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Business Decision in Tourism - Carnival Corporation Plc

University: University of Chester

  • Unit No: 7
  • Level: Undergraduate/College
  • Pages: 4 / Words 1040
  • Paper Type: Assignment
  • Course Code: L/508/0482
  • Downloads: 696
Question :

The scenario of this report discusses that a trainee business adviser of Carnival Corporation Plc London has asked to show their understanding over financial system and practices as well as its importance in travel and tourism industry.

  • Identify the importance of volume, cost and profit for management decision making in Carnival Corporation Plc.
  • Analyse the uses of management accounting information as a decision making tool in Carnival Corporation Plc.
  • Evaluate interpretation of financial accounts in decision making of travel and tourism business.
  • Critically analyse source and distribution of funding for non-public and public tourism development.
Answer :
Organization Selected : Carnival Corporation Plc


Funding and finance is very basic aspect which has been required for particular amount of attention and time by any of the business for better growth and even for economy. So with this perspective a travel and tourism company known as Carnival Corporation Plc has been planning a trip and according to it cost volume and profit analysis is particularly done with the perfect strategy. The present report is giving brief understanding on the significance of cost and volume in financial management. The different pricing methods which can be applied in the travel and tourism sector has been elaborated. Further it has been continued with the factors which are influencing the profit for travel and tourism businesses. There are various applications of management accounting information which are used in business of travel and tourism. As there are various sources and distribution of funding for development of public and non public tourism and in last scenario all the sources are analysed properly.


1.1 Importance of costs and volume in financial management

Cost can be defined as the amount which has to be given or paid to buy or obtain anything and with reference to business, it is a monetary valuation of the material, time and utilities, resources and efforts which are consumed. Volume can be defined as the amount of expenses which are purely denoted in monetary aspects and it is a measurement of finance related to business. Cost volume profit analysis is usually referred as a process of planning that a management has been using for forecasting the future volume of any activity and cost which is incurred, profits which are received and sales which are performed. It gives proper analysis on the changes in sales and cost which are directly impacting the income related to future periods. Carnival Corporation and plc is the world's largest leisure travel company whose portfolio is of 10 global cruise line brands. This company even owns a tour company which complements in cruise operations (Barr and McClellan, 2018).

Cost and volume; both are essential for travel and tourism business. In the aspects of cost, it helps in cost reduction, decision making, to improve the performance of management and in designing effective financial structure. Cost is a crucial factor as it gives cost reduction in activities which are related to business and give high profit for business. It can be increased or decreased according to the requirement of business. The financial account of the business are managed by costs. The process of decision making on capital budgeting for getting the best return on the investment. The financial structure can be managed and designed with various costs of travel and tourism activities which are linked with business. The different projects get various costs of the project which help in improving the performance of financial management and for comparing the business's financial ability of travel and tourism.

There are different kinds of volume with respect to business. There is basic necessity of volume analysis for the business like travel and tourism. Travel and tourism business can save the money by applying economies of scale as it gained the saving of cost with increment in level of production. There is need of determining the process of break-even analysis at the point where the businesses can recover the initial cost which has been spent on the earlier expenses. For the business like travel and tourism, it is essential to determine break-even point to pertain the cost of covering duration. In the scenario, if economies of scale do not perform effectively then it is referred as diseconomies of scale. The tourism business, analysis of volume is essential to know about the working of business.

Students can visit at - Contemporary Issues in Travel and Tourism of Whitbread Company

1.2 Pricing methods used in travel and tourism sector

There are various methods of pricing which can be used by the business of travel and tourism and Carnival Corporation plc such as rack rates, seasonal pricing, last minute pricing, common pricing types as well as discounting and package deals (Praticò, Saride and Puppala, 2011).

Rack rates: Every business must have rack rate i.e. full rate which is stated as rate where discounts are applied and which are generally given to the wholesalers and which is printed on the brochures for the coming season ahead. The full rate is usually applied all the time without any discounting which is day to day and this is for attracting operators. For accommodating the operators especially in the middle markets which will usually be charging full price for two months or a month to fulfil gaps.

Cost oriented pricing method: It is the pricing method which usually adds certain margin to cost which enables for deriving the margin from operations related to business. It is the easiest way for determining margin as it is very clear and understandable.

Seasonal pricing: It is a standard process for travel and tourism business for catering the various levels of demand during the year. It can be referred as a mix of pricing for covering high and low seasons throughout the year. Usually, it will be constant for every date periods but it will be implied on holiday dates of schools and colleges as well as some local event of every year.

Pricing at last minute: It is referred as the most common method for suppliers for accommodation to cover the gaps in the availability of inventory and it basically discounting on the routine prices which are related to advance bookings and are usually promoted on the websites of last booking (Jobson, 2012).

Market oriented pricing method: The price has been determined according to the competition that is pertaining in the market as cost is high or low and even based on the cost which prevails the market.

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