Finance and Funding in the Travel and Tourism Sector: Analysis Report

This report provides a comprehensive analysis of finance and funding within the travel and tourism sector. It delves into the significance of financial management for business development, profitability, and goal attainment, focusing on companies like Carnival Corporation & plc and Dalata Hotel Group plc. The report covers key aspects such as cost analysis, pricing strategies (including cost-plus, market-led, value-added, and comparative pricing), and the influence of factors like events, seasons, currency rates, and natural disasters on income. It also examines financial statements, including cash flow statements, trading accounts, profit and loss accounts, and balance sheets, alongside performance ratios like current ratio, acid-test ratio, return on capital employed, and stock turnover ratio, providing a detailed understanding of financial performance and decision-making within the industry. Furthermore, the report highlights funding strategies for capital projects within the travel and tourism sector.

Finance and Funding
in the Travel and
Tourism Sector

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1.1: ...........................................................................................................................................1
P1.2:............................................................................................................................................2
P1.3 :...........................................................................................................................................3
Task 2...............................................................................................................................................4
Covered in Poster........................................................................................................................4
Task3................................................................................................................................................4
P 3.1.............................................................................................................................................4
Task 4.............................................................................................................................................12
Covered in Leaflet ....................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Finance has a vital role in developing and establishing a businesses organization to
operate its routine activities, its business will grow to earn profitability and attain its goals and
objectives. People are seeking for pleasure while spending their holidays, so it needs high rate of
investment to catch the attention of people in order to please them with ambience and amenities,
development of sight scenes, etc. This report is completely focused on finance and funding of
travel and tourism, funding structured to sanction the amount to establish a locations for tourist
purpose, and sum of the cost and volume of the monitory policies refers to financial status of
business, that of the past year(Buhalisand and Darcy, 2011).
This is dependent on management accounting system and financial management to reach
out its goals of benefit of travel and tourism sector. In this report, Carnival Corporation & plc is a
largest leisure travel company in London, which is about to explain the significance of costs and
volume, pricing methods, and profit through finance management. Dalata Hotel Group plc is
another firm which is undertaking management accounting information to assist in decision
making on the bases of its accounts report. At the last of the report, it includes a funding face in
which gathers pecuniary resource to develop it capital projects.
Task 1
P1.1:
A cost is a sum of total expenditures that are spend in manufacturing of products and
services, to produce a goods and services for the end user by which they can be satisfied. Cost
needed to be controlled to accomplish all the functions effectively in a business, different kind of
costs are combined to know the overall expenditure in every operation. There are several types
of costs that includes direct costs which is directly related to the production. In case of indirect
costs are those which are not directly related with production but can be define as depreciation
and administration expenses, fixed costs that never changes, variable costs varies with the level
of output, allocation comprises with the process of identifying, aggregating and assigning costs
of objects, and apportionment cost(Choiand and Turk, 2011). Carnival Corporation & plc, offers
services to the clients, which are known as incurred cost that need to by the customer after the
consumption. There are so many techniques and tools which are used by the businesses to make
decision, that involves break-even analysis which is a calculation of at an axes where revenues
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and expanses are almost equal economies of scale and diseconomies of scale refers to
