Finance and Funding in Travel and Tourism: A Detailed Analysis

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, utilizing Carnival Corporation & plc and Dalata Hotel Group plc as case studies. It examines the importance of costs and volume in financial management, analyzes various pricing methods, and identifies factors influencing profit. The report also explores different types of management accounting information and assesses its use as a decision-making tool. Furthermore, it interprets the financial accounts of Dalata Hotel Group plc and analyzes sources and distribution of funding for tourism-related capital projects, offering insights into financial strategies and challenges within the industry. Desklib provides a platform for students to access this and other solved assignments to enhance their understanding.

Finance and Funding in Travel and
Tourism Sector
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Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................4
1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study.................................4
1.2 Analyse pricing methods used in the travel and tourism sector. You should use relevant
examples from different cruise brands of Carnival Corporation & plc.....................................5
1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study..................................................................7
Task 2.........................................................................................................................................9
2.1 Explain different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc as your case study......................9
2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc............................................................................................................14
Task 3.......................................................................................................................................18
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2016 showing at least two years performance.........................................................................18
Task 4.......................................................................................................................................20
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism............................................................................................................20
Conclusion................................................................................................................................22
References................................................................................................................................23
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Introduction
Funding states the money or amount which is provided or offered by the business entities
along with the sector related to regulatory bodies for the particular purpose. But on the other
hand, funding refers to the procedure of receiving capital or money and that is useful for the
purpose of business and in this fund, are provided by the financial institutions which include
banks as well as other lending agencies (Difference between, 2018). In task one, discussion to
be done on cost and volume along with the importance of the different cost in Carnival
Corporation. Along with this, a demonstration to be done on different pricing method for the
company. In task two and three, Dalata Group Plc needs to be taken for analysing the
management information system and decision-making tools. Along with this, examination to
be done of financial accounts of Dalata Group. In task four, different sources and distribution
of funding for tourism development are to be presented.
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Task 1
Introduction
In this task, discussion to be done on the importance of finance and funding as well as cost
and volume as it reduces the profit of the company. If business entity manages the cost then
this will help them in generating more revenue. Along with this, a demonstration to be done
on diversified pricing methods which help in setting the appropriate price and by that they
can make correct decision to invest or not.
1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses using Carnival Corporation & plc as your case study.
If carnival Plc wants to earn more revenue, then they have to manage the cost as well as a
volume which help in collecting the funds and that can be used in the development of tourism
sector.
Cost
Cost can be defined as the value of money and that can be used up to produce something and
by that, they can deliver appropriate services. It includes different type of cost that is direct or
indirect cost, fixed as well as variable cost. Fixed cost is that cost which does not vary
according to the changes in the number of units. Variable cost is that cost which is changing
according to the number of units (Boardman, et. al., 2017).
Cost volume profit analysis: It assists in determining and analysing the changes in cost as
well as a volume which affect the operating income of the company. In this, sales price per
unit is constant and total fixed cost are constant (Cliff Notes, 2016).
Volume
Break-even point: It is a point where the company can identify the situation of no profit no
loss. It includes the sales volume at which company earns no money. It assists in determining
the potential to generate more profit. Along with this, changes need to be analysed in the
profit when prices are altered (Accounting tools, 2017).
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Economies and diseconomies of scale: Economies of scale define the advantages of cost as
it assists in expanding its services in the long run. It provides the discounts to the business
entity. Diseconomies of scale assist in increasing the cost of production of Carnival Plc. The
main factors include supervision or lack of decision (Nitisha, N.d).
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1.2 Analyse pricing methods used in the travel and tourism sector. You should use
relevant examples from different cruise brands of Carnival Corporation & plc.
