C.H.M.

E Society

BHONSALA MILITARY COLLEGE

Rambhumi, Nashik
A
PROJECT REPORT
ON

“FINANCIAL MANAGEMENT OF TOUR AND TRAVEL IN NASHIK DISTRICT”

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

In Partial Fulfillment of the Degree of M.com (2nd year)

Submitted by
Miss. Shanti Mahendra Yadav

Guided by
Dr. Sunil joshi
Year 2021-2022

1
 University Examination Seat no.

CENTRAL HINDU MILITARY EDUCATION SOCIETY’S

BHONSALA MILITARY COLLEGE NASHIK

– 422005.

Certificate
This is to certify that Mr./Miss.
Is a bonafide student of M.Com Part II in specialization of Advanced
Accounting and Taxation / Business Administration for the year 20 - 20
He/ She has undertaken and completed the Project Work as required by the
rules of the University of Pune.
He/ She has completed his/ her Project Work on the following topic

Project Guide Miss.Deepa R. Hinge Dr.U.Y.Kulkarni

Dr.Sunil joshi Co-ordinator, M.com Principal

External Examiner:-

2
 DECLARATION

I Miss Shanti mahendra yadav student of M.Com II year of Bhonsala military

College Nashik. I declare that the Project on “Financial management of tour and
Travel in Nashik district” is a genuine and benefited work presented by me.
The empirical findings in this project report are based on the data collected by myself; this

matter presented in this report is not copied from any source. The work has not been

submitted for the award of any degree or diploma earlier is the Pune University or any

other university the project report is submitted to Pune University in the partial fulfillment

of the degree of M.Com.

Date: Shanti Yadav

Place: Student

3
 ACKNOWLEDGEMENT

It is a great Pleasure to me acknowledge my deep sense of gratitude to

all those who have helped me in completing this project successfully.
I would like to convey my sincere and heart rendering thanks to
The owner, of Arihant travel , Pathardi phata Nashik for providing me
an opportunity to work with them and providing me necessary
information about their organization, their operation and providing
guidance in developing my Project.
First of all I would like to thank University of Pune providing me an
opportunity to undertake a project as a partly fulfillment of M.com
Degree.
I would Special thanks to my guide Dr.Sunil joshi sir.
I would also thank to our department head to guide me on the
project.
I would also like to thank my near and dear they give me
anything time information & helping me regarding my project.

INDEX
4
SR.NO CHAPTER NAME PAGE NO
1. INTRODUCTIO AND RESEARCH
METHODOLOGY

1.1 INTRODUCTION 7-14

1.2 SELECTION OF THE SUBJECT
1.3 OBJECTIVES OF THE STUDY
1.4 NEED OF THE STUDY
1.5 SCOPE AND LIMITATIONS
1.6 METHDOLOGY OF THE STUDY

2. History of tour and travel industry

2.1 HISTORY OF TOUR &TRAVEL

2.2 ABOUT TOUR &TRAVEL 15-35

2.3 VISION & MISSION

2.4 CHARACTERISTIC OF TRAVEL AGENCY

2.5 STRUCUTRE OF TRAVEL AGENCY
2.6 MEANING AND CONCEPT OF TRAVEL
3. BUSINESS
36-39
2.7 TYPES OF TRAVEL AGENCIES
2.8 SWOT ANALYSIS

Merits and Demerits of the financial

management in travel business.

5
4. FINANCIAL MANAGEMENT OF TOUR AND
TRAVEL
4.1 INTRODUCTION TO FINANCIAL
MANAGEMENT

4.2 IMPORTANCE OF MANAGEMENT IN

TRAVEL AGENCY

4.3 TRAVEL MANAGEMENT ACCONTING 40-70

SYSTEM

4.4 ACCOUNTING PROCEDURE IN TRAVEL

AGENCY

4.5 MULTIPLE ACCOUNTS BOOK KEEPING

FOR TRAVEL AGENCIES

4.6 TYPES OF MANAGEMENT ACCOUNTING IN

TRAVEL TOURISM BUSINESS

4.7 BOOK KEEPING RESERVATION

SOFTWARES

5. DATA ANALYSIS AND INTERPRETATION

71-72

6. CONCLUSION AND SUGGESTION 73-75

7. BIBLIOGRAPHY
76

6
 CHAPTER NO. 1

INTRODUCTION
&
RESEARCH METHODOLOGY

o INTRODUCTION
o SELECTION OF THE SUBJECT
o OBJECTIVES OF THE STUDY
o NEED OF THE STUDY
o SCOPE AND LIMITATIONS
o RESEARCH & METHDOLOGY

7
1.1 Introduction

The use of the term travel trade dates back from the early years of the 19th century,
but this should not obscure the fact that what we describe today as travel trade
(travel agency and tour operation business) was taking place much earlier in history.
Throughout the history, there were travel middlemen who helped the merchants
traveling for trade and others who traveled for religious purposes. Let’s trace the
historical development in travel trade – in world as well as in India.
In 1670, the Grand Tour concept was developed especially for educational
Purposes. Another major development took place in the year 1730. Health experts
suggested that sea water is found to be useful to cure many diseases. The result was
that many resorts around the English Coast were established to attract Visitors
seeking to cure themselves by sea water. In 1815, steamboat services were
introduced from London to Gravesend. One effect of this development was the
construction in all major resorts of a pier to accommodate the vessels on their
arrival. In 1820, European cultural centers were opened to British travelers. The rail
link was introduced between Liverpool and Manchester in a1830. In 1838,
Peninsular and Oriental (P&O) Steam Company introduced steamship services to
India and Far East.

Tourism and travel have undergone tremendous growth and diversification to

become a major force in the international economy. Many developing countries
have increased their presence in the market, particularly as travelers have expanded
beyond the more traditional destinations in order to seek out new places and
experiences.

The intent of this guide is to provide resources for those interested in researching
current tourism and travel industry and trends, though a few historical resources
have been included for perspective. We have also tried to include resources that
provide data and information that will help researchers develop their own market

8
profile. We have also covered a few specific areas that are frequently discussed;
however, this guide does not attempt to go into all sectors of the tourism and travel
industry.

Today, accounting is recognized as an information system and is designed to

communicate the right information to the internal as well as external users.
Accounting involves recording, classification and summarizing the accounting
information directed toward the determination of financial strength and weakness of
a travel agency.

To manage a travel agency/tour operator profitably demands accurate recording and

preparation of financial statements. These are essential in determining the true and
fair status of the business and for making strategic plan and decisions.

1.2 SELECTION OF THE SUBJECT

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The subject selected for the project work is “Financial management of tour and travel in
Nashik district”.
A scheme of “Financial management of tour and travel in Nashik district”
is the most important subject. Tourism is the need for Society. Tour and travel is the part of
our life.

Tourism Studies treats its study and research area as a whole, where physical, economic,
social and cultural aspects of tourism, tourist markets, and destinations are the main
corner-stones of learning.

When traveling, research can significantly impact your time for the better. Researching
prior to setting off can give you deep insights into the area, telling you places to avoid and
places you must go as well an endless amount of additional information which will aid your
journey.

When traveling, research can significantly impact your time for the better. Researching
prior to setting off can give you deep insights into the area, telling you places to avoid and
places you must go as well an endless amount of additional information which will aid your
journey.

A major benefit of travel management is the ability to reduce costs associated with travel.
This can include everything from airline tickets, to hotel room rates and travel insurance.
Generally, travel management specialists will have industry contacts and enough
experience to find or negotiate the best deals.

The most important financial accounting is needed for the every business so as an student
need to know these procedures.

1.3 OBJECTIVES OF THE STUDY

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The objectives of the studies are as under:-

1. To develop a system that automates the process and activities a travel agency and
customer details.

2. To foster better knowledge of various cultures.

3. To improve the local population's quality of life.

4. To provide both community and tourist-oriented facilities. To instill pride in one's

traditional culture and identity.

5. To know the various accounting procedures in the tour and travel industry.

6. The basic objective of financial management is to achieve optimal profit, both in the
short and long run.

7. To know to various accounting and financial tools and software used in the travel
management.

8. To encourage the student of avail this method of financial management in tour and
travel agency.
9. To know working culture and environment of the management at travel agency

10. To know to effectively the management runs on the smooth basis everydays.

1.4 NEED OF THE STUDY

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The Project Report very important role in the study of M.Com. Every student has to submit
project report. The project work is an integral part of M.Com course and it importance lies in
the fact that it gives the student their first exposure to an organization Need of the Project as
under:-

 To know that theoretical knowledge obtained in an travel agency at Nashik

 To know various problems, competition and challenges in Financial

management of the travel agency.

