Analysis of Finance and Funding in Travel and Tourism Sector

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector, focusing on key aspects such as cost management, pricing methods, and factors influencing profitability. It examines the importance of costs and volume in financial management, various pricing strategies, and factors impacting profit for businesses like Carnival Corporation & plc. The report also delves into management accounting information, its use as a decision-making tool, and interprets the financial accounts of Dalata Hotel Group plc, including a two-year performance analysis. Furthermore, it explores the sources and distribution of funding for capital projects associated with tourism, offering a holistic view of financial management within the industry.

FINANCE AND FUNDING IN THE
TRAVEL AND TOURISM SECTOR

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explain the importance of costs and volume in financial management of travel and
tourism businesses.......................................................................................................................1
1.2 Analyse pricing methods used in the travel and tourism sector............................................2
1.3 Analyse factors influencing profit for travel and tourism businesses of Carnival
Corporation & plc cruise brands.................................................................................................3
TASK 2............................................................................................................................................4
2.1 Explain different types of management accounting information that could be used in travel
and tourism businesses................................................................................................................4
2.2 Assess the use of management accounting information as a decision-making tool for
Dalata Hotel Group plc ..............................................................................................................5
TASK 3............................................................................................................................................5
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2017 showing at least two years performance............................................................................5
TASK 4............................................................................................................................................6
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism...............................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Finance and good funding is important for better execution of business operations that
help in effective handling of functions in travel and tourism sector. The better management of
business operations help in suitable rise in functions of firm. This will help in significant increase
in operational capacity of a travel and tourism enterprise. For the report, Carnival Corporation &
plc (CCP) and Dalata Hotel Group have been considered. The former is a USA UK based travel
and tourism firm, which provides customised tourism services. The report laid emphasis on a
wide range of operations in travel and tourism sector. In addition, it focuses on the costing and
volume of operation that has been followed by organisation. The different pricing methods with
profit influence have been discussed in travel and tourism sector. The accounting information
with its importance as a decision-making tool is been analysed. An interpretation of finance in
travel and tourism with public and non-public tourism development is been taken in effective
management. Also, the different sources and distribution is been taken for public and non-public
tourism. Apart from this, funding for development of capital projects will be analysed in tourism
sector.
Main Body
TASK 1
1.1 Explain the importance of costs and volume in financial management of travel and tourism
businesses.
Costing plays in-depth and crucial role in development of operations that will affect
operations of a company on large scale. An effective costing of commodities is offered by travel
and tourism firm as Carnival Corporation & Plc will support enterprise to manage its functions in
a better way (Guttentag, 2015). Besides this, better pricing will help firm to control consumer's
perception towards that firm and attract them to purchase services offered by business
organisation. Other than this, the good valuation helps in improving volume of operations that
are been considered by tour and travelling firm. Some major valuation measures that are been
taken in thought process by the firm to improve their functional volume are as follows:
 Direct cost: It involves all operations of Carnival Corporation & plc that will cover up its
expense that are been directly taken in thought by the organisation. This expenses or
costing measures will support firm to promote their services and products related to travel
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and tourism sectors effectively. This expense can be negotiated and altered as per the
financial requirements of firm and customers.
 Fixed cost: This includes the operations taken by cited firm which are fixed in nature and
thus can't be negotiated by travel and tourism company. This expenses and costs never
changes even with the rise or fall of volume of operations performed by the company.
This expense is been paid by the enterprise in a better way to carry out its operation in the
company in a much effective and better way (Vanhove, 2017).
 Varied costs: This costs or pricing are variable in nature and changes as per the volume
of travelling enterprise. However, they remain static during the operations within the
organisation but can be negotiated and altered as per the requirements of the company
and that of its customers. This approach is based on operational capability of firm.
Besides this, volume of operations is also major factor that impacts the growth of a travel
and tourism firm and improves profit margin. It is dependent on economies of scale and core
competencies of tourism enterprises and increases its functionality.