disadvantages of cost that firms and government results due to increase in firm size or output.
The firm has used several cost volume profit analysis with a purpose of taking decisions which
are related with the cost, volume and profit. The analysis is done to gain the understanding of
sales level, that generate the information about the desired profit. Cost volume analysis is an
effective tool that aid to analyse the actual cost and the capability of the firm to to provide lavish
services to the customers, and there are some other benefits of using cost volume benefits
including better controlling, decision-making, forecasting and price fixing(Evans, Stonehouse
and Campbell, 2012).
P1.2:
As pricing is a important in every business so, travel and tourism industry is not
untouched with that, it is one of the most giant industries, which is growing rapidly and never
gone in break even point, this is one of the finest source of income for any individual who is
pursuing in travel and tourism organization and for government of the country also, to generate
maximum revenue to support economy. It has been determine that there are various types of
pricing strategies considered in an organisation to set prices of the products and services which
are offering by them, Carnival Corporation & plc also considering various aspects of pricing
methods to decide the price of their offering comforts, they are offering some schemes like
discounts on some specific services as well as competition pricing. The firm needs to be take a
look on all of these kinds of prices before select one, as company can offer discount price in off
season for example, this is cruise leisure travel firm, so it can increase the time of peak season to
gain the profit, because at that time the travellers will not bother about prices, and in off season
discount is best policy to sustain and maintain the operations. Cost plus is one of the effective
objectives to achieve future aims and goals through using different kind of costing by including
total earning of an organization based on actual cost of services (Gibson, Kaplanidou and Kang,
2012). In market led pricing the prices are generated through market force, according to the
customer demand, by providing the things for what customers are seeking for. Carnival
Corporation & plc, is using this price strategy to decide the price of assorted packages. In value
adding pricing the firm is adding extra services with already existing to allure the customers
whereas in comparative pricing method, prices are regulated according to the market analysis
regarding the prices of rivals, this can lead to get the advantages in competitive scenario when
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others are increasing their prices to gain profit, then less prices can give a hike in profit because
may prefer for the affordable prices and best facilities. In return on investment, the prices will
will be shape according to the bases of interest rate of the products and services and the return on
investment, the total expenditure on products and earned interest on that and then it will compare
with the actual investment cost (Henderson, 2010).
P1.3 :
There are various section which influences income of travel and tourism, that are as
follows-
Events – Events are holding a major place to attract tourist, as there are several events
are organized by the industry to get the attention, when there is any kind of festival is flowers are
about to bloom, at that time several events are organized by some may travel and tourism
company, for example in Easter and Christmas time, there are many events and parties are taking
place and that time prices are offers with a discount, which invites guests on affordable prices
(Heung, Kucukustaand and Song, 2011).
Seasons – There are different seasons that causes the profit of the travel an tourism
industry, that seasons are known as peak seasons and moderate seasons. Carnival Corporation
& plc, evokes the customers with a view to increase profitability.
Currency rates – Every country has different currency rates, these differs from the
profits according to the businesses, Carnival Corporation & plc has customers from across the
borders and that impact on its business due to differentiation of currency rates.
Natural catastrophe – The natural disasters are a big destruction for the tourist because
tourist avoids to go on certain location which have in danger state.
Terrorism – Terrorist attacks one of the most crucial factor that effects on the profits,
there are so many countries which get in the drawbacks because of terrorism and also lose the
chances to over come this fear in people's mind.
Travel trends – Travel is similar to another activity, and trends develops from one year
to next year to determine what a kind of things can be do for marketing. Trends can offer the
exotic destinations, like beaches, European tours, and so on. Trends have a certain niches, to
make every year a new popularity among visitors.
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Task 2
Covered in Poster
Task3
P 3.1
4