 The need to engage in strategic planning and capital budgeting to ensure that an
appropriate level of capacity in the tourist industry is identified.

 The tourism industry needs to manage its financial planning, fiscal control and
decision-making.

 These help them in improving their profit gains.

 The managers also have to focus on the sales forecasts and budgets of a
business to create a financial plan.

 To know the financial management which include profit and wealth

maximization, cash flow management, cost efficiency improvement, operating
risks management, survival management.

1.5 Scope and limitation.

There are certain limitations in every work. In the present research
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Work following limitations were observed.

The study is mainly based on primary and secondary data. Some of

The conclusions are based on the estimates, assumptions, observations and
Informal interview. Time constraint is also one of the major factors
Because same tourists are not visiting certain places at certain time.
Tourists hesitate to fill up the questionnaire and they do not take it
Seriously because they are in different mood and hence there is need to
Convince them.

Tourism is responsible travel to natural areas, which conserves the environment and improve
the welfare of local people. It is tourism based on the natural attractions of an area. They
want what is real, and they want to be immersed in a rich natural, cultural, or historical
experience.

 It also puts pressure for data collection and analysis of data.

 The study is limited only to the analysis of the financial management of travel
industry.
 To detailed study of financial management of travel industry.
 To study on the based on secondary data from the websites.
 Approximate values, data in graphs and figures used to finalize the account. .
 There are termed condition to be change by the government.
 There are change in commission rate and many other object according to the time.

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 1.6 RESEARCH & METHDOLOGY
The project report methodology includes various step collections of data. In the first step in
methodology collection of data and preparation and presentation of project report. There was
systematic process or procedure in methodology. It is a systematic way of solving the
problem. It is a systematic way of solving the problem.

DATA COLLECTION:-

The data used in project report has also available on the internet. There were two type
of the data collection was as under:-

A} PRIMARY DATA COLLECTION:-

The primary data collect with the help of branch manager, discussion with staff of
Travel agency.

The primary data collect from management too.

B} SECONDARY DATA COLLECTION:-

The secondary data is the main source of finding information. Secondary data source
like that newspaper, book, internet websites of the bank have been used for data collection.
Secondary source of data collection provide most important information or data for the
purpose of study project report.

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History of tour and
travel

CHAPTER NO. 2

History
15

of tour
 and

• HISTORY OF TOUR &TRAVEL

• ABOUT TOUR &TRAVEL

• VISION & MISSION
• CHARACTERISTIC OF TRAVEL AGENCY
• STRUCUTRE OF TRAVEL AGENCY
• MEANING AND CONCEPT OF TRAVEL BUSINESS
• TYPES OF TRAVEL AGENCIES
• SWOT ANALYSIS

2.1HISTORY OF TOUR &TRAVEL

A travel agency is a private retailer or public service that provides travel and
tourism-related services to the general public on behalf of accommodation or

16
 travel suppliers to offer different kinds of travelling packages for each
destination. Travel agencies can provide outdoor recreation activities, airlines,
car rentals, cruise lines, hotels, railways, travel insurance, package tours,
insurance, guide books, VIP airport lounge access, arranging logistics for
luggage and medical items delivery for travelers upon request, public transport
timetables, car rentals, and bureau de change services. Travel agencies can also
serve as general sales agents for airlines that do not have offices in a specific
region. A travel agency's main function is to act as an agent, selling travel
products and services on behalf of a supplier. They are also called Travel
Advisors. They do not keep inventory in-hand unless they have pre-booked
hotel rooms or cabins on a cruise ship for a group travel event such as a
wedding, honeymoon, or other group event.

Travel agencies use the services of the major computer reservations systems, also known as
global distribution systems (GDS), including: Amadeus CRS, Galileo GDS, Sabre, and
Worldspan, which is a subsidiary of Travelport, which allow for comparison and sorting of
hotel and flight rates with multiple companies. Bookings made via travel agents, including
online travel agents, may or may not be confirmed instantly. Unlike online travel agencies,
metasearch engines and scraper sites, such as Skyscanner, Kayak.com, Rome2rio, and
TripAdvisor, may or may not have their own booking engine, and instead provide results for
search queries and then divert traffic to service providers or online travel agencies for
booking. Travel agents may also work with airline consolidators

17
Finance and funding is the important concept that is required appropriate amount of time and
attention by the business for the better growth of the business as well as economy. Unit 2
Financial Management in Travel & Tourism Sector Assignment is the important part of the
economy so it becomes essential that finance and funding in this relation be focused with full
capacity and potential. So in that context a travel and tourism company called Carib Happy
Tours Company is planning a trip to Caribbean for one month. So accordingly cost volume
and profit analysis is done along with appropriate pricing strategy in this concern. For the
better performance all the factors that would constitute profits are also analyzed. Next is the
management accounting and the investment appraisal report is also made so that no problems
may arise in that regards in future. Interpretation of the travel and tourism company is made
by its ratios. Company also wants to build a hotel in the Caribbean so sources and
distribution of funds in that regards also mentioned in this assignment in the detail form.

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2.2 ABOUT TOUR &TRAVEL

In simple terms, the travel industry is concerned with providing services related to
travel from one location to another. This includes services that are directly related to
the travel itself, such as transportation, but also includes services related to catering for
travelers’ needs and wants after they have arrived at their destination.

It is often associated with the tourism industry and, as you will learn later in this
article, there is significant cross-over between the two, especially in terms of the
businesses that fall under their respective umbrellas.
The term travel originates from the Old French word ‘travail’ which meant heavy
labor. Travel refers to the movement of people or objects such as airplanes, boats,
trains, and other conveyances between various distant geographical locations. Another
"etymologically for the world tour as suggested by Theobald in 1994 is that it is
derived from the Latin, 'tornare' and the Greek, 'tornos', meaning 'a lathe or circle and
the movement around a central point or axis'. This meaning changed in modern
English to represent 'one's turn’ and they suggest the action of movement around a
circle. Argument is that a circle represents a starting point, which ultimately returns
back to its beginning. Therefore, like a circle, a tour represents a journey in that it is a
round-trip, i.e., the act of leaving and then returning to the original starting point, and
therefore, one who takes such a journey can be called a tourist.

19
Tourism in our minds is connected with vacation, holidays, pleasure, tours and travels,
attractions, historic or scenic places, and going or arriving somewhere. Tourism is
prevalent from the pre-industrial age and some common examples are cruises on the
Nile River, tours made by wealthy Egyptians, Greeks, and Romans, and the grand
tour.

People travel for short-term to other places from their normal place of residence and
during these temporary visits consume goods and services like transportation,
accommodation, etc., and the entire process is known as tourism. The tourism industry
revolves around providing enjoyment and pleasurable experiences. Hence the term
‘tourism’ is comprised of several social practices and experiences, signifying a
'departure' from normal mundane life.

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 2.3 VISION & MISSION
Every travel industry has some vision and mission which are as follows.

 Helping people and companies travel smart and achieve more.

 Be the world’s most trusted and innovative travel management company.
 Collaboration connects us.
 There’s no problem so tough that we can’t tackle it together. Working as a team, we
harness the wisdom (and energy!) of the crowd.

 Act with purpose

We embrace change and foster innovation. Our creativity and drive are positively
contagious – and they get results.

 Do what’s right
We operate openly and foster transparency. Our team members, clients and
communities always know where we stand.

 Give your best

Passion powers us. We believe the only way to do great work is to love what you do.
We’re inspired by the people and places around us.

 Feed the future

When we give others the tools, skills and opportunities to succeed, they flourish.
When we give ourselves the same, we’

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2.4 Characteristics of Tourism
Given below are characteristics of tourism as evident from the definitions discussed
above. These will be helpful in understanding tourism at a conceptual level.

Tourism involves travel and stay, can also include day trips, business trips, etc.
There is a movement of tourists from the place of origin to the destination. The
tourism industry is tourist-oriented and built entirely upon people.
Tourism can be international when travel is from one country to another
Domestic tourism means the travel is within the country
Tourism is a leisure activity
Tourism also involves a journey and services like transport, accommodation, catering,
and viewing, etc.
The journey and stay is generally at a site is outside the normal working place or
residence
Tourism is for a short period
Tourism may involve a variety of experiences. Every individual tourist may have
different perceptions about the same products/services of the tourism industry.
Tourism is always about the experience that the customer makes.
The products and services of the tourism and travel industry are perishable meaning
they are consumed as soon as they are produced and cannot be stored for the future.
Tourism is also associated with the status symbol in modem society
There may be indirect and direct recreational and health benefits of tourism
Tourism is now emerging as global phenomena
There exists a variety of tourist types and modes of tourist experiences
The tourism industry involves tourists, tourist product, type of destinations,
attractions, and tour management
Most of the tourism products are intangible as tourism is about the time spent and the
experience made
Social, economic, and institutional factors affect travelers’ decisions to travel to
certain selected destinations that affect these decisions

22
Supply-side of the tourism industry is limited and pre-fixed that is surplus capacity
based on demand cannot be instantly created like train berths, hotel rooms, etc.

