MN5F51FB Finance And Funding Travel And Tourism Sector Level 4


Finance and funding in hospitality business is most necessary terms which must be taken in account of manager of organisation in proper way. Various financial management and accounting approach can be utilised by business manager in order to managing finance activities in business. In the report, the company has been selected which is Carnival Corporation and Plc, which is UK based the largest hotel organisation. In addition to this, it can be said that, the report will be discussed about importance of costs, volume in financial management in the hotel and also analysis of pricing method used in travel and tourism sector. Different types of management accounting information that can be used in the hotel and also management accounting information for decision making tools. Apart from it, the investigation will also be discussed about sources and distribution of funding for the development of capital projects associated with the hotel.

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Task 1

P 1.1 Explain the importance of costs and volume in finance management of travel and tourism businesses

In order to managing finance in Carnival Corporation and Plc, there are numbers of costing and volume computing approaches are being used by its manager in case of reduction of costing in the firm.

Importance of costing: This is one of the crucial element in the business as they provide are using several types of costing in the business in order to examining proper costing of the firm and apart from it, different types of costing is being used by the company for different-different purpose in business (Airey and Chong, 2010).

Direct costs: Direct costing are those costing which is related products and services direct occurs in Carnival Corporation and Plc , in case of functioning its various operational functions. In the hotel some direct costing incurring which is, Direct labor, direct materials, commissions, some rate and wages of employees. These are some essential direct costing which occurs at workplace while various types of operational activities running in the hotel, its manager can use managerial approached to cutting cost down in firm to gaining appropriate profit (Benson and Henderson, 2011).

Indirect costing: These types of costing can be fixed and variable form. In Carnival Corporation and Plc , some indirect costing are associated with its operational activities and indirect costing can be used for examining expenses of business activities. The hotel is bearing indirect costing for such activities, advertising, computing, maintenance, security, supervision etc. all these activities contain large amount of expenses for the firm. So its manager need to computing it's at workplace by using managerial accounting systems.


Break even analysis: Break even analysis is an effective approach which can be used by Britannia business manager widely by production management and management accounting terms in order to comparison of total variable costs to fixed costs for total sales revenue of the business in order to determining the level of sales volume in the enterprise (Buckley, 2012). The company professionals need to analyse different price levels relating to various levels of demands to reaching to the break event point of the business, where the firm can gain desired profit in industry.

P 1.2 Analyse pricing methods used in the travel and tourism sector

Market lead pricing: The company is using the costing method in order to analysing pricing and also gaining proper profitability as well. The organisation has been set up a pricing in specific hotel services, as per its standard so all other business also have to follow its standard which does not provide opportunity to the company to let it down standard of pricing in market. It helps them to meeting to their desired profitability in the market (Chaisawat, 2012).

Marginal costing: This cost is calculating by Carnival Corporation and Plc manager where the company reaches to break even point. Marginal costing inclusion some items which is associated to direct material costs, direct labour costs, direct expenses costs and variable production overhead costs. All these costing can be included in computing various costs of business in industry.

Return on investment: return on investment is a performance measure, used to evaluate the efficiency of an investment or compare the efficiency if a numbers of different investment (Dwyer, Forsyth and Dwyer, 2010). It can be said that, in the hotel, multiple numbers of investors are investing on its various section, which can bring out appropriate amount of money as per their proportion of investment.

Absorption costing:This is a managerial accounting cost method of expensing all costs associated with manufacturing a practical product and it demands for basically adoption of accounting principles in order to gaining proper issues in business. In this pricing statements,. All type of costing has been included which is associated with direct costs in producing a good as the cost base.

Cost plus pricing: Costs plus pricing is one of the appropriate method to setting up the pricing of goods and services. As per its approach, the hotel manager need to add up direct material cost, direct labour cost and overhead costs for its various foods and accommodation services in firm. So sufficient margin can be added in costing of several products.

P 1.3 Analyse factors influencing profit for travel and tourism businesses

Profit: Profit of a business can be defined as a form, in which total costs are deducted from the total revenue, so profitability can be gained in business. Profit is a financial advantage that benefit that is realised when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the business activities (Fredman and Tyrväinen, 2010).

