travel and tourism sector, focusing on financial management, cost and volume analysis, and pricing strategies. It examines the importance of costs and volume for businesses, exploring various pricing methods like rack rates, seasonal pricing, and discounting, alongside factors influencing profitability, such as seasonality, events, government regulations, currency rates, and natural calamities. The report includes an analysis of the financial accounts of Dalata Hotel Group Plc, comparing the financial performance between 2015 and 2016, and concludes with an assessment of funding sources for capital plans within the industry. The report uses Carnival Corporation & Plc as a case study and references various academic sources to support its analysis.

Finance and funding in
travel and tourism sector
Contents

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Importance of costs and volume in financial management of travel and tourism businesses
................................................................................................................................................1
1.2 Pricing methods used in the travel and tourism sector.....................................................2
1.3 Factors influencing profit for travel and tourism businesses............................................4
TASK 2 Covered in PPT..................................................................................................................5
TASK 3............................................................................................................................................5
3.1 Interpret Financial accounts of Dalata Hotel Group Plc:.................................................5
TASK 4............................................................................................................................................8
4.1 Covered in Leaflet:...........................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance is the most critical thing for running any business in an effective manner. Although, this
can be said that company’s manager needs to decide an effective finance so that the business
objectives can be achieved effectively. This is the report which is based on the Carnival
Corporation plc which is planet leading leisure travel company in addition to the portfolio of the
cruise brands in North America, Europe and Australia (Vanhove, 2011). This report is based on
the importance of cost and quantity in financial management. This explains the various pricing
tools which implements in the travel and tourism sector and diverse components that influence
profits of cited this sector. Apart from this, it can be said that this report explains various
management information needs which help in making their business objectives attainable. This
report covers the Dalata Hotel Group Plc under which it will reflects interpretation of the
financial statements. At the end of this report, this covers the leaflets which assess sources of
funding for capital plan of the quoted industry.
TASK 1
1.1 Importance of costs and volume in financial management of travel and tourism businesses
Carnival Corporation & Plc: This organisation is one of the largest leisure travel organisations
which have diverse portfolio of most of the effective cruise brands in North America, Europe and
Australia. The organisation portfolio consists of 10 international cruise brands (Van der Sterren,
2017). Apart from this, Carnival Corporation & Plc owns a tour company which complements its
cruise operations:
Cost: The costs reflect to those expenses which occur in the firm’s operations and
activities. Costs are crucial components in t business which affect the business activities.
Volume: This is the quantity of the expenses which is reflected in the monetary terms in
the organisation. This is mostly said that the calculation of the finance in the business.
Imperativeness of the costs: Costs is the most effective tool for development of the firm. This
plays an important role for the organisation’s success or failure. This can be found that whether
firm’s cost is higher or lower (Turner, 2010). It is totally depending upon the firm’s competitor’s
prices. The price of the product is more if the cited company cannot meet its desired outcomes.
While, on the other hand, if cost of the organisation is affordable then in that case, the company
could get the sustainability.
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Cost reduction: This is term which refers to the most important factor in accompany as they
provide cost reduction during the company’s activities (Tribe, 2015). By applying cost reduction
technique, company can gain sustainable development over competitors. This can be done by
using effective management accounting tools in the production or service process of the Quoted
company.
Decision making: The decisions of the firm’s managers totally rely upon the costs of the
products or services (Vogel, 2014). Although, this can be said that the company’s manager will
take decisions after analysing the costs.
Designing financial structure: The financial structure of the Carnival Corporation & Plc
frame and regulated with various costs in travel and tourism tasks.
Enhancing Management Performance: Costs help in improving the financial management
performance because this demonstrates various costs of projects in order to compare financial
situation of company in travel and tourism sector (Spenceley, 2012).
Importance of Volume:
Break even analysis: This is the procedure of determining the point as per the business
which includes its cost incurred on the expenses. For this organisation, this is the most important
to evaluate the break-even points in order to observe the cost covering period.
Economies of scale: This is the scale which represents extra costs which saves
enhancement according to the production level. This sector could protect the costs by applying
economies of scale.
Diseconomies of scale: The stage under which economies of scale does not function in
that case, organisation refers to the diseconomies of scale. According to the tourism business,
assessment of this volume is needed to be provided as per the business operations.