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2.5 STRUCUTRE OF TRAVEL AGENCY

 STRUCUTRE OF TRAVEL AGENCY

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 2.6 Meaning & Concept of Travel Business
 Travel business is an economic activity, which is related with continuous and
regular buying and selling of travel related services for satisfying human
wants. Travel industry has been agreed as a service industry. In tourism,
service is anything which is provided to the traveler to travel, stay and
involve in tourism activity. Travel has fascinated human beings throughout

25
 the ages. During the past time travel was there but ‘tourism’ was not there.
Because travel was not undertaken for the purpose of pleasure and their
motive was not to seek holiday from the daily routine works. When people
learned to differentiate between work and leisure then tourism started. When
business agencies were developed to sale travel related services then tourism
industry started and travel business flourished.

 Tourism is related to broader economic and social issues including

commodification and globalization of culture, hospitality, friendship,
pleasure, and place and its attractions. Within this realm, tourism is regarded
as experience industry where travel experience is sold as a commodity just
like other household, recreation-oriented products. Therefore, tourism is
related to travel, stay and involvement of people in tourism activities. Their
travel and stay need to generate economy and economy is generated by
service. For this there should be buying and selling process. Only travel
business are able to involve in motivating travelers to travel, organize travel
formalities, and provide travel related services and they can sale tour.

 Travel business is a complex concept as the industry includes many activities,

which together produce the tourist product that is travel experience. It is also
complex due to various sub-sectors of the tourist products. Tourism is a single
industry but it is made of different industries such as hotel, airlines, travel
agency, trekking agency etc. Each one of them provides individual product or
they combine together to provide travel experience. Any visit to a tourism
destination comprises a mix of several components of different organizations.
A traveler may buy all the travel components from a commercial supplier, for
example a travel agency, as a single product or may buy travel components
individually from different suppliers. The buying and selling of all such travel
related services constitute travel business.
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 Travel Agency

Travel agency is one of the most important organizations in the tourism private
sector that plays a significant and crucial role in the entire process of
developing and promoting tourism in the country or at the destination. It is a
travel agency which packages and processes all the attractions, accesses,
amenities and ancillary services of a country and presents them to the tourists.
That’s why travel agencies are known as image builder of a country. A
prospective travel agency is one that makes arrangement of travel tickets (air,
rail, road and sea); travel documents (passport, visa and other documents for
travel), accommodation, entertainment and other travel related services from
the principal suppliers. It may also secure travel insurance, foreign currency for
the traveling people.

A travel agency may either be one of a chain of retail outlets or a single

operation. The work of the larger agencies is often divided between different
divisions, e.g. counter service, business travel and foreign exchange. In smaller
concerns each member of the staff will have to handle many aspects of the
agency's business. Some agencies limit their activities to arranging travel
and/or holidays to a specific area, but most cater for a very much wider demand
and fulfill all the functions associated with acting as intermediary between the
providers of holidays, transport, accommodation etc., and the client.
Companies that deal only with business travel are called Business Travel
Houses. They may also be responsible for dealing with the planning, publicity
27
and bookings for trade fairs and conferences.

Travel agency sales clerks take bookings on behalf of tour operators,

sell tickets for travel, make hotel bookings, take payments from the public and
give advice, on types of holidays, methods of travel, passports, visas, travelers
cheques, foreign currency etc., They need to have a good knowledge of the
products and destinations offered by the tour operating and travel companies.
Managers and assistant managers are responsible for the day-to-day operation
of branch offices. This includes staffing, marketing, accountancy, complaints
etc. Travel managers should have professional qualifications and experience. In
a small agency training will probably be on-the-job. Large companies may offer
a training programme. The main features of travel agency business are:
 An important link between the clients and principal suppliers.
 Image builder.

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 2.7 TYPES OF TRAVEL AGENCIES
Retail Travel Agency: A retail travel agency sells tourist products directly to the
public on behalf of the product suppliers and in return gets commission. Some
package tours are sold in two ways i.e. on a commission basis and mark-up price.
When a travel agency sells a tour package on marked up price, it means that first it
marks up the cost of a tour and then sell it at a higher rate. The mark up price is the
difference between retail price and wholesale cost.

A retail travel agency is defined as ‘a business that performs the following

functions: quote fares and rates, make reservations, arrange travel tickets and
accommodation, arrange travel insurance, foreign currency, documents and accept
payments.’ The main source of revenue for a retail travel agency is the commission
received from the vendors. However, the rate of commission differs from
organization to organization and travel component to travel component. In India,
retail travel agencies receive ninety five percent of their revenue from commission
and the remaining five percent from consultancy services.

Wholesale Travel Agency: These agencies are specialized in organizing package

tours, which are marketed to the customers/tourists through the network of a retail
travel agency or directly to the prospective clients (if the wholesale travel agency
has a retail division). A wholesale travel agency purchases tourist product
components in bulk and designs package tours. Sometimes, a wholesale travel
agency buys travel components from a vendor in bulk and resells them to another
travel business organization.

29
Wholesale travel agencies assemble package holidays and sell them to the clients
by retail travel agencies. A typical package tour includes – air ticket,
accommodation and sometimes other services may also be included in it such as
entertainment, sightseeing and sports activities etc. These packages are referred to
as ‘package tours’ as most of these tours include the services of escorts but a few
are sold to people who wish to travel independently. How a wholesale travel
agency generates profit? Generally a wholesaler receives volume discounts from
principal suppliers because a wholesaler might agree to purchase a large

number of seats from a particular airline or reserve a large number of rooms at a

particular hotel and resort.

Practically, a wholesaler who sells package tours is called a tour operator.

However, technically there is a difference between a wholesaler and a tour
operator. A wholesaler who sells tourists products individually without assembling
them into package tours is called a consolidator. Mostly, these are specialized in a
particular product component, such as air tickets, accommodation, conferences and
conventions etc.

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 2.8 SWOT ANALYSIS
Now is a good time to keep a promise to yourself and conduct a SWOT analysis
for your travel business. The SWOT acronym indicates Strengths, Weaknesses,
Opportunities, and Threats. The traditional SWOT looks at Strengths and
Weaknesses of a business (internal factors) and tries to thereby ascertain the
relationship with Opportunities and Threats (factors external to the agency). Doing
an annual SWOT analysis is a good prerequisite to a marketing plan and assists
with developing the appropriate goals for your travel practice. One of the most
important aspects of a SWOT analysis for travel agencies is very simply the act of
planning: the analysis makes you take a good look at your positioning in the
market. Each component of the SWOT analysis bears a relationship to the others.
Each of your strengths will give rise to opportunities or the capacity to exploit an
opportunity. Likewise, your strengths allow your travel practice to better confront
the threats on the horizon or compensate for weaknesses.

3 Strengths

4 Your Strengths are those aspects of your business profile that give you a
distinct market advantage and upon which you can capitalize in your
marketing plan. The category of Strengths goes to those qualities internal to
your travel practice, not to external factors like the economy.

5 Pull together into a list those qualities which are unique to your travel practice
as well as those which you might share with your competitors. Strengths build

31
 upon one another and a set of qualities in combination may contribute more
than a similar set with a key element missing or in differing proportions.
Begin with your unique selling point: why would clients turn to you as
opposed to your competition? What is unique about your agency? What
qualities set you apart? Perhaps it is your niche in the marketplace. Perhaps it
is the personality of your agents. Your strength may be in your legacy – the
reputation you have built over the years. Treat your SWOT analysis as a
brainstorming session. Participants should feel free to name any quality that
resonates as a strength.

6 Weakness

An analysis of the weaknesses of any travel consulting business by its owner

requires an extraordinary degree of both honesty and humility. It is not easy
to admit where your program has weaknesses. Further, from the perspective
of an insider, it is often difficult to even detect some weaknesses. For that
reason, the input and constructive criticism of outsiders is an invaluable
asset. It is likewise important to allow your insiders, employees and
associates to openly point out deficiencies during the SWOT analysis. The
customer or associate who provides constructive criticism is doing you a real
favor, so be prepared to accept critical input in the spirit in which it is given!