Seasonal variation: Seasonal variation affects the profitability of hospitality business in industry, it has been seen that, many of hotels depends on sales of its various accommodation and hotel services on some specific seasons. In case of Carnival Corporation and Plc , its customer base increasing on some seasons in country. Mostly, in summer and winter time, peoples loves to going outside and staying in hotel (Goswami, Mattoo and Sáez, eds., 2012). So in these seasons the hotel customers comes in large volume which make impact on sales of business accommodation services in market. So that's why company get extreme profitability on seasons variations. In hotel demands of variety of services also boost up by its loyal regular customers.

Current trends: Several types of current trends are celebrating by peoples of the country in UK. So current trends plays vital role in order to increment in sales of hotel's accommodation and facilities in industry. In UK different kinds of trends are generating and celebrating by peoples of the nation. So some current trends such as, wedding ceremony, birthday party business parties, religious festival. Christmas part etc. People chose unique location and places where the celebration can be executed by peoples. So this factor also increasing the sales of the business in market which boost up profit of hotel.

Political environment: Carnival Corporation and Plc is located in UK, where political environment of the country has been changing frequently (Irshad, 2010). Various political parties and organisations has been celebrating in the hotel by top political leaders and ministers in the industry. In addition to this, many other country's political leaders are arriving in the UK for various political purpose. They arrive and stay in hotel and also use various types of hotels and travelling facilities provided by the hotel. So it increases the sales of the firm in industry in positive manner.

Task 2

P 2.1 Explain different types of management accounting information that could be used in travel and tourism businesses

In Carnival Corporation and Plc , its manager are using different kinds of management accounting information system in case of determining and managing all financial terms in firm. It assists the business manager to making focus on collecting several types of financial data in the business in order to making appropriate and profitable business in the firm (Jucan and Jucan, 2013). Management accounting information comes in the form of financial ration, budget forecasts, variance analysis and cost accounting at workplace.

Forecasting: All types of firms is needed to implementation of strategic planning in order to stay competitive in market. This is the process of planing for future operation through the use of forecasting in business. Forecasting is the planning for future operations through the use of forecasting approach at workplace. This approach can be utilised by Carnival Corporation and Plc manager to analysis of past revenue, sales and growth statistics and calculating out in the future time period. Its manager need to analyse previous year data and as per its information, they have to forecast for the future of the hotel profits and financial progress in industry.

Financial statements: Financial statements of Carnival Corporation and Plc can assist its manager to identify the areas in which hotel is gaining less revenue and profit. Financial statements can be used by the hotel managers for taking into account the all major financial transaction which can assist them to identify those areas of entire financial transaction and identify major sector in which company has been giving weaker performance (Kastarlak and Barber, 2011). So as per financial assessment, they have to make decision in respect to gaining sustainable growth in industry.

Budget:This is one of the appropriate financial terms which must be used by Carnival Corporation and Plc manager in order to examination of budget for several types of business functions. With the help of budgeting system, hotel financial department can distribution finance among various business function such as, management, operational and accounting, human resource, production and marketing department etc. so profit standard can be set up as per budgeting approach and organisation need to make efforts to gaining it within predetermined financial period.

P 2.2 Assess the use of management accounting information as a decision-making tool

Management accounting information system can be used in business in order to making proper decision in Carnival Corporation and Plc .

Investment: Various types of management accounting tools such as return on investment and investment analysis approach can be used by the hotel manager in case of determining proper amount of investment and also its appropriate proportion of return on investment. So it assists the organisational manager to making decision about gaining desired profitability on particular investment in the firm (McCabe, Minnaert and Diekmann, eds., 2011).

New product and services: Th business manager can make decision regarding to launching new foods products and accommodation services in Carnival Corporation and Plc in industry which can raise sales and revenue for the firm (Swarbrooke and Page, 2012). It can be said that, the business manager need to formulate unique hotel products and services which can boost up sales of the entity.

