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Diploma in Travel and Tourism Management
Unit Number and Title
Unit 2 Finance and Funding in Travel Tourism
Organization is comprised of complex set of activities in which various functions are performed to accomplished set goals and objectives. Tours and travel business throughout the time gaining momentum and covering several set of activities and services for the increment of client’s satisfaction at large. A complete analysis over the ratio of data depicted in financial statement of the restaurant group plc has been made in this report. Moreover various internal and external factors have also been divulged in order to create a complete understanding over prices determination of products offered in the market by Marline enterprises Plc.
With the complete understanding over the case study given in this report it is observed that there are several internal and external factors which are very much useful for the Merlin Entertainment Plc for setting prices of the travel and tourism services in the market. Tours and travel business has been gaining momentum throughout the time for the betterment of the client’s satisfaction several.
Financial management- It is related with arrangement and deployment of funds in the business functioning of Merlin Entertainment Plc. It is considered that tours and travel business is comprised of various expenses and cost which is required to be incurred for the development of tours packages for clients at large.
Cost of the tours and travel business is very important part for determine the price of the packages for the clients. Merlin Entertainment Plc has been using following factors in order to make effective decision in its tours and travel business.
Cost-It is associated with all the related expenses for developing a determined tours and travel packages for the clients. However, Merlin Entertainment Plc has been incurring several types of expenses for developing client’s oriented tours and travel packages.
Fixed cost- This is the cost which is fix in nature and helps Merlin Entertainment Plc in reducing overall cost of the torus and travel packages. Normally it is comprised of lighting expenses, contract payment to vendors and further more.
Variable cost- This cost is variable in nature and changes with the changes in the number of clients in Merlin Entertainment Plc such as hiring new employees, expenses of destination, hiring cabs and accommodation services.
Direct cost- It is related with the direct expenses over the services offered by the organization in tours and travel business packages to clients such as arrangement of spas, hotels, foods and furthers more.
Indirect cost- This is the cost which is related with the expense made on other associated activities of Merlin Entertainment Plc such as expenses on advertisement, hiring professionals and developing portals for the clients.
Volume- Merlin Entertainment Plc has been providing its services around the globe. There are various tools and technique which is used by organization to compute the ideal volume tours and travel package that generate high amount of profits such as EOQ, break even points or etc. EOQ of the Merlin Entertainment Plc is computed with the help of available stocks and turnover in the given time span.
Profits- It is the amount of difference which is computed by deducting cost of the tours packages from the revenue earned by Merlin Entertainment Plc.
Importance of cost volume and profit of Merlin Entertainment Plc
It helps Merlin Entertainment Plc to reduce its price of the tours and travel packages
With the increasing level of volume organization could easily reduce the cost of tours and travel packages. In addition to this it also helps Merlin to increase its profit in determined approach.
It is the most required factors for the Marlin. It helps Merlin Entertainment Plc to plug back all its money in the business and provides required amount of funds for the betterment of the business functioning.
It is related with distribution of costs in all the process system of the organization in order to evaluate per unit of cost of the torus and travel packages.
Merlin Entertainment Plc has been offering several tours and travel packages to client. In order to set up an effective price of the different tours packages Merlin Entertainment Plc has been using different pricing methods. However, setting price of the tours packages provides a very big impact on the market share of the organization at large.
Methods-In order to increase the market share of tours and travel business Merlin Entertainment Plc has been using several price fixing techniques that are given as below.
Cost based price model- This is related with fixing price of the tours packages in accordance with the cost incurred on the particular tours and travel packages. In this process Merlin will add up certain % of amount in its cost and helps in determine per unit cost of the tours packages.
Seasonal wise price-It is observed that Merlin has been setting high price at the time of seasons of the market when the demand of the tours packages is high and vice- versa.
Demand oriented price- It is related with setting prices of those tours packages high which are high in demand in the market and keeping prices of tours packages low at the time of low demand in the market.
Clients’ oriented price methods- In this price method Merlin has to fix its price as per the demand of the clients in the market.
There are so many rivals in the market who have set up their price differently and provide changes in the number of torus packages as below.
Pricing of the tours packages
Number of tours packages
Star tours and travel limited
£ 500- £1500
25- 35 orders per year
Martin Randall travel
£1500- £ 2500
55 orders per year
Merlin Entertainment Plc
£ 200 - £ 1000
150 orders per year
Merlin Entertainment Plc has several influential factors which has been affecting its business in positive and negative ways in determined approach. However in order to determine the profit for the tours travel business of Merlin it is observed that company should evaluate following factors as given below.
Seasonal variation- This is related with changes in the season of the business. It is observed that profits of the company are dependent upon the turnover of the business. In the seasonal time it is observed that company has positive business responses from the clients.
Economic conditions- It is concerned with all the economical factors such as micro and macro factors. It is observed that profit of Merlin depends upon the purchasing power of the clients, market conditions, political changes, technology use, social preferences and other factors as may be noted (Soysal, et. Al., 2010).
Government intervention- It is related with government policies and framework regarding with the torus and travel business. It is observed that company would draw more profit if there is less interventional made by government either in domestic or international business.
Trend of business- throughout the time with the increasing changes in the business environment working of Merlin it is observed that profit of the organization is affected by the general trend of the public. If people are having trend to visit new countries then there will be high profit to the organization and vice- versa
(Hubrecht & Leleu, 2010).
In this report a complete adamantine study has been prepared over the economical factors, price setting tools and technique and other methods at large. Now in the end of this report it would be observed that ratio analysis is very much important for the stakeholders to make an effective investment decision making.
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