5

6

7

8

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Cash flow statement – It seems to well known financial records prepare by an organisation. It is
clearly state that variation in cash inflow and outflows are collected from companies final
statements. This will provide systematic detail of cash flow incur in the businesses. It is
mentioned under section 7 (IAS7) that gives proper plan for operating cash in an organisation.
Along with this, it provide effective data just about the capital investment activities such as sales
purchaser of fixed assets. It is one of the most essential part of cash flow that involves major
activities which are related with providing long term banking loan system(Murphy, 2013). There
are several miscellaneous activities such as shareholder and dividend that are involves in cash
flow that are as under: Trading account – Financial gain statements is separate into two equal parts such as
profit and loss and balance sheet which is view in financial statements of the company
that give full fact are affiliated with net loss and profit. It is having some information
regarding services, credit sales and cost of product sold-out. Profit and loss account – They are providing financial statement of net profit and losses
of shareholder and capitalist. It includes legal expenditure, salary, office rent which
comes under fixed accounting period. Balance sheet - It is that statement which present financial position of an organisation
for specific accounting period that includes all major records are related with asserts and
liabilities of the management(Nielsenand and Spenceley, 2011).
Dalata's financial performance and measurement:
Current ratio – In such cause, the current ratio is around 1.44 for Dalata hotel which is
having 2.89 times rotation in total assets in accordance with total debts in an accounting year
2015. With the help of this, it can analysed that current asset has reduces in respect to current
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liabilities. Along with this, actual asset is 162278 in 2015 which has been reduced to 98771 in
2016 so the debt are analyse as 68821 in 2016. It can helpful in short-term decision, rather than
long term decisions(Pike, 2012).
Acid test ratio – It is that ratio which has been measured by omitting inventory from
current asset and it will divided in rest of the current liabilities. It was calculated as 1.40 in 2016
of Dalata hotel and it is not a terrible status as analyse to past year project which was measured
as 2.86 that is considerable.
Acid test ratio
2015 2016
2.86 1.41
Return on capital employed- This seems to be an effective aspect which is related with
total operating profit a company after getting analysis of total capital employed during the time.
It is a profitableness ratio which display how efficient Dalata hotels administration is.
Return on capital employed
2015 2016
5.82 4.98
Return on net assets
2015 2016
3.74 3.78
Return on net asset- It is the total percentage of ratio which is being calculated in order
to analyse total return they are earning from total assets of the company. The ratio was around
3.78 in 2016 which was decrease by 0.04 times from last year. It is ascertained that they are
using fixes assert and working capital to great outcome (Ritchie, Amayaand and
Frechtling,2011).
Net profit ratio
2015 2016
9.58 12.02
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Net profit ratio – As per the above net profitability is more effective in comparison to
last year. This mean the profit earn during the time is sufficient enough in accordance with the
last year (Song and Lin,2011).
Stock turnover ratio
2015 2016
89.50 69.40
Stock turnover ratio- From the above ratios, it has been seen that stock turnover ratio of
the company is indicating maximum percentage in last year with total of 89.50 time. It get reduce
to 69.40 times in present time.
Task 4
Covered in Leaflet
CONCLUSION
This report is about travel and tourism finance and funding that includes the information
about management accounting information that includes the costing methods, volumes profit
criteria and finance accounts that has the information about cash flow, trading account, profit and
loss, balance sheet, performance ratios like acid test ratio, return on capital, and so on. It also
contains the information about the sources that aid to raise the funds to invest in capital projects,
that aid to decision making and it also contains poster and leaflets with it. This informed about
the management account information considering with travel and tourism industry that has a lot
scope to invest in projects and less scope the dropping, although there are such factors that
impacts on its performance get fluctuate in its performance and activities as compare to the past
years. It contains the performance of a hotel that shows the performance with balance sheets, that
shows a travel and tourism industry business affects in economy.
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REFERENCES
Books and Journals
Buhalis, D. and Darcy, S. eds., 2011. Accessible tourism: Concepts and issues. (Vol. 45).
Channel View Publications.
Choi, H. C. and Turk, E. S., 2011. Sustainability indicators for managing community tourism. In
Quality-of-life community indicators for parks, recreation and tourism management (pp.
115-140). Springer, Dordrecht.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor & Francis.
Gibson, H. J., Kaplanidou, K. and Kang, S. J., 2012. Small-scale event sport tourism: A case
study in sustainable tourism. Sport management review.15(2). pp.160-170.
Henderson, J.C., 2010. Sharia-compliant hotels. Tourism and Hospitality Research.10(3).
pp.246-254.
Heung, V. C., Kucukusta, D. and Song, H., 2011. Medical tourism development in Hong Kong:
An assessment of the barriers. Tourism Management.32(5). pp.995-1005.
John, S. and Susan, H., 2015. Business travel and tourism.
Koutra, C. and Edwards, J., 2012. Capacity building through socially responsible tourism
development: A Ghanaian case study. Journal of travel research. 51(6). pp.779-792.
Ma, M. and Hassink, R., 2014. Path dependence and tourism area development: the case of
Guilin, China. Tourism Geographies. 16(4). pp.580-597.
Morrison, A. M., 2013. Marketing and managing tourism destinations. Routledge.
Murphy, P. E., 2013. Tourism: A community approach (RLE Tourism). Routledge.
Nielsen, H. and Spenceley, A., 2011. The success of tourism in Rwanda: Gorillas and more. Yes
Africa Can: Success Stories from a Dynamic Continent. pp.231-249.
Pike, S., 2012. Destination marketing. Routledge.
Ritchie, J. B., Amaya Molinar, C. M. and Frechtling, D. C., 2011. Impacts of the world recession
and economic crisis on tourism: North America. Journal of Travel Research.49(1). pp.5-
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Song, H. and Lin, S., 2011. Impacts of the financial and economic crisis on tourism in Asia.
Journal of Travel Research.49(1). pp.16-30.
Spenceley, A. ed., 2012. Responsible tourism: Critical issues for conservation and development.
Routledge.
Spencer, J. P. and Zembani, P., 2011. An analysis of a national strategic framework to promote
tourism, leisure, sport and recreation in South Africa: tourism, leisure, sport and
recreation. African Journal for Physical Health Education, Recreation and Dance.
17(2). pp.201-218.
Online
REPORTS, RESULTS AND PRESENTATIONS. 2015. [Online]. Available through;
<http://dalatahotelgroup.com/investors/reports-and-presentations/?date=2017>.
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