Understanding Funding and Finance in Tourism and Hospitality

Vocabulary flashcards covering unit sources of funding, cost management, break-even analysis, and pricing methods in tourism and hospitality.

Main Sources of Internal Funding

Internal financial sources generated within a tourism and hospitality business, including retained profits, commission, and cost-cutting.

Main Sources of Short-Term External Funding

Short-term external financial arrangements used by businesses, including leases, creditors, and debt factoring.

Sources of Long-Term External Funding

Long-term external financing options for businesses, including mortgages, bank loans, and external investors.

Public Sector Funding Roles

Public sector support for the tourism and hospitality industry provided through grants, start-up loans, heritage infrastructure, and transportation links.

Cost Classifications

Categories of expenditures including direct, indirect, fixed, and variable costs such as materials, consumables, labour, fuel, insurance, rent, mortgage, and other overheads.

Allocation and Apportionment

Accounting methods used to assign direct costs and distribute shared overhead expenses across departments or revenue centers.

Break-Even Analysis

A technique used to assess how trade volume affects income by examining unit sales over time, time- and volume-related costs, and the margin of safety.

Margin of Safety

A metric identified during break-even analysis indicating the amount by which sales can fall before reaching the break-even point.

Cost-Led Pricing

A pricing approach based primarily on product or service costs, such as cost-plus pricing using given formulae like gross profit percentage.

Market-Led Pricing

A pricing strategy determined by external market factors, competitor pricing, and customer demand rather than internal costs alone.

Contribution-Based Costing

A pricing and costing method that focuses on the margin generated per unit to cover fixed overheads and achieve target profit goals.

Marginal Costing

An accounting method that differentiates between fixed and variable costs to determine how changes in volume affect total profitability.

Targeted Return on Investment

A financial performance objective that sets prices or operational targets to ensure a specified rate of return on invested capital.