Every travel agency has inherent weaknesses. Being too small is a weakness
– there are some opportunities that cannot be taken on by a one or two-
person office. Being too large can be a weakness if the size of your travel
agency results in slow decision-making or too-rigid policies. Too few
personnel, a poor location, outdated collateral can all be considered

32
 weaknesses. A lack of experience is a weakness, as is a lack of capital.
Remember that in the context of a SWOT analysis, weaknesses refer to
internal issues, not to externals such as a local competitor (we will address
the competition under “Threats”).
7 Opportunity

We know our hypothetical travel agency’s strengths and weaknesses. Now, it is

time to think about the opportunities that the market is presenting. Opportunities
are external to the company and present the possibility for profit and growth IF the
company can position itself to take advantage of the opportunity – which is
precisely what the SWOT analysis is designed to do. It is almost certain that the
company will not be able to take advantage of every possible opportunity, so
identifying the ones with the most potential is critical.

Analyzing opportunities requires a good working knowledge of local, regional, and

national trends. Changes in the public perception of particular destinations, pop
culture, improving economic conditions, pent-up demand or changes in local
demographics can have real impact on a travel agency’s opportunities. For
example, the upcoming release of a movie can increase demand for a particular set
location as did Lord of the Rings for New Zealand. Getting ahead of that demand
curve might suggest a marketing campaign or a set of destination specialist
courses. Positioning a travel agency to take advantage of the building of a new
local senior citizen community is the type of advance planning that could be
important to growth.

Here is a list of possible opportunities for our hypothetical agency:

33
  Pent up demand for travel after a year of Covid-19Picture
 Concerns over terrorism create domestic travel demand
 ABC Travel, a competitor, looks weak – no marketing during Covid – laid
off employees
 Series of articles in local paper on River Cruising got a lot of attention
 New Senior center has inquired about group travel

It is easy to see that opportunities may be fleeting. For that reason, a SWOT
analysis cannot be treated as a static plan but should be considered alive and
organic. Not all opportunities can be anticipated by the travel agent and therefore
some room must be left for contingency and unexpected opportunities.

8 Threats

I am almost hesitant to discuss threats to your agency or travel practice. Most of us

too easily imagine all the possible perils that await at every turn, and we have spent
the past year on the edge. It keeps us up at night. Worse yet, threats can cause
even the most stalwart travel agent to do the worst possible thing – nothing.
Threats have a way of making business people pull in their resources and withdraw
from the marketplace. The value of a SWOT analysis, however, is to recognize
threats ahead of time and to counter weaknesses and marshal our strengths so that
we can not only exploit opportunities but can counter, prepare for and diminish
threats early on.

34
Threats are external to your agency. They might come in the form of a new
competitor, a bad national economy or conditions that are completely local to your
community. A terrorist attack anywhere in the world would be a threat as it might
keep people from traveling. A resurgence of swine-flu is a threat we all face this
fall. Any of these events or circumstances would threaten an agency’s ability to
exploit opportunities, to grow, and prosper.

Here is a list of possible threats to our hypothetical agency:

 Covid has dampened demand for European travelPicture

 The possible shut-down of a furniture manufacturer in town may cause
economic distress locally
 Political chaos is causing market uncertainty
 The competitor across town just affiliated with a large industry franchise
with lots of marketing dollars

However, each of these threats also suggests a course of action. New competitor?
Let’s look at how we can better bootstrap market. Bad economy? Adjust our
marketing strategy to fit the mood. Threat of terrorism or extended Covid – let’s
better communicate, educate our community and suggest alternative destinations.
Taking action is the key to confronting and dealing with threats. We have
identified our strengths – let’s use them in defense of our travel practices!

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 CHAPTER NO.3

Merits
 MERITS:
and Some advantages of the financial
management system are following as:
Demerit  It helps the management of an agency to conduct
its business in a more efficient and effective

s of the
manner.

 It lays emphasis on staff organization.

financia  It is helpful in measuring the efficiency of the

whole organization and each department
individually.

l 36
manage

 It promotes the feeling of cost consciousness.

 It forces the manager to concentrate on the future.

 Better Decision Making

Financial management facilitates better decision making. It collects and
provides all financial information regarding the organization. Easy
availability and accessibility of all information help managers in taking
decisions efficiently on the bases of facts and figures.

 Transparency Of Information
Financial management leads to the transparency of all information in
business. It records all information systematically and made it available to
all business users. Better transparency helps in developing proper
understanding within and outside the organization and avoids any confusion
or errors.

 Finance Control
Controlling the finance of an organization is one of the better advantages
offered by financial management. It supervises and manages all activities of
the business to exercise financial control. Finance managers ensure that all
activities of business go in accordance with the estimated cost and should
not go above the pre-set budgets.

 Enhances Managerial Efficiency

Financial management is responsible for maintaining proper financial
discipline in an organization. It ensures that all financial resources are
efficiently utilized and there is no wastage. Financial managers supervise the
activities of all employees and work at deriving better results out of them.

 Profit Maximization And Wealth Maximization

Financial management aims at raising the profit of organization and wealth
of shareholders. It aims at earning high profits by reducing the cost of
operation and efficiently utilizing all resources. Higher the profit the
company earns, the higher would be the dividend declared by the company
for its shareholders. This way it will increase their wealth.

37
 Determines Adequate Capital
Estimation of an adequate amount of capital that a business requires to start
and continue its activities is an important task. Financial management
estimates the right amount of funds required by the business so that it can be
acquired timely.

 Avoids Debts
Financial management helps in avoiding and taking any unnecessary debt by
the company. It aims at the proper and efficient application of all funds and
aims at reducing the overall cost. This leads to avoiding any need for
additional funds requirements by the business.

 DEMERITS:

 Costly
Practicing Financial management is a costly activity for business
organizations. For controlling and measuring the cost, financial management
implies various financial control tools. These tools are costly to use and are
time-consuming.

 Rigidity
Financial management leads to rigidity by setting certain standards for
measuring performance. All the standards are set in accordance with certain
parameters. However, conditions may differ while performing the actual task
from those conditions which were considered while framing standards.
Therefore due to standards rigidity, actual and standard performance cannot
be properly evaluated.

 Determination Of Standards
Financial management requires determination of standards for measuring
actual performance which is a very difficult task. There are no proper setup
criteria for setting up standards and there may be chances to set improper
standards.

 Difficulty In Applying Control Measures

38
 Applying various financial control measures faces several difficulties. These
financial controls can be easily applied at the starting of the process but its
implication becomes difficult during operation of the process.

 Problems In Recognizing Deviation

The identification of real reasons for deviation in an actual performance is
not always possible. Financial management can work toward managing or
avoiding deviations if and only real reasons for such deviations are found
out, otherwise, it is ineffective.

39
 CHAPTER NO.4
 FINANCIAL MANAGEMENT OF THE TOUR
AND TRAVEL
 INTRODUCTION TO FINANCIAL MANAGEMENT

 IMPORTANCE OF FINANCIAL MANAGEMENT IN TRAVEL

AGENCY

 TRAVEL MANAGEMENT ACCONTING SYSTEM

 ACCOUNTING PROCEDURE IN TRAVEL AGENCY

 MULTIPLE ACCOUNTS BOOK KEEPING FOR TRAVEL AGENCIES

 TYPES OF MANAGEMENT ACCOUNTING IN TRAVEL TOURISM

BUSINESS

 BOOK KEEPING RESERVATION SOFTWARES

40
 4.1 INTRODUCTION TO FINANCIAL MANAGEMENT
Finance and funding is the important concept that is required appropriate amount
of time and attention by the business for the better growth of the business as well
as economy. Unit 2 Financial Management in Travel & Tourism Sector
Assignment is the important part of the economy so it becomes essential that
finance and funding in this relation be focused with full capacity and potential. So
in that context a travel and tourism company called Carib Happy Tours Company
is planning a trip to Caribbean for one month. So accordingly cost volume and
profit analysis is done along with appropriate pricing strategy in this concern. For
the better performance all the factors that would constitute profits are also
analyzed. Next is the management accounting and the investment appraisal report
is also made so that no problems may arise in that regards in future. Interpretation
of the travel and tourism company is made by its ratios. Company also wants to
build a hotel in the Caribbean so sources and distribution of funds in that regards
also mentioned in this assignment in the detail form.
What is financial management?
For your travel agency or operator to be successful, it is essential to apply a series
of administrative actions to take care of finances and control all activities that
involve financial resources.

Thus, the objective of financial management is to manage and analyze to

understand if the business is bringing income and profitability. And this is done
through a complete look at expenses, investments, income, etc.

