Travel and Tourism

Question: Write an essay onTravel and tourism. Answer: Introduction Travel and tourism is a good venture that can be financed and generate desirable revenue that are profitable to both the organization in particular and its funders. The report covers the areas of consideration that should be looked at to ensure the Best City Hotel Plc extends its operations effectively and also to increase revenue generation. The areas analyzed include the key five sources of finance that can enhance funding of a Tourism and Travel stake, behavior of costs and how they are likely to affect profits, the pricing techniques that are best in winning customers trust, cost volume and analysis (Barrow, 2015). The travel and tourism venture can be considered as a social, cultural as well as economic phenomenon that entails movement of the people to various places or countries beyond their usual environment either for business/ professional or personal reasons. The parties involved are referred to as visitors being either tourists or excursionists. The whole travel and tourism undertakings have to do with tourism some of which takes the perspective of the tourism financing and in particular tourism expenditure. It is imperative to note that there is the broad scope of the travel which further encompasses various activities that take into consideration of the domestic, inbound and outbound (Buhalis, 2013). World Tourism report accounts that by 2004 the United Kingdom had registered more than 750 million global tourists in various travel and tourism firms. It is as a result of simplified support services pertaining travel. For instance, airline services have become convenient and easily accessible. Therefore, tourists can book tickets online and get directed effectively to their destination. Due to the increased travel rate, the Hotel also needs to be extended and its services improved to best. However, travel and tourism are growing and expected to heighten more due convenience and service provision in this industry. The Hotel will nevertheless, grab the opportunity of giving the international and local tourists charge able services (ChaÃÅ' vez-Presa, 2014). As far as technology is concerned, it has an immense impact in the sector of travel and industry. The standard websites that have a winning power should be used to enable the Hotel perform some of its services online. In so doing, any tourist can explore the Hotels best nature and able to undertake bookings online before they travel, such that they are sure to get excellent accommodation and catering by the time they will travel. In the United Kingdom, most tourists are foreigners and a few United Kingdom citizens (Duffy, 2012). Sources of funding/financing The Hotel can be funded through many ways depending on their accessibility and convenience. There are a variety of financing sources but, the manager will select a few of them that are most suitable for the Hotel operations. However, some of the key sources are discussed below. Loans from financial institutions In the United Kingdom, the funds can be sourced by borrowing from banks or microfinance institutions. It is the best source of finance since the business can borrow enough money to fund its operations and services at once. It is also advantageous to borrow from the banks or microfinance so that the enterprise can have one lender rather than having many sources which may be inconvenient for the Hotels well functioning (Orrison, 2013). Borrowing from these institutions is more reliable because they give the company an opportunity to negotiate the repayment of the loan. However, banks and microfinance institutions are easy to lend funds to businesses are have a potential to expand and grow. The institutions can give short term loans that are payable within two years or long term loans that are repayable for more than five years (Evans David, 2013). Ordinary shares These shares are issued to the company possessors of the firm. Ordinary shares are also known as equity shares. They are often given for cash. The issue cost is normally same or greater than the nominal measure. The dividends of the shares have the rights to control the operations and also the stockholders (Kotler, Dholakia, Hasan, 2014). The equity shares are issued in more than one way. These ways are as follows: Public offers In this method, the company the gives the list of the shares to the public. The method has the ability to attract many people and help the business acquire huge amounts of money that it usually requires. Offer for sale In this technique, the public is called for to buy the shares that already exist. It is mostly used to remove all or some of the business holdings. However, the surviving shareowners take vantage floatation of the shares through aggregating them and selling them at the initial price. Retained profits The Hotel can utilize the profits it generates to finance itself and undertake various expansions and improve the services as well. Retained profit in the Hotel is the best and cheap source of finance. It is because the funds do not attract any interest and if in any case it may be repaid, it is usually interest free. In this way, the company will be able to reduce the cost of operation (Feinberg, Kinnear Taylor, 2013). Venture funds In this kind of source, the funds are majorly sourced from the persons who have a potential to finance a business by giving reasonable amounts of money. Also, investors can give funds to boost the company and this is considered to be venture funds or capital. The venture capital is always given when a company is starting or the one that has been making loses and management feels the firm can improve if it is financed to retrieve its operational services. The source is very dangerous to some extent because the enterprise can be funded but, fails to perform within the required standards that are set. The business can collapse and the funders get a loss. Those who finance this kind of method, have to wait for long periods because the business has to make profit and be able operate before paying them. The company through this source of financing is likely to reduce operational cost given that the funds do not attract interests as the money is not a loan (Enz, 2013). Government Help In this source of financing, the government of the United Kingdom can be requested by the management of the Hotel to fund the Hotel under the terms and conditions that can be agreed upon. The UK government is always willing to fund any enterprise that contributes to the economy of the country. Funds offered by the government are always convenient because they attract little or no interests. However, the government will not be so strict on repaying the money unlike banks and financial institution (Murphy Murphy, 2014). The behavior of costs Any shift of the functioning of the company leads to changes in the behavior of costs. An important tool a manager should have is the knowledge of the behavior of the costs. The behavior enhances the manager to plan and use the resources available effectively and moderate the cost of the organization