Finance and Funding in Travel and Tourism Sector Report Analysis

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector. It begins by exploring the significance of cost and volume in financial management, using Carnival Corporation and plc as a case study. The report then delves into various pricing techniques employed in the industry, including cost-based, skimming, penetration, demand-based, and competition-oriented pricing strategies, as well as seasonal pricing. Furthermore, it examines the factors influencing profit for travel and tourism businesses, such as political, economic, and technological impacts, and the effects of currency rates. The report also includes an analysis of the financial statements of the Dalata Hotel Group plc, and discusses the sources and allocation of funds for capital projects within the industry, concluding with a summary of key findings and recommendations. This report aims to provide a detailed overview of financial practices and challenges in the travel and tourism sector.

Finance and Funding in Travel
and Tourism sector

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1: Significance of cost and volume in financial management of T&T business.................3
1.2: Pricing techniques which are implemented in travel and tourism sector........................4
1.3: Analysis of factors influencing profit for travel and tourism business...........................6
TASK 2 ...........................................................................................................................................8
2.1 and 2.2: PPT part..............................................................................................................8
TASK 3..........................................................................................................................................15
3.1: Interpretation of financial statements and accounts of Dalata hotel group...................15
TASK 4..........................................................................................................................................16
4.1: Sources and allocation of funds for the development of capital projects......................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Finance is an essential resource which plays vital role in managing the operations and
functions of organisation. Funding is an activity indicates towards generating finance resources
from multiple options available in marketing (Evans, Stonehouse and Campbell, 2012).
Generally finance and funding is used to gathering the finance requirement and allocation of
resources in required areas. This report defines finance and funding activities in respect of travel
and tourism sector. All the resource and options of generating finance and allocation of resources
are defined subject to tourism sectors. Financial practices are explained at micro level and issues
are considered in this context. Career and growth opportunities are described while working as a
supervisors at management level in the sector of travel and tourism industry. This context will
help to understand the cost, volume and profit, management and accounting information along
with distribution of finance resources. Carnival Corporation and plc is the selected organisation
to analyse and compare the subject with Dalata Hotel group plc.
TASK 1
1.1: Significance of cost and volume in financial management of T&T business
Carnival corporation Plc: This is one of the largest leisure travel company which is
having plenty of operation at different locations. Such as North America, Europe and other
nations. It is dealing in almost 10 international cruise line brands. They are responsible for tour
financing to maximum tourists to move around various attractive destination of different
countries (Pike, 2012). The travel and tourism business is more profitability business in now a
days. It has been found that every year wide range of tourists are travelling across various
attractive places. There are various aspects those are related with finance in accordance to tours
and travelling business. Such as:
Cost: It is said to be the amount which is occur in financing of tour packages for people.
It is an important aspects that is needed to be kept in mind while planning any trip. There are
various packages which are offered to the people according to their comfort and on that basis
charges are applicable to them.
 Direct: It is that cost which is directly related with the production process of a product
and services. Some of them are those items for which costs are complied like as person,
sales region or other client. Example, direct material, sales commission and freight.

 Indirect: These are those costs that are not directly accountable to the cost of production.
Like as specific project, functions and product. Few examples are administration
expenses and other utilities.
 Fixed: As per this cost that does not change with an increase or decrease in the total
amount of product and service produced by an organisation. These are to be paid by
owner of the firm. Such as, factory rent, interest expenses and so on.
 Variable: These are those costs which are varies or changes with the production of one
extra units. Raw material, labour cost and packaging are directly associated with variable
costs.
 Semi-fixed: It is also known as semi-variable cost which is composed of a combination
of fixed and other variable elements. If company does not occurs any production during
the time, a fixed cost is still going to incurred.
Volume: It is term as total quantity of services and expenses which is denote in financial
value are considered into this. It is mostly related with total quantity of tickets people are
purchasing from the Carnival company.
Importance of costs:
As, it is more critical aspects in travelling sectors. The growth and sustainability is
entirely depend upon the cost they are incurring during the year. It can be organised through
proper planning so that chances of mistakes and losses can be reduce (Heung, Kucukusta and
Song, 2011). Tours managers always tries to increase revenue for the company and for this they
used to make strategies to sell out maximum tour packages during the season. Cost reduction: It is one of the main factors which a firm is looking always. They plan to
provide much economical tour services in order to reduce there own costs. It will help in
increase efficiency and profitability for the company. Decision-making: It is has been primarily crucial for the finance department to make
proper decision regarding the company's position during the year. Whether, they are
having sufficient amount of return from every trip to sustain their business.
 Increasing performance of managers: Cost-systems can be beneficial for the
management in order to expand their business operations in various parts of the nation.
Importance of volume:

BEP Analysis: Such kind of procedure is used to determine that stage where business is
laying at the current position (Chio, 2014.). It is mostly related with total costs and expenses
which are incur to balance there operation. Carnival company is always trying to plan to at least
cover there total cost that are invested by the company.
Economical of scale: It is related with that cost benefits that are generate with increasing
results of a products and services. It can help the company to overcome variable cost per units
because of operational efficiency and synergies.
Diseconomies of scale: Under this particular stage, a situation in which economic of
scale no longer operate for Carnival plc. These are occur because of increase in size of business
which is resulting from every tour plan.
Volume can increase by determining total sales capacity generated as a dollar amount.
Company's have plenty of option to increase profitability of an organisation. They need to simply
cut down costs and maintain volume. Cut down production and pass the total revenue on to client
in an effort to increase total sales of the company.
1.2: Pricing techniques which are implemented in travel and tourism sector
In every business segment, it is necessary to determine those people which are interested
in travelling across the nation. For this, they are been offered various tour packages that can help
them to plan their trip in more effective manner. People are more price sensitive so they used to
select those services and products that can benefit them for long term. It is known as identical
techniques because having wide range of price plan and scheme (Nielsen and Spenceley, 2011).
Proper segmentation needed to be done prior providing any packing offer to the people so that
exact demand can be identify. Pricing polices are changes according to their time and situation.
In order to make there journey more memorable, company always used to provide best pricing
packages to them so that effective customers can enjoy there journey in more easy manner.
Pricing method is the well organise route which is taken by Carnival plc in fixing the cost for
their tour packages. Some pricing techniques which are attracting customers are discussed
underneath:
Cost based pricing: It is the most easiest way to determine exact a plan should be prices at. It is
divided into various segment such as:
 Full cost pricing which is related with the combination of variable and fixed cost etc.
 Direct cost pricing is associated with variable costs plus total percentage of markup.

 Cost plus pricing is an effective pricing techniques which is used by Carnival company to
increase their profitability.
 Skimming pricing: Under this pricing method carnival plc is used to charge high pricing
at the initial level of trip planning. It is mostly adopted by higher class people. Example:
International stay and food facilities to upper class people.
 Penetration pricing: It is known as that techniques which a carnival company offers to
customers at a price significantly minimum than its competitors (Song and Lin, 2010).
Like for example: Coupons, discounts and extra accommodation.
Demand based pricing: Such kind of pricing is mostly depend according to the demand
of customer as well as supply of the tour plan. It is said to be more realistic in nature.
Competition oriented pricing: Such kind of pricing is known as market oriented pricing
which consists of based prices that a competitors charges without considering client demand and
with there own costs. Some of them are:
 Premium pricing:
 Discounted pricing
 Parity pricing:
Product line pricing: It is associated with given packages that are related to one another.
The planning cost of these tours are also will not be same. It is mostly indented to get higher
profit from the set line. Such as :
Destination Cost (In pound)
Domestic region 100
National 250
International 500
Seasonal pricing: It is that pricing which is charged by Carnival company according to
the season. Such as:
 Summer pricing: At this time maximum number of customer are used to travel to
different destinations. The company used to change high price (Benson and Henderson,
2011). They increase the cost of trip with providing necessary discount as well.