This management allows you to have controls, indicators, targets and strategic
actions that bring improvements to your business so that it is profitable.

If in a given month the results were not the best, based on the management analysis
it is possible to understand what happened.

41
Based on the results obtained, strategies are defined to change this reality and
improve your company's financial health.
Financial Management means planning, organizing, directing and controlling the
financial activities such as procurement and utilization of funds of the Hospitality
and Tourism business. It could also be seen as applying general management
principles to financial resources of the enterprise

Financial management refers to the functions involved in the management of

financial resources. These functions are fund procurement, working capital
management, capital budgeting, and capital structure designing of an organization.
It includes controlling and maintaining the financial assets of an organization

42
4.2 IMPORTANCE OF FINANCIAL MANAGEMENT IN TRAVEL
AGENCY
Let's be honest?

You may even find this topic boring, but the routine of any company is full of
processes that involve money, and financial management processes are essential
for the company to pay the bills and generate profit.

When talking about the financial management of Travel Agencies and Operators,
this point becomes even more important, due to the large movement between

43
accounts payable and receivable and high operating costs that require monitoring
before, during and after the sale of the service.

The financial management of Travel Agencies and Operators it is essential for the
survival and professionalization of your business.

The need to engage in strategic planning and capital budgeting to ensure that an
appropriate level of capacity in the tourist industry is identified. Next, the need to
utilize capacity effectively trough techniques such as yield management and cost-
volume-profit analysis is discussed.

Helps in improving the profitability of organisations; Increases the overall value of

the firms or organisations; Provides economic stability; Encourages employees to
save money, which helps them in personal financial planning

Financial management provides pathways to attain goals and objectives in an

organisation. The main duty of a financial manager is to measure organisational
efficiency through proper allocation, acquisition and management. It provides
guidance in financial planning. It assists in acquiring funds from different sources

Financial management must plan to pay its taxes on a timely basis. Financial
management is an important skill of every small business owner or manager.
Every decision that an owner makes has a financial impact on the company,
and he has to make these decisions within the total context of the company's
operations.

 A positive investment culture

 Financial support from the market - seed capital,

44
 business angels, local investor consortia, foreign

 investors and entrepreneurs

 Fast decision making processes based on market

 solutions and sustainability

3 Support not subsidy substitution

4.3 TRAVEL MANAGEMENT ACCONTING SYSTEM

The basic objective of accounting is to ascertain the profitability and finance
position of a travel agency operation. To achieve this, every travel agency prepares
the following journals and statements:

Sales Journal
Cash Receipt
Account Receivable
Cash Disbursement

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IATA ledger
Pay Roll
General Ledger
Profit and Loss Account
Balance Sheet
Sale Journal
In this journal, all credit sales are recorded. Sometimes, a travel agency provides
extends credit facilities to its clients i.e., leisure and commercial clients. It, in fact,
makes a cash loan to its clients. However, it has been noticed that only large-scale
travel agencies can afford to extend credit to corporate customers, but even then, a
thorough credit check is required before a credit amount is opened.

To maintain the up-to-date record of all credit sale, travel company prepare a sales
journal.

Cash Receipt Journal

It is used to record all revenues received by the travel agency during the period. In
other words, transactions concerning cash, credit cards, cheques are recorded in
this journal. For example sale of the tour package, the commission received from
the hotel, airlines and other vendors are recorded in it.

Account Receivable

When a travel agency purchases tourism products, services from the supplier on
credit, the amount owed to producers/suppliers/sellers are referred to as an account
receivable.

Cash Disbursement

46
Cash outflows are recorded in cash disbursement journal. Cash outflow means the
operating expenses of the travel agency like rent, salaries, telephone expenses,
administrative expense, financial and legal expenses, selling and distribution
expenses etc.

These are mostly paid by cheques or through bank drafts. Cash disbursement
journal is also called Cost Journal. Thus, cost journal is used to record the
payments made by a travel company to its employees and others.

IATA Ledger
The IATA ledger is known as ‘Chief Book of Accounts’ and is the destination
point of entries made in the journals or sub-journals. It is used to balance the
accounts of the travel agency. In accounting, ‘Balance Account’ means continuous
and consistent check and verification of the accuracy of a travel agency’s
accounting system.

 Financial Analysis and Control Techniques Used in Travel Agency Business

It is observed that financial statements convey much useful financial information to
internal management and outside users, and for this reason, it has become
imperative to discuss the various tool for analyzing financial statements and
control techniques used in travel agency business.

The emphasis is focused on the application of tools and techniques which are key
indicators of a travel agency’s financial health and are considered vital for wise

47
decisions to improve an agency’s profitability, financial soundness, and strong
financial strategies.
Accounting Ratios
Accounting ratios are known as ‘financial ratios’and are considered key indicators
for measuring the agency’s profitability and financial performance. They may be
calculated at one point of time or may cover several time period to identify trends
in several years. It is also used to compare one’s own position with an average
industry.

According to Wixon and Kelly in 1970, “an accounting ratio is an expression of

the quantitative relationship between two numbers. It is a simple arithmetical
expression of the relationship of one amount to another like 100 to 200 or 600 to
700 etc.”
The main ratios which are widely used to analyze an agency’s performance are:

 Liquidity Ratio

 Current Ratio
 Quick Ratio
 Profitability Ratio

 Profit Margin
 Return in Assets
 Return on Investment
 Activity Ration

 Fixed Assets
 Accounts Receivable
 Account Payable
 Leverage Ratio

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  Capital-gearing Ratio
 Financial Leverage
 Operating Leverage
 Debt Equity Ratio

Liquidity Ratio
It means an agency must be able to pay its short period debts and obligations from
its short period financial resources to remain in the business. The most common
used liquidity ratio is the current ratio.

Current Ratio
This ratio compares the agency’s current assets to current liabilities. A high current
ratio indicates that the travel agency is liquid and has the ability to pay its current
obligations in time as and when they are due.

Activity Ration
Activity ratios measures how effectively a travel agency manages its resources.
Practically, funds are invested in various assets of a business to enhance sales and
earn profits. The greater the return which can be derived from the assets, the more
attractive the investment and the more profitable the agency.

These ratios are also called ‘turnover rations‘ because they reveal how rapidly
resources are converted into revenues. High ratios are generally associated with
good asset management. The activity ratios are:

Account Receivable
Account Payable
Fixed Assets

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Account Receivable indicates the number of times the average receivables are
turned over during a year. The higher the value of turnover, the more efficient is
the management of account receivable and vice versa.

Account Payables indicates how much time a travel agency is likely to take in
repaying its account payables/creditors in a very short period. The less the number
of times, the more is the credit period that a travel agency enjoys.

Profitability Ratio
The main objective of travel agency business is profit maximization. Essentially
the existence, continuance, and expansion of travel business depend, to a large
extent, on the travel agency’s capacity to earn good amount of profit every year.

Profitability ratios are a fair indication of sound management of a travel agency.

The main profitability ratios are profit martin/net profit to sales ratio, return on
assets and return on investment.

Capital Structure Ratio

It measures the relationship between long-term debts and owner’s equity.
Generally, debt financing increases the risk of investment in the business. So a
higher leverage ratio is associated with higher risk and vice versa. However, there
are times when a travel agency can make use of borrowed capital than equity.

The debt-equity ratio and debt servicing ration are used to measures the capital
structure of an agency. The debt-equity ratio compares the total debt with total
owner’s equity of an agency.

Cash Flow Analysis

50
Cash flow analysis is a measurement of the amount of money that a travel agency
has in navel at any point in time. It enumerates the net effect of the various
transactions on cash and takes into account the receipts and disbursements of cash.
It also summarizes and causes of changes in the cash position of a travel agency
between the different dates of balance sheets.

The long-term survival of any travel agency depends on its ability to generate cash
from its main trading activities. The cash flow analysis is prepared by using the
information contained in a travel agency last two year’s annual reports.

Practically, cash flow analysis is based on the profitability and liquidity of the
travel agency and it helps the users to assess and identify:

Travel agencies’ ability to generate future net cash inflow from the operations.
An agency’s need for external financing.
The reason for the difference between net income and net cash flow from the
operational activities of the agency.
The effects of cash and non-cash investing and financing transactions.
Moreover, by analyzing cash flow, the owners, shareholders and the management
know exactly where the travel agency stands at any given time, on the other hand,
credits, or suppliers, and the financial institutions use cash flow analysis to
determine whether the travel agency can repay loans or has the debt paying
capacity.

Break Even Point

A travel agency is said to be ‘break’ even when its total revenues are equal to total
costs. It is a point where there is no profit or loss and at this point, the contribution
is equal to fixed costs.