1.2 Pricing methods used in the travel and tourism sector
Various pricing tools implemented in travel and tourism sector are:
Rack Rates: - The rack rates are sum of rates explained by company without rendering discounts
or offers. They are rates for the entire season mentioned on the brochures (Ritchie, Amaya
Molinar and Frechtling, 2010). Seasonal pricing: Throughout the year, there are many tourist seasons for the optimum
visits. Seasonal rates totally rely upon the tourists’ visits. If the number of visits are
higher, in that case, the rates would hike up. But if number of travellers visiting are less,
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then in that case, the price would become lower. However, prices keep changing over the
time. Last minute pricing: This is the last minute pricing method, which mentioned the
different prices of this sector which keeps changing according to the last minute deals.
There is a requirement to set up the price according to booking. Discounting: This is the pricing tool which depends upon discounts to the tourists. Package deals: This is one of the pricing methods of tour and travel business which is
explained according to the various amenities given in the package to the tourists.
Although, it is a highly efficient tool for pricing tool (von der Weppen, and Cochrane,
2012).
 Commissions: This is the thing which is provided to the third party on booking.
Commission is a kind of pricing tool which charges more amount from the tourists.
Examples of various business from travel and tourism sector: Tourism Victoria is one of the
state government tourism which applies the seasonal pricing methods but prefer flexible pricing
according to the pricing tool as they keep changing as per the travel and tourism industry’s need
(Pike, 2012). Carnival Corporation are the travel and tourism business given tours in North
America, Europe and Australian which keeps dynamic pricing tool for their operations. On the
other hand, Cape tour is the other firm which renders tours packages for South Africa and
considers seasonal and package pricing tools.
While, on the other hand, few pricing methods are likewise there, which are as follows:
Cost oriented pricing method: As per this, pricing tool is a fixed number which is
provided to the costs in order to more profits could be provided from operation. This is most
effective and convenient way for determining the profits according to the method of pricing is
convenient.
Market oriented pricing method: According to this tool, price is determined as per the
competition which provides in the market. As, prices are the short or high which relies on the
prices which will prevails during the market by contenders (Papatheodorou, Rosselló and Xiao,
2010). Cost oriented pricing tool which is applied under this sector as, this tool assists to provide
to modify the best margin for the business that would assist to optimise the profits. Although,
this tool is convenient tool in order to implemented to entire party. Apart from that, market
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oriented pricing tool which could be implemented by the organisation in order to compare the
price along with its leading contenders that will survive in the long run.
1.3 Factors influencing profit for travel and tourism businesses
Tourism is concerned on to give service to those people who came from abroad for limited
period of time from their home country. There are various firms which with travel and tourism.
Foreign tourists take help from these firms to visit other country. For attaining the goals and
objective, these industries implement some innovative marketing strategies. Carnival
Corporation & plc is a travel and tourism industry which implements different strategies to
attract customers for travelling abroad (Nielsen and Spenceley, 2011). The manager of company
launches new schemes for customers with different tour package offers. Various discount offers
are given by company to stand before their rivals in marketplace.
Organisation put their efforts to maximise profit level. Manager appoints different
members to communicate with customers giving information about various schemes of travel
and tourism. Manager of Carnival Corporation & Plc invites their customers to take part in
various events, adventitious tours which helps to maximise probability of company. Manager
implements an effective strategy to manage all activities of plan which help to fulfil the desire of
their loyal customers (Morrison, 2013). There are different factors which affect the profit of
Carnival Corporation & Plc which are described as below:
 Season: Foreign travellers choose some specific season for travelling abroad. Manager
of travel and tourism firms communicate with their customers for travelling abroad. In
order to attract a large number of customers, they use advanced technology to advertise
and promote their touring plan. Carnival Corporation & Plc offers various discount offers
on different touring package. It aids to maximise the level of profits.
 Event: In order to improve the performance, manager of Carnival Corporation Plc
organises various types of events which aim to give full entertainment to their loyal
customers.
Government: Government imposes high rate of interest which influence the level of profitability.
Another factor which influence the profit is hike in petrol price (Heung, Kucukusta and Song,
2011).
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 Currency Rates: Various company has diversified rate of exchange of currency. It also
influences the profit of Carnival Corporation & Plc. Lots of customer who are from other
country. Company's profit depends upon these customers.
 Natural Calamities: Natural calamities also influence the level of profits of company
because tourists do not want to visit that place.
Terrorism: Terrorist activities affect the profit of company tourist neglect to visit country where
terrorist activities takes place
TASK 2
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