1.2 Analysing pricing methods used in the travel and tourism sector
Pricing plays a very deep and crucial role in operations of company. The travel and
tourism sector see through the effective pricing practices, which will help a firm like arnival
Corporation & plc to handle its operational requirements in a better way. Other than this,
effective and reasonable pricing helps enterprise to attract maximum number of customer or
tourists towards firm. Apart from this, the prices of services and products offered by organisation
will help to meet its functional requirements in a better and significant manner (Armenski,
Dwyer and Pavluković, 2018). Some major factors of pricing that impact the functionality of
CCP are as follows:
 Competition based pricing: this approach of pricing is used to gain a good competition
based pricing to see through the better management of competition that is been faced by
firm in CCP's cruise firms like Carnival cruise line, Holland America line, P & O Cruises
etc. this is been implemented by the firm to gain a competitive advantage over its rivals
and help the firm to gain a good advancement in market.
 Target based pricing: This is based on the principle that each commodity helps it to
earn a good amount of revenue and profit. The cruise firm of CCP will look after the
placing of effective pricing in market based on target audience or customer base. It helps
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in altering the prices as per requirements of target customer base of CCP's cruises. This
involves the deciding of variable costs and setting of a price segment in the market for a
particular service or product offered by tour and travelling firm (Robinson and et.al. ,
2016).
 Value based pricing: this involves the operations that are associated with the creation of
better valuation of services offered by cruise firms. Such pricing strategy is set on the
basis of budgeting and economic stability of firm as well as their tourists. The customers
will look after the gaining of maximum valuation of services and products in minimum
application of cost.
1.3 Analyse factors influencing profit for travel and tourism businesses of Carnival Corporation
& plc cruise brands
There have been various factors that affect the overall growth and development of a
better profit margin of travel and tourism business. The cruise firms associated with Carnival
Corporation & plc will look after the better handling of these factors to gain a better market share
and meet the operational and other requirements of their clients or tourist's boarding their
service. Some major factors that affect the overall functionality of travel and tourism business
are as follows:
 Organising an Event: The occurrence of an Event or an activity like World cup, concert
on a tourist destination will provide the cruise firms with a better opportunity to get a
good number of tourists. This will help in better increase in revenue generation and will
make the firm to opt necessary alterations to meet the requirement of tourists or
customers. It also supports an enterprise in gaining a good income and profit margin.
 Season or weather: Some tourist destinations are based on their seasonal environment.
Thus, the cruise firm can develop a strategic plan to gather tourist base during this period.
Other than this, the season also decides the pricing of service and products that are been
offered by a firm (Van der Sterren, 2017). Other than this, the high tourist season
indicates that service charges will be more while low season showcases decrease in prices
or valuation of products and services, impacting the profit margin.
 Currency rates: The economic conditions prevailing in domestic market as well as on a
tourist location also plays a very vital and intriguing role that influence the profit of a
travel and tourism firm like cruises of CCP. The alteration or vast difference in currency
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value between the monetary resources of local market and tourist location will have a
deep impact on revenue generation, mitigation of expenses and creation of marginal
profitability of a firm (Shahbaz and et.al., 2017).
 Governmental support: the support from political bodies and other authorities, looking
after the growth of tourism and travelling will impact revenue generation on wider basis.
The local as well as the government on the target location lays a very deep impact on the
operation of travel and tourism company. It will support the cruise firm to gain an
economic and other operational support that aids in better growth and development of its
operations.
TASK 2
P2.1 Explain different types of management accounting information that could be used in travel
and tourism businesses.
Covered In Poster
2.2 Assess the use of management accounting information as a decision-making tool for Dalata
Hotel Group plc
Covered in Poster
TASK 3
3.1 Interpret financial accounts of Dalata Hotel Group plc for the year ended 31st December
2017 showing at least two years performance
Analysis of financial accounting of Dalata Hotel Group will help in better planning of
different financial factors of the company and will support in suitable rise in the functionality
and managing of financial resources (Airey and et.al., 2015). Other than this, the assessment of
financial performance will help in better planning and deciding of future strategy.