51
Budgetary Control
The keystone of planning and control activities in the travel agency is the
budgetary control system, which is a major part of the day-to-day operations of the
accounting system. It is applied to a system/technique of a management and
accounting control by which all travel agency operations and activities are
forecasted and actual results, are compared with budget estimates.

The process of budgetary control involves the establishment of budgets, relating

the responsibilities of executives to the requirements of a policy, and the
continuous comparison of actual result with budgeted results, either to secure by
individual action the objectives of that policy or to provide a basis for its revision.

Practically, budgetary control technique is a useful accounting tool for translating

strategic objectives/goals into realities. It also provides the management useful
parameters for measuring the travel agency’s performance so that agency
management can be tape corrective and timely actions if actual results are below
the planned ones.

Advantages
Some advantages of the budgetary control system are following as:

It helps the management of an agency to conduct its business in a more efficient

and effective manner.
It lays emphasis on staff organization.
It is helpful in measuring the efficiency of the whole organization and each
department individually.
It promotes the feeling of cost consciousness.
It forces the manager to concentrate on the future.

52
4.4 ACCOUNTING PROCEDURE IN TRAVEL AGENCY
When you start a travel agency, you need to keep accurate accounting records for
your business. These records help you keep track of your agency's performance
and are necessary for preparing your tax return. The most important accounting
procedures for a travel agency are the cash flow statement, the general ledger and
the income statement

53
Cash Flow Management
One of the most basic goals of your accounting procedures is to keep track of your
agency's cash flow. While running a travel agency with multiple daily transactions,
it can be easy to lose track of your sales and your incoming payments. Through the
use of your accounting software, you can keep track of your company's net cash
flow from sales and expenses. This keeps track of the cash management of your
business and helps identify any financial problems. Make sure that your agents
post all business transactions in your accounting records.

General Ledger
Another accounting tool for a travel agency is the general ledger. The general
ledger gives an overview of your company's current position. This ledger keeps
track of your agency's assets, everything your company owns and what it owes.
The accounting impact of all business transactions should be recorded on your
general ledger through your accounting software. Most businesses update their
ledgers daily or weekly. It is crucial to update your general ledger regularly so you
can keep track of your agency's financial status.

Recognizing Revenue
An important accounting procedure for any business is the process of revenue
recognition. This principle establishes when a business has officially earned
revenue and can declare the earnings on its accounting statements and for taxes. A
travel agency, as a service industry, must use the cash method for recognizing
revenue. Your agency must recognize revenue as earned as soon as a payment is
54
received. It does not matter when you complete your service to the customer, as
soon as you receive payment, you must recognize the payment as revenue.

Income Statement
The last accounting procedure for running a travel agency is the maintenance of an
income statement. The income statement records your total income and expenses
to calculate your net profit over a period of time. The income statement serves a
similar purpose as the cash flow statement. While the cash flow statement only
keeps track of cash, the income statement measures the profits of your business.
When you start your agency, the cash flow statement is more important as you get
the handle of your company's daily cash flow. In the long-run, your income
statement is more important as it gives a better description of your company's total
profitability.
One of your responsibilities as a business owner is to keep accounting records.
This information is useful for keeping track of your company's financial
performance. You also need good accounting records for preparing your taxes, and
for presenting your company to investors. Posting reports and closing month-end
reports are two accounting transactions to keep your financial records updated.

General Ledger
The general ledger is a basic accounting tool to keep track of your business'
accounts. The ledger records your firm's assets, or what it currently owns, and its
liabilities, what it currently owes. This report is useful because it gives a current
snapshot of your company's financial position. The ledger gives an overview of the
accounting impact of all your past transactions. While you can record your
company's general ledger by hand, most businesses use accounting software to
keep their ledgers presentable and updated.

Posting Reports

55
When your business completes a transaction, you need to update your ledger by
posting a ledger report. If you do not have time to update your ledger every day,
you can keep track of transactions in a business journal. A posting report is when
you input your journal reports into your company ledger. You can post ledger
reports at your own convenience. Most businesses use a daily or weekly update
schedule. It is best not to delay posting reports for more than a week, as you may
lose track of your company's financial position.

Month-End Reports
At the close of each month, you need to complete a month-end report to keep your
accounting statements updated. The month-end report adjusts your ledger for
monthly transactions. This includes recording loan payments, reducing the value of
business assets by their depreciation, writing off any bad debts and recording
entries for prepaid expenses. The month-end report is also used to review the past
month's transactions and make sure everything has been properly recorded. If your
accounts do not balance, the month-end report is a time to correct any accounting
errors.

Year-End Reports
Your business must also complete a year-end report for its accounting records.
This report is to prepare your business' official accounting statements at the end of
its fiscal year. The year-end report calculates your net earnings for the year to
update your company's retained earnings balance on its balance sheet. This gives
your company a clean accounting ledger for the following year. One last part of the
year-end report is to mail out IRS Form 1099s to your company vendors for their
taxes.

4.5 MULTIPLE ACCOUNTS BOOK KEEPING FOR TRAVEL AGENCIES

Travel Business Accounting – The travel industry has to deal with a vast range of
institutes like agencies, hotels, restaurants, etc. They are scattered in different cities
and countries, which makes this industry very vibrant.
56
The uniqueness of the industry:

Travel and Tourism industry is a unique as compared to the other industry. It has a
different course of work and that too changes with the season. Like a travel firm
takes their clients on a trip to various places based on clients’ requirements but
considering the season at that place. In addition to that, the budget is also an
important aspect we need to care of. Thus, we know and understand that how
unique this industry is and provide the accounting solutions based on it.

Integration of online business:

Industries around the globe are changing at a fast pace, and so the firms in the
travel and tourism industry. Most of the firms have provided services online
through their websites. We at Meru Accounting facilitate a smooth integration of
your online website with an array of accounting software that increases the
efficiency and ease of importing date in the accounting sheets of the software.

Tracking of inventory and receivables:

Travel and tourism firms have linkages with different clients across the world. The
firms also have to keep a good association with different institutions like hotels,
transportation agencies, food suppliers or restaurants, so they can give their clients
a good experience. To help travel industry in managing their inventory and
payments because of reception, our professional team carries out the tracking of
inventory and account receivables to prevent any disruption in the services.

Timely financial services:

Travel and Tourism industry works at a rapid pace. Thus it’s very essential to
know the nitty-gritty of the financial position of the firm. We at Meru Accounting
promise to deliver timely financial services so you can focus on the key parameters
of your business and increase profits.

Travel planning and business strategies:

57
The competition in this industry is cut throat. So, we give our clients a good view
on their financial viability regularly that helps them plan the trips and develop
business strategies to grow and prosper.

It is very significant if you are running a very graceful business like Travel. The
travel industry is showing a nice boom as more and more people are showing
interest in travelling to different places. Most of the people can’t travel very often,
so they wait for a long duration to travel to the desired location. Here, the travel
industry has to remain on their toes to fulfil the customer’s demand.

Travel service providers:

Home-based or Independent Contractors–
They are generally handled by a single or few people with no official place. They
will have an agency registered on any non-working official place too. Here, very
few people travel through their contacts.
Niche or Specialty–
This agency provides a tour of a particular sector only. They make the tour
package here for a specific group of travellers, or they have one specific place for
the tourists to travel.
Corporate only–
The corporate tour is a particular tour agency that is offered to only the corporate
companies. These tour agencies have an excellent idea regarding arranging tours
for different companies.
Franchise –
A franchise is one of the standard ways of doing business. Here, the entity which
runs the businesses uses the name of an established brand along with their scheme
for the travellers.
Types of Travel businesses:
Travel booking Agents:-
Travel booking agents do all the arrangements for the journeys. They usually book
all the transportation ticketing for travellers.
58
Travel service providers:
The travel service providers look after all the things in travelling. They arrange the
facilities for staying, travelling to different places, eating, and other essential stuff
for travelling.
Bus Service providers:
The bus service providers provide the buses for travelling in that desired place. As
per the capacity of the passengers and the requirement, the bus arrangement
occurs.
While running the travel businesses, it is essential to manage the accounts of the
agency along with the invoices in a travel agency. Managing the accounting for
each of the above differs to a large extent. There are a lot of things in travelling
which we have to keep in the right places while accounting.

