_18-9255-(Irina)_ Business Finance Ass2

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Fundamentals of Business Finance

Financing Tourism: Exploring Sources and Applications of Business Finance

Agenda

• Introduction …………. 3

• Business Finance Fundamentals ………4

• Internal vs External Sources of Finance ……….. 5

• Factors Influencing the Choice of Finance ……….. 6

• Application of Business Finance – Emirates Airlines ……. 7

  • Conclusion ………… 8

  • Q&A ……… 9

• References ……. 10

(Watson and Head, 2019)

Introduction

Effective financial management is the lifeblood of the tourism business and acts as the foundation for operational stability, strategic growth, and sustained competitiveness in the volatile market. Besides, the optimisation of cash flow and managing investment risks and controlling risks, the financial satregies can help in ensuring long-term viability and allow organisations to thrive despite seasonal demands. Effective revenue management can help in managing investments in overall infrastructure and marketing to generate higher returns.

(Watson and Head, 2019)

Business Finance Fundamentals

The InterContinental Hotels Group operates in the asset-light, high cash-generative and predominantly franchised business with over 5,000 hotels. They have focused on the fee-based revenues from their more than 12 brands. Hence, this company generates strong returns in financial management by minimising the hotel's ownership and optimising the high-margin revenues from its franchise fees and management contracts. The core financial fundamentals of the company focused on franchising and managing hotels rather than on InterContinental Hotels Group’s reducing capital expenditure requirements (Watson and Head, 2019). This is leading to the high cash flow generation in the company. The revenue generated from the franchise fees system fund and management contracts is effective in the permanent business markets. In early 2026, some effective strategies rely on enhancing the quality of existing brands that clever superior owners' returns and improve their operational efficiency.

(Watson and Head, 2019)

Internal vs External Sources of Finance

The internal and external sources of finance help in representing the two fundamental ways an organisation can raise capital. The internal finance is the fund that is generated from within the organisation’s own operations and assets. On the other hand, the external finance is the capital that is obtained from outsiders. According to 2026, the organisation called IHG PLC has operated under an asset-light business model. This has assisted in dictating how it manages these sources to drive overall growth (Atrill and McLaney, 2018).

(Atrill and McLaney, 2018)

Factors Influencing Choice of Finance

Various factors influence the choice of finance, and these factors may include cost of procurement, cost of utilisation, tax benefits, risk profiles, default risk percentage, financial risk, long-term requirements of the organisation, short-term requirements and many more. These ey factors influence the value decisions regarding the financing options, which eventually influence cost, profit margin, capital expenditure and many more (Seeling et al., 2022). Considering this, the factors that influence the decision-making of IHG are the cost of finance, risk and stability performance of the company.

(Seeling et al., 2022)

Application of Business Finance – InterContinental Hotels

Business finance is the strategic procedure of gaining and managing the investments to start, operate and grow an organisation. Besides, the applications can involve purchasing assets, financing expansion, effective planning and many more. Along with this, the use of working capital management can help in ensuring adequate liquidity to cover day-to-day operating expenses (Weetman, 2019). Business finance plays a pivotal role in shaping organisational performance and promotes sustainable growth. This process supports strategic decisions and growth strategy while reducing risk factors (McLaney and Atrill, 2023).

(Seeling et al., 2022)

Conclusion

The fundamentals of business finance are very important for business development. This presentation has been chosen by the InterContinental Hotels Group for the context development. It provided business finance fundamentals for the InterContinental Hotels Group. The internal and external business sources of finance for te comoay ahs beem analsyued with their future business development.

(Atrill and McLaney, 2018)

References

Atrill, P. and McLaney, E.J. (2018) Accounting and finance for non-specialists. 11 th edn. Pearson.

Atrill, P. and McLaney, E.J. (2018) Financial accounting for decision makers. 9 th edn. Pearson.

Callao, S., Jarne, J.I. and Laínez, J.A. (2007.) Adoption of IFRS in Spain: Effect on the comparability and relevance of financial reporting. Journal of International Accounting, auditing and Taxation, 16(2), pp.148-178.

Hermawan, E. (2021). Financial managers as policy makers and company relations with financial markets. Journal of Law,Politicsc and Humanities, 2(1), pp.13-

ihgplc, (2026) Debt investors. [Online] Available at: https://www.ihgplc.com/en/investors/debt-investor [Accessed 06 05 2026].

McLaney, E. and Atrill, P. (2023) Accounting & Finance: An Introduction. 11th edn. Pearson.

Nikolov, B., Schmid, L. and Steri, R. (2021). The sources of financing constraints. Journal of Financial Economics, 139(2), pp.478-501

Seeling, M., Kreuter, T., Scavarda, L.F., Thomé, A.M.T. and Hellingrath, B. (2022) The role of finance in the sales and operations planning process: a multiple case study. Business Process Management Journal, 28(1), pp.23-39.

Watson, D. and Head, A. (2019) Corporate finance: principles and practice. Pearson.

Weetman, P. (2019) Financial Accounting: An Introduction. 8 th edn. United Kingdom: Pearson.

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