In the tourism sector, the tour operator needs to set the price for the different holiday
packages and for that appropriate method should be used. It includes:
Cost-plus pricing method: It is an appropriate and effective method for setting a price for
the holiday packages. This method also called as markup pricing method as it assists in
determining the cost of their services (Study.com, 2017). This method succour in setting the
price of a particular service. It includes the direct material, direct expenses as well as direct
labour cost. It can be computed in three steps which include determining total cost by adding
fixed and variable cost. Then divide the total cost by a number of units and at last unit cost
should multiply by the markup percentage for the selling cost (Peavler, 2016).
Return on investment method: It is part of profitability ratio which assists in calculating as
well as computing the profit on the basis of investment in terms of percentage of the original
cost. It aids in measuring the money which was made on the investment according to the
investment on a purchase price. It helps the investor in making the decision to invest or not
(My Accounting Course, 2017).
Break-even pricing method: This method is associated with the break-even analysis as it is
a forecasting tool which is used by the marketers to determine the sales of the company. This
will not consider directly to the demand in the market at the time of determining the price
(Know This, 2018). This can be calculated by using formula include:
Fixed cost / Price – Variable cost per unit = % of units to break even.
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1.3 Analyse factors influencing profit for travel and tourism businesses using Carnival
Corporation & plc cruise brands as your case study
There are numerous factors which have an adverse impact on the profit for business related to
travel and tourism sector by using Carnival plc. It includes:
High competition in the market: In the market, there are different tour operators and that’s
why competition is increasing in the tourism sector. They are providing services at an
affordable price and this will increase the number of visitor’s.
Terrorism: It is the main driving force and this will be having an impact on the decision of
visitors as well as tourism sector. If the attack was done by the terrorists in the diversified
areas then this will affect the revenue of carnival Plc because this will decrease the number of
consumers and by that spending’s also decrease (Saha and Yap, 2014).
Natural disasters: This is also an important factor as it has a big influence on the travel and
tourism sector. This factor impacts the destinations and by that decision of the visitors as
well. This creates the physical damage to the different areas and by that company’s profit
decrease (Tsai, et. al., 2016).
Figure1: Factors affecting tourism
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Source: (Ajake, 2015)
Variations in the currency rate: The value of the currency is changing on a rapid basis and
if visitors purchase currency or book their packages on old price then this will affect the
profit or the tour operator and by this carnival Plc suffers the loss. Investigation of the impact
of the exchange rate regimes the flow of international tourism (De Vita, 2014).
Variations in the policies of regulatory bodies: According to the variations in the needs and
wants of the consumers, then the policies of government changes accordingly. When the
policies of regulatory bodies are changing then tour operator or Carnival Plc need to
implement those policies as it assists in attaining success in the market and by that visitors
can make a correct and appropriate decision (Weimer and Vining, 2017).
Conclusion
From the above, it has been depicted that the employees of Carnival Plc need to maintain cost
along with the volume which helps in increasing the profit. The managers of the company
adopt an appropriate method of pricing to set the price of the holiday packages as it assists in
increasing the number of consumers. Along with this, they have to analyse the different
factors which have an adverse impact on the revenue of the company.
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Task 2
2.1 Explain different types of management accounting information that could be used in
travel and tourism businesses using Dalata Hotel Group plc as your case study
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Management accounting information assists in managing the accounting information. It helps
in making the correct and appropriate decision. Along with this, they have to do proper
functioning with the proper management and control on the functions and performance of the
company.
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Financial statements are essential to the company as it assists in making the managerial
decisions. It is a formal record of all the activities related to finance. This will succour in
identifying and analysing the position and performance of the company in the market. It
should be present in a proper manner.
The balance sheet of the company denotes the financial position of the company as it includes
the assets and liabilities of the business. Balance sheet help in computing the ratios which
assist in comparing and analysing the performance of the company in the market at a time of
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high competition. This analysis helps in control in the budget as well as assist in making the
correct decision for the betterment of the company.
By computing and calculating the different financial ratios, Dalata Group can analyse their
performance and position in the competitive market. From the income statement or profit and
loss statement, top-level managers can easily prepare or set their goals and objectives for the
long term. When employees of the company prepare appropriate statement then this will help
shareholder in making the correct decision.
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