Things to take care of travel business accounting:

Revenue recognition
When the travel agency makes the actual travelling for the travellers, they have to
make the revenue tracking in a very proper way. The revenue earned through the
customers who are adequately bifurcated to make sure that the appropriate
management of the income is done.
Expenses
Properly managing the costs is an essential factor to keep track of the outflow of
the capital. The charges are mainly incurred in activities like booking the
transportation tickets; the cost involved in the eating items, the individual facilities
given to the travellers through external sources, and many other expenses did for
the clients.
Meru Accounting provides excellent accounting for Travel Agency. They have
better ways to manage the expenses and revenues done in the travel business.

Here are some reports provided by Meru Accounting for your travel business:
Cash flow forecast:

59
Whenever an actual travelling happens for the travellers, a lot of expense starts.
Here, it is essential to keep a proper track of all the entities where the costs are
made. It helps the travel agencies to make an appropriate Cash flow forecast.
Organisations need to do a detailed analysis of the cash flow. Here, it is easier for
the travel agency to make the proper Cash flow forecast.

Budgeting and analysis of deviation:

Every travel agency desires to have a proper budgeting analysis to estimate the
cost, expense, and revenue. The accounting service here can provide better
Budgeting and analysis of deviation.

Use of Xero for Travel business.

Class Tracking.
The travel agencies have a different travel package for their customers. The class
tracking facility provided by the Xero enables us to track all the travel packages in
a very proper way.

Two Bank Accounts.

We set up two Bank accounts for the travel business. One is the client’s trust
account, where we make all the travel expenses and income. While the other is the
general travel business account, where all the business-related information for the
travel agency is kept standardly. This system helps the travel business to track all
the financial transactions accurately along with the profitability.

4.6 TYPES OF MANAGEMENT ACCOUNTING IN TRAVEL TOURISM

BUSINESS

60
 Management accounting helps the management to collect and manage all the
internal working of the data time to time so that if any problem arises then it
can be solved without any default. This is important as all the defaults, flaws
or any other aspect that would affect the business are critically analyzed
before any penalty. Different types of management accounting is as follows-

Budget report-
All the expenses that would occur in future are estimated and then
documented in the budget report. By this management accounting all the
expenses that can occur in future are reported that can enable to make plan
accordingly. This is the best way performing accounting.

Job cost report-

In this technique, all the main area of the business where profit can be
earned is focused so that no extra time and efforts are wasted on any non-
profitable project. All the aspects through which profit can be generated are
analyzed and then reported to make correct elevation of the profit generating
projects.

Cost allocation report –

In this report, allocation is made to each and every resources present in the
business at early stage so that no ambiguous situation in any relation may
arise in future. This helps the managers to keep a track record on the
functioning of the business and there related outcome.

In context with the CHTC, business has planned to earn at least £ 10,000
from the trip to the Caribbean but the planned budget and the actual
expenditure differ drastically as if business charged £ 800 per tourist then it
would suffer a loss of£ 1500 which leads to no exchanges of the profit
earning from the trip.

This evaluation is performed and a bad management accounting is

showcased by the company. So now it is important that CHTC chose the
best technique for the purpose of accounting.

4.7 BOOK KEEPING RESERVATION SOFTWARES.

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Booking and reservation software
Today most travelers have no problem booking their hotels themselves. It’s so easy
and convenient! There are price aggregators that give you the best rates on the
market in seconds, even tools that predict prices using historical data. There are
even chatbots that do that for you. So, for many people, human agents lose their
appeal because they often rely on the same websites a client can comfortably use.
This isn’t ideal.

When you’re using specialized travel booking software, you get access to the back
office and can connect your bookings to the accounting service, receive reports,
create invoices, and much more. In fact, standard features for booking and
reservation software include:

GDS connectivity
Other third-party suppliers integration (bed banks, tours and attractions, etc)
Booking and cancellation management
Payment system and automatic billing
Discounts management
Here we’ll review a few players on the market to give you a better idea of what’s
available.

NB: We won’t be covering GDSs themselves, but rather discuss systems and
providers that combine several suppliers. If you want to explore GDSs offers
better, check our separate article on GDS connectivity.

Rezdy: tours and activities marketplace and booking engine

Rezdy is a popular tours, activities, and experiences marketplace that connects end-
suppliers with distributors. For travel agencies, tour operators, and other resellers
Rezdy offers a booking engine. Besides sourcing inventory from suppliers directly,
Redzy connects to key tour aggregators such as GetYourGuide, TripAdvisor,
Klook, Musement, and more.
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It comes with all needed back-office features such as inventory management, real-
time rates, reporting, and a handful of payment gateways by Stripe, PayPal, and
Square.

Lemax: much more than hotels and flights

Among its numerous solutions, Lemax offers booking and sales software both for
B2B and B2C models. Integrated with Travelport GDSs and Hotelbeds, a
hospitality wholesaler, it allows you to add not only flights, hotels, and rentals, but
also excursions, vessels, cruises, and more. Its main advantage is customization
and universality – Lemax API can be used pretty much for any travel booking
operation, from conference organization to group tours.

Lemax online booking platform

Lemax online booking platform

PHPTravels: general-purpose and open source booking engine

PHPTravels is useful for its modules. Whether you need hotel, car, flight, or tour
booking, you can use each module separately and enrich your already existing
solution. It’s 100 percent open source, meaning you can employ developers to
customize the tool to your liking. They also provide the code for your mobile
application and you can test out the demos on their website.

The platform is integrated with Travelport GDS, a Hotelbeds bed bank, Expedia,
and other third-party suppliers.

Dolphin: full back office for smaller businesses

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Just like its competitors, Dolphin provides back-office support for reservations,
sales, and customer communication. They also offer solutions for business travel
agents with integrated company and client profiles and other functions for
commercial relationships.

Dolphin is integrated with all three major GDSs, Expedia, key car rental providers,
and such tours and experiences suppliers as Viator.

Bookinglayer: adventure travel booking engine

Bookinglayer provides a booking engine for online travel agencies that focus on
camping, mountain biking, surfing, and other types of adventure travel. It doesn’t
come pre-integrated with suppliers or GDSs, so the engine targets those agencies
that already have their pool of partners and plan on automating booking processes.

It’s designed to be easily deployed on popular CMSs (Squarespace, Wix,

WordPress, etc) and already has a payment module with integrated payment
gateways and other features like customizable surcharges.

Client management also becomes automated and you have a built-in CRM, a
customer portal enabling travelers to see information about their departures and
arrivals, and update information.

Bookinglayer’s back office interface

Bookinglayer’s back-office interface

Accounting software

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Most reservation tools that we listed above provide some form of financial
management for travel agencies already. However, any business that has to do
something with sales employs a very complex accounting system, and separate
functions are not comprehensive enough for the travel business. Just some of the
must-have features a travel agency accounting platform should include:

Invoicing
Inventory management and tracking
Connection to banks
Bank reconciliations
Data security
Travel agent commission management
Sales analysis
Supplier data handling
Now, let’s quickly review what the market has to offer in accounting for travel
agencies.

Xero: secure and feature-rich

Xero is a cross-platform accounting service that offers three pricing plans for
different business needs. All basic features are available in each plan. These
include invoicing, mobile access via Android and iOS apps, connection to bank
accounts, and secure SSL encryption. Xero is a good fit for travel agencies, hotels,
and hostels. It works with more than 160 currencies and can be integrated with
third-party tourism apps.

Xero’s offerings and interface demo

Xero’s offerings and interface demo

TravelWorks: BSP-ARC support and group planning

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TravelWorks allows you to easily control travel agent commissions, even in
complex cases, such as sharing commissions between different agents. To sell
flights, US agencies have to be accredited by the Airlines Reporting Corporation
(ARC) or Billing Settlement Plans (BSP) by IATA for agencies outside of the US.
TravelWorks supports BSP-ARC management and exception reporting that
automatically identifies errors. It also simplifies group planning with templates.

OnlineInvoices: profits calculation and performance monitoring

Targeted at companies in all sectors, OnlineInvoices also offers advanced features
to travel agencies. You can send invoices to tourists and partners via email and
receive payment by credit card, PayPal, Stripe, or bank transfer. You can analyze
travel data to locate the most popular hotels and sights and assign each agent to
accomplish specific tour services as well.

Tour and itinerary building

Designing tours is one of the most time-consuming operations in a travel agency. It
requires booking, planning, scheduling, pricing – all considering the most popular,
budget, or unique inventory for each location. Thankfully, there is software for
this. A typical tour builder would include:

Inventory system integration

Supplier integration
Tour publishing tools
Tour templates
Tour booking engine
Tour creation is also ususally associated with tour operators, so you can check our
article specifically dedicated to tour operator software. Here are some of the tools
that help agents and operators design tours.