to expected standards. A manager should understand how every aspect of production leads to change in cost. Each action undertaken in the organization has an impact in the behavior of cost. It is therefore his role to define the changes that are beneficial to the company and those that are for personal interests. The costs can be divided into variable, mixed and fixed costs (Moutinho, 2014). Variable costs Here, when the cost changes, production quantity or quantity also changes. Whenever production is high, production level also heightens while when the cost decreases production diminishes too. Below are graphs that demonstrate the changes in costs. The fixed costs remain constant within a particular period. However, fixed costs incur when there are no units for the production. Mixed costs They are not applicable when in raw. They exhibit the features for both variable, fixed costs. For mixed costs to be helpful, they are further divided into variable and fixed. They are also referred to as semi-variable costs. Cost Volume and Profit Analysis (CVP) The relationship that connects price, quantity and profit is well studied by the cost volume and the profit analysis. The cost volume and profit analysis enhances the manager to plan well on issues regarding revenue generation. Other tasks like the budget planning and other financial functions are organized well with the aid of cost volume and profit analysis. Most important, it gives the general look of the process for profit planning (Moutinho, 2014). Significance Cost Volume and Profit Analysis (CVP) Management strongly requires the cost volume and profit analysis, so that it gives the overview of the impacts and inter-connection among the changes that control profit realization. In this way, it will be easier to build a revenue sub-structure. In order to realize highest profits and get rid of loses the cost volume and profit analysis should be in practice. To understand the importance of cost volume and profit analysis more, it is divided into contribution margin and break-even point (Moutinho, 2014). volume-profit chart/break-even point It usually means a point where fixed cost (FC) and variable costs (VC) are equal to the sales revenue. It is given by; Break Even = VC + FC The graph below shows the break-even point Contribution margin It refers to the profit or income the business that is available before subtracting the costs. Strategies for pricing The manager in the company requires to strongly pay attention to the pricing strategies. The nature of pricing a manager applies, may either attract many customers and generate more or sometimes lead to collapsing. It depend s on how well they are applied and at what season. It is good to understand that the tourism and travel sector is service based (Kim, 2015). Thus, measuring the cost is challenging but, all efforts should be shown to perfect the pricing. However, there are various considerations to look at. They are as follows. Season pricing This is a winning strategy that ensures the customers are satisfied in all seasons. Even though it is difficult to vary prices form season to season, it is recommended that prices should vary from peak season to low season. During special events or holidays the pricing criteria should be used carefully to attract more customers. Giving discounts Is a form appreciation the customers that the company really appreciates them buying the services. Discounts encourage them buy more services because they feel that they are enjoying affordable and quality services. Allocating commissions Commissions encourage the customers and feel to belong to the business and that they have a role to play. For instance, the marketing team can give a 20 percent commission to any visitor who refers a friend. Each customer will strive to invite or refer a friend to earn a commission. Recommendation In the current business world, pricing decisions are based on the nature of the products offered. Importantly, quality services attract valued prices as compared to weak services. Some of the distinct service characteristics that influence pricing decision entail; Service perishability, this implies the fact that service duration period is limited. Demand fluctuation heavily influence price levels. During peak seasons, the management can attract premium prices while during low tourism season, it is important for the management to attract price levels that will attract more customers. This may entail normal prices but coupled with discount offers that are distinct from the competitors. Despite the fact that most of the services are homogeneous, it is wise for the management to distinctly differentiate their services and also prices as compared to the competitors. Ensuring that the prices offered adequately cater for the cost of the services, it is a wise move that ensures sustainabili ty of the venture(Feinberg, Kinnear Taylor, 2013). Furthermore, the management is expected to put into consideration some of the pricing concepts such as the intrinsic value, time value and volatility of price function. The price intrinsic of a service is the amount attributable to a given service. The management is mandated with the role of ensuring that service price is commensurate to the service value offered. Quality services attract high value and therefore management should ensure the organization offers very distinctive services to win customer satisfaction levels (Kim, 2015). Conclusion In the pricing decisions, the management should factor in some of the concepts like breakeven point. When pricing for the organizational products, it is important to ensure that the prices are competitive enough to ensure that they cater for the costs incurred. Being wise enough to cover operational cost ensures that the organization is self-sufficient and can generate a profitable revenue (Stickney, 2013). However, when making pricing decisions management should introduce pricing payment offers such as cash discount, the subscription criteria benefits. For instance, the first ten customers to get discount and also membership subscription fee for the organizational activities. This is a strategic decision tool that enriched customers loyalty hence moving the group to gain market niche and an edge in the competitiveness hence advancing its growth and productivity (Schroeder, 2015). References Barrow, C. (2015). Enterprise development: the challenges of starting, growing and selling businesses. London, Thomson. Buhalis, D. (2013). eTourism: Information Technology for Strategic Tourism Management. ChaÃÅ' vez-Presa, J. A. (2014). Economies of scale, economies of scope, and structural change in the Mexican commercial banking system. Duffy, R. (2012). A trip too far: ecotourism, politics, and exploitation. London, Earthscan. https://public.eblib.com/choice/publicfullrecord.aspx?p=430100. 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P. (2013). Financial accounting: an introduction to concepts, methods, and uses. Mason, OH, South-Western/Cengage Learning. Kim, S. (2015). Cost-Volume-Profit Analysis For A Multi-Product Company: Micro Approach.ijafr, 5(1).