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The financial assessment of Dalata Group is as follows:
Ratios
2016 2017
Profitability
Gross profit
net profit
11.2
-0.22
11.0
0.02
Liquidity
Current ratio
Quick ratio
0.59
6.35
0.61
6.57
Debt equity 0.86 0.89
Efficiency Ratio
Assets
Inventory
Capital gearing
stock turn over
Debtors collection period
1.37
147.65
3.810094637
142.8596491
1.294326241
1.39
143.36
4.750319775
142.9217391
1.303712523
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Creditors payment period 12.08000737 18.43210027
Current ratio:
The relation between the current assets and liabilities are shown with the help of current ratio.
The current ratio shows the potential of the company in terms of its liquidity position of the
business and determines the capability to fund the company’s short term obligations and debt
handling. After making the calculation it is realized that the current ratio of Dalata group in the
year 2013 has increased from 0.61 by 0.59 in comparison with the previous year. It clearly
reflects that the liquidity position of Dalata group has enriched in 2013 compared to the previous
year.
On the basis of financial report that has been presented above, it can be said that the cited
travel and tourism firm had a very good performance in past two financial years. There have
been a rise in revenue of the firm and the effective growth in market share has helped the
company to cater the requirements of their customers in a better way. The company has seen a
good rise in its non current assets and have lead a major part of operations that has impacted its
growth and rise in revenue generation (Al-Najjar, 2015). However, the firm has to look after the
various aspects to plan for better financial strategies as there has been a decrease in total assets
and equity i.e. £773,959 from £785,920. This caused a major impact on it revenue and profit
margin and has impacted the better financial stability of firm in the market. On the basis of
financial analysis of Dalata Group, the firm has to make strategic plan to have a better financial
stability.
TASK 4
4.1 Analyse sources and distribution of funding for the development of capital projects
associated with tourism.
Covered in leaflet
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CONCLUSION
Thus, this is concluded from the report that financial support and funding are essential for
an organisation. The importance of funding and financial resource for an organisation are been
analysed. Also, the assessment of management accounting information and its utilization for
decision making in Dalata group will help the enterprise in gaining a financial stability. In
addition to it, interpretation of different financial performance of cited hospitality firm and
various sources of its funding is been evaluated, that supports a good rise in overall functionality
of firm.
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REFERENCES
Books and Journals
Airey, D. and et.al., 2015. The managerial gaze: The long tail of tourism education and
research. Journal of Travel Research. 54(2). pp.139-151.
Al-Najjar, B., 2015. Does ownership matter in publicly listed tourism firms? Evidence from
Jordan. Tourism Management. 49. pp.87-96.
Armenski, T., Dwyer, L. and Pavluković, V., 2018. Destination competitiveness: public and
private sector tourism management in Serbia. Journal of Travel Research. 57(3). pp.384-
398.
Castaño-Isaza, J. and et.al., 2015. Valuing beaches to develop payment for ecosystem services
schemes in Colombia’s Seaflower marine protected area. Ecosystem Services. 11. pp.22-
31.
Gurtner, Y., 2016. Returning to paradise: Investigating issues of tourism crisis and disaster
recovery on the island of Bali. Journal of Hospitality and Tourism Management. 28. pp.11-
19.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism. 18(12). pp.1192-1217.
Pierce, A.K., 2016. The financing activities of Canadian small and medium-sized enterprises in
tourism industries.
Robinson, P. and et.al., 2016. Operations management in the travel industry. CABI.
Shahbaz, M. and et.al., 2017. The nexus between tourism demand and output per capita with the
relative importance of trade openness and financial development: A study of
Malaysia. Tourism Economics. 23(1). pp.168-186.
Van der Sterren, J., 2017. Financial markets, microfinance and tourism in developing
countries. ARA: Revista de Investigación en Turismo. 1(2).
Vanhove, N., 2017. The Economics of Tourism Destinations: Theory and Practice. Routledge.
Veal, A.J., 2017. Research methods for leisure and tourism. Pearson UK.
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