TripСreator: tour planning with built-In inventories and booking engine

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TripCreator helps operators design tours for the website and custom tours for each
client. TripCreator has a rather broad inventory of hotels, destinations, attractions,
but your offline inventories are also available. TripCreator validates dates, opening
hours, or driving distance. You can both generate dynamically packaged tours and
manually combine activities.

For extra pay, you get a booking engine, a mobile app, and white-label
customization features.

Tour designing process in Tripcreator

Tour designing process in Tripcreator

Tourwriter: itinerary builder with booking engine and CRM

Another tool wired for tailor-made experiences, Tourwriter allows you to create
itineraries and embed them on websites for a basic designer-tier mode. Expert-tier
users, paying extra, get access to a booking engine with booking confirmations,
commissions management, and a CRM.

CRM systems
How is travel customer relationship management different from any other? Why
can’t you use one of the traditional solutions from Zoho, HubSpot, or Salesforce?
Every industry has marketing properties that can’t be covered by one universal
tool. So, what to look for in a travel CRM system?

Lead distribution among agents

Travel-specific customer categories
Support for travel marketing channels: booking websites, TripAdvisor, etc.
Automated departure and arrival notifications
Customized dashboards

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Let’s see how existing solutions help travel agencies solve marketing challenges.

Zoho’s Travel Agency CRM: comprehensive tool from an industry leader

One of the biggest CRM providers, Zoho has a targeted Travel Agency CRM with
features beneficial for companies selling travel services. Here you’ll find a lead
capturing machine that gets all inquiries made via your website directly into a
CRM with the ability to distribute them among your agents. You can also set up
quota templates that get sent out to customers according to your own rules. Zoho
also simplifies passenger handling, allowing you to classify them according to their
role.

Zoho Travel Agency CRM interface

Zoho Travel Agency CRM interface

LeadSquared Travel CRM: exhaustive marketing software

LeadSquared provides marketing software for all businesses, but it also has a
specific CRM and marketing solution for travel brands. Its travel product is divided
into three functions: travel marketing, package sales, and partner management. So,
besides CRM function, it automates all marketing and sales tasks and manages
leads, supporting detailed reports, customized dashboards, and lead distribution
based on trip location and budgets.

LeadSquared’s travel marketing solutions

LeadSquared’s travel marketing solutions

Kapture Travel CRM: automatic itineraries and travel sales tunnel

Besides basic customer profiles and interaction, Kapture creates itineraries semi-
automatically and directly in a CRM. The sales funnel here is also customized for
travel agencies and allows you to track clients from their interest in a vacation to
the booking itself. Kapture also saves all important travel documents such as
passports, tickets, and visas in one place.
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Itineraries created by Kapture CRM

What to look for in travel software: our recommendations

A good travel agency software shouldn’t only perform the functions your clients
can already easily access online. It should bring out the advantages of traditional
agencies and strengthen their operations. It shouldn’t create new obstacles such as
a complicated interface that will make your agents return to their Excel
spreadsheets.

When looking for either accounting, reservation, or marketing software, pay

attention to these factors and pick out a tool that will make your business shine.
And if you’re going the custom development route, come to your vendor with the
following specifications:

Tech support
This not only includes 24/7 chat or call service, but also a knowledge base, FAQs,
and tutorials. TripCreator, for example, provides webinar training to all users,
while Orioly creates video instructions.

Similar to yours business flow

Thanks to trial options available in many cloud platforms, you can determine
which software follows the same processes you and your agents already have.

User-friendly interface
Just like a tool’s workflow should be familiar to your agents, its user experience
must use the same familiar language they do.

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Automatic confirmations and notifications
Make sure that both agents and clients get notified about the main touchpoints of
their journeys. While not required, it’s also useful to have a disruption
management tool to help travelers already on their trip navigate during flight
delays.

Automatic client database creation

Most CRMs create lead and client profiles automatically when you receive a quote
request online, with data provided by travelers: names, desired destination and
dates, and number of people in the group.

Secure access
Travel agents handle a lot of sensitive and personal client information, so data
protection is not optional for travel agency tools. You probably also want to protect
information about each agent’s sales from other agents.

Advanced reports
What’s the point in gathering and managing all this data if you can’t draw insights
from it? Reporting functions will show you which destinations, dates, seasons, and
agents bring you the most value.

Start thinking of automation and your own systems

The competition in the travel agency market is fierce. Booking Holdings and
Expedia are close to becoming an oligopoly, capturing the majority of travelers
thanks to great service and unlimited marketing capabilities.

And yet, smaller niche agencies may still thrive if they manage to access the best
deals or offer unique travel products unavailable with industry behemoths. To do
that, you have to take control of the systems and tweak them to work for your
value proposition. This is rarely available with off-the-shelf tools. You can’t
configure advanced commissions management, you can’t customize the way you
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work with metasearch engines, you’re quite limited in terms of inventory that you
don’t source directly from suppliers.

So, if you’re thinking of making a bespoke system, consider checking our article
on travel APIs that generalizes supplier integration options in the industry, learn
how booking engines and OTA back-office work. And you may watch our video
on commissions management.

CHAPTER NO 5
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 DATA ANALYSIS AND
INTERPRETATION
Travellers are increasingly searching for personalised experiences. Without
predictive analytic this task is impossible. In few milliseconds systems need to
predict what the customers wants and then adapt the offer accordingly. For
example bringing together a flight, extra baggage, a hotel, while also slightly
adapting the price dynamically and considering competitors offers in real-time.

Segmentation and clustering of passengers

A basic segmentation of travellers is based on their trip purpose (e.g., leisure or
business). This is a well-known driver to explain customer behaviour (e.g., price
sensitive vs product quality) and then used to adapt travel products accordingly.
Supervised classification algorithms can be used to segment people in well-known
classes. On the other hand, clustering algorithms permit discovery of new kinds of
behaviours; the ones that cannot be classified by hand easily. This is a key feature
to segment customers from new generations and dissimilar cultures.

Fraud Detection
There are more than 3 billion air passengers per year worldwide. This generates a
large number of online transactions that need to be validated in real-time. The
losses coming from fraud in payments and other related transactions are
significant. Predictive analytics play an important role detecting frauds and even
cyber-attacks on travel systems. The main challenge on these kinds of applications
is to balance the trade-off between the number of "true" detected issues against the
"false positive" cases. You may know cases of credit card rejections when
traveling abroad, well...this is a "false positive" that should be taken into account to
improve these algorithms.

Passenger and other travel data enrichment

Analysis of records coming from different travel systems have shown that data is
not as rich as we would like: many database fields are not commonly filled (e.g.,

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large presence of missing values). Similarly there is other important information
that is not coming from raw data and are available only by integrating other data
sources. Predictive analytics is useful to infer missing data and also matching
different sources bringing new capabilities to travel systems.

5 more examples of predictive analytics in the travel industry

Forecasting (eg., for revenue management systems and demand analysis)

Historically, forecasting engines embedded in revenue management systems
considered only past bookings. However, what happens if some elements are
changed? (e.g., a new "fare family"), what happens if an airline move their flight
from 9:00AM to 8:00AM? What is the impact on demand if the price of flight
tickets increases 10%? New generation forecasting systems are based on “factors”
(price, schedules, etc.) in addition to simply time-series, thus allowing them to
optimise revenue

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CONCLUTION & SUGGESTION

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  CONCLUSION

 SUGGESTIONS & RECOMMENDATIONS

 CONCLUSION

The financial statements helps the business in decision making by showing the
financial position of the firm and analyzing the future needs of the business.

& Budgets are prepared to plan the future financial transactions. The budget helps
the manager in decision making by providing the proper planning of the finance of
the firm in the future and deciding the activities needed the finance in future.

From this analysis we can define that there are effective role management
accounting information in the process of strategic decision making.

Arihant travel agency is taking effective decisions in which there are using
management accounting information for making those decisions more effective.

Travel and Tourism industry is using its financial analysis for taking effective
decision making related to the expansion of the company.

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5 SUGGETIONS & RECOMMENDATIONS

Travel agencies should use the proper tools and techniques for the effective
implementation & for smooth running of the business.
Agencies should be customer oriented.
Aparts from for the better engagement of the business travel agencies should take
into consideration the following point.
Ask for referrals.
Establish a strong social media presence.
Motivate your team members (especially your sales team) with great
incentives.
Encourage your customers to leave reviews.
Establish a personal connection with your customers
Go where your customers are.

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 BIBLIOGRAPHY

6 BIBLIOGRAPHY
Financial Management for Travel Agencies (The Travel Management
Library) Hardcover – October 1, 1986
by Phillio D. Davidoff

7 WEBSITE
www.google.com

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