 Winter pricing: Under this, the demand of people are varies as most of them used to
travel to those country where temperature is little at higher side (Tarlow, 2014). The
charges are differ according to there selected option.
1.3: Analysis of factors influencing profit for travel and tourism business
Profit directly linked with the marketing trends and advertising activities. These are the
tools which used to gain customer's interest and involvement towards products and services of
organisation (Wang, Xiang and Fesenmaier, 2016). Visitors and foreign are the main sources
which remain responsible to generate profitability. Physical appearance visibility was the major
factors which considered as essential in generating profits in ancient time. But Innovative trends
and tactics in marketing and advertising changed the meaning of marketing in travel and tourism
industry. Below are some factors which affect the profitability in travel and tourism sector.
Political impacts: This particular impacts can be seen because of changes in government rules
and regulations. They needs to make modification in tax rates for those visitors who are going
outside or international tourists. These are directly make impacts on tourism productivity as per
the modification in tourism norms by the tourism department of that particular country.
Economical: This is an essential aspects for tourism sectors. Because if fall in GDP rates
can increase the currency exchange amount of outside people. This will help the nation in
attracting large number of tourists to visit at their destinations which directly helps in achieving
growth and success in tourism sectors.
Technological factors: As technology is providing better chances of getting more
effective growth and profit to every nation. With the use of latest technology tourism sectors can
maximise its customer base in more effective manner. The need to provide online booking and
discounts with tour packages without visiting to relative shops.
Currency rates – travel and tourism is a sector which connects the national economy with
other countries and territories. Different countries are has their own currencies and monetises in
which their economy deals. Criteria of foreign visitors remain high in travel and tourism
industries. Currency remain differ from each country's to country. Rates are decided according to
various factors as employment conditions, GDP, fiscal deficit etc. Carnival Corporation and plc
is an organisation of the United States based cruise company. Dollar is the currency which used
to operate financial transactions. Currency rate changes on regular basis which creates difficulty
to set profit margins and charges.

Development – Growth and development are the main factors which help the
organisation to improve productivity and services. It gives positive and favourable results in the
form of increased income and profitability. Carnival Cruise is a combination of two companies
as Carnival Corporation and Carnival plc, both ave potential to improve the services and product
quality. It has a partnerships with various cruise control ships and service organisations. It get
benefits of advanced technology and latest segments which attract large number of tourists and
visitors towards organisation.
Government support – Growth and development depends upon proper support of local
government and authorities (Song, Liu and Chen, 2013). These are the factors which help in
reducing the ratio of complexity and help visitors to understand the norms and regulations
regarding tourist destinations. Government support and corporate properly to boost the numbers
of tourist and visitors. Travel and tourism sector remain directly linked with the economy of
nation. In various terms government run tourism boards which help to funding and finance
subject to improve profitability and sustainability of travel and tourism industry. Marketing
campaigns, travel and development programs, regional and rural awareness regarding promoting
rural tourism industries are the programs organised by government to support the structure of
travel and tourism industries. Government pass the budgets and sanction the bills subject to
improvement and development in tourism sectors.
Travelling trends – customs, traditions and culture are the factors which are found in
travel and tourism trends. Cultures and trends diverse from country to country. The United states
is a combination of multiple trends and customs. US culture is known as western culture which
attracts visitors and tourist numbers. Increased numbers of visitors result high returns and profits
subject to promoting travel and tourism industries. Themes and structures in Carnival
Corporation plc are designed on the basis of ethical and traditions cultures in US. It has large
luxurious ships and cruise which deliver the royal experience to visitors and tourists. Various
marketing trends and advertising policies are also affect the travel trends. These factors also
remain behind in making profits.
Locations and destinations – Tourist destinations and locations plays vital roles in
generating profits and sustainability (Singh and Kaur, 2011). Beaches, hill stations, Hollywood
industry, Casinos, royal and luxurious hotels and motels, Unique infrastructures are the
designation in US. Western culture and adventurous designation remain first choice of visitors

and tourists. Most of the destinations are famous for royal weddings and functions, gatherings,
Meetings and events. Support of US government also active in direction of maintaining and
restoring ancient heritages and architectures.
TASK 2
2.1 and 2.2: PPT part