Raising capital: This approach also can be used by hotel managers in order to overcoming form several types of financial issues in business. It can be said that, raising capital can be used in the business in order to enhance criteria of business in respect to increment in products and services of the business and also effective decision making (Witt, Brooke and Buckley, 2013).

3.1 travel and tourism financial accounts

The travel and tourism financial accounts will include the better handling of the business operations that will lay a very deep impact on the operations of a business organisation. The better funding and management of financial resources will help in suitable rise in the functionality and handling various business operations that will lay a very deep impact on the travel and tourism sector. The effective assessment of cash flow, balance sheets, trading accounts and account related to expenses and revenue generation will be taken in consideration. Other than this, the balance sheet related to the operational expenses is been taken in consideration. To measure the different financial factors, the return on net assets, capital invested, collection period, net profit percent, gross profit and stock turnover is been analysed, that is been practised in travel and tourism sector (Becker, 2016).

The following of this approach will help in better handling of financial resources that will impact the growth and development of cited enterprise. Besides this, the measuring of financial performances will help in better handling of business operations that will help in suitable rise in revenue generation of cited firm. Other than this, the assessment of financial account will help the firm to plan its strategies to reduce the expenses and meet the operational requirements of the organisation in a better way. Other than this, it will support the better rise in functional calibre of the organisation (Vogel, 2016.).

4.1 analyse sources and distribution of funding for the development of capital projects associated with tourism


The travel and tourism sector will have a wide range of sources of funding or gaining the financial resources to execute its business operations to have a better profitability and revenue generation. The different sources of funding is as follows:


Department of Culture, Media and Sport: Such bodies like National Lottery Commission will take in consideration for better gaining the financial support in a better way. Also, the promotional, measures that are been taken in consideration by the various service provide will lay a very deep influence on the productivity of business firm.

Renting By leasing the advantages of an association for a specific time frame: renting is considered as a medium term wellspring of fund through the organization can win cash. It is one of the better methods for raising fund and additionally to budget and then again it can be costly as well.

Exchange credit-Trade credit is a wellspring of assets where an association purchases anything which is required without bringing about the instalment quickly with an exchange credit cutoff of around 1 month when all is said in done.

Contract buy It is relatively same as renting and furthermore considered as a fleeting wellspring of raising assets with a distinction that the organization holds the privilege of owing the benefit simply after the reimbursement of cash.

Development of tourism and non tourist sites like cycle storage will also help in better management of wide range of funding for the travel and tourism company



Equity: Another way through which sources can be accumulated is the issue of the share capital so that funds of the business can be increased. This the long but better way to accumulate funds as compared to different sources. There are many alternatives in these options that can be followed by the company for the purpose of collection of funds from different sources. This method is known as capital stretch method. It is an easy and simple method which consist of bills of exchange and many other receipts related to creditors of the business.



The above report has exhibited the financial considerations of tourism sector to administrate it in the most effective way and avoid any future occurrences of loss. For this purpose, it has hereby demonstrated the significance of costs, profits and volume for the purpose of decision making and on its basis, take relevant set of decisions to frame appropriate budgets, etc. Another section has depicted the usage of several management accounting related data as a tool for effective decision making. Lastly, this unit has interpreted the financial accounts to aid in the process of decision making in tour based organisations.

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  • Airey, D. and Chong, K., 2010. National policy-makers for tourism in China. Annals of tourism Research. 37. 2. pp. 295-314.
  • Benson, A. M. and Henderson, S., 2011. A strategic analysis of volunteer tourism organisations. The Service Industries Journal. 31. 3. pp. 405-424.
  • Buckley, R., 2012. Sustainable tourism: Research and reality. Annals of Tourism Research. 39. 2. pp. 528-546.
  • Chaisawat, M., 2012. Travel and tourism education in Thailand. In Global Tourism Higher Education (pp. 209-236). Routledge.
  • Dwyer, L., Forsyth, P. and Dwyer, W., 2010. Tourism economics and policy (Vol. 3). Channel View Publications.
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