How We Calculate an Accurate Travel Budget
And the power of customizing your company’s settings on the backend.
Every TravelBank trip starts with an accurate predictive budget, which lets you know how much your employees should drop on a trip before the trip even happens.
But how do we know these budgets are accurate?
Our patent-pending algorithm uses a combination of real-time market data and industry standards for business travel and daily rates to generate our trip budgets.
By default, the budget algorithm uses these benchmarks:
Nonstop economy flights (as possible)
3-star hotels or higher
Economy-class rental cars
GSA rates for Parking and Daily Allowance (‘per diem’)
These benchmarks mimic current business traveler behavior to create a realistic budget that encourages better spending decisions.
One of our early beta customers, FiscalNote, decided to put our predictive budgets through a stress test. They created a series of theoretical trips based on their typical business travel, using a variety of city combinations and trip durations. The stress test looked specifically at the budgeted amounts predicted for airfare (or rail) and lodging, and compared them to the prices they were able to get online using the same benchmarks.
“We were pleased to see how accurate TravelBank’s predictive budgets were to our benchmarks. We were able to comfortably beat the budget in most scenarios, but there was also enough flexibility for travelers with specific needs, like specific flight times. This level of accuracy and and the ability to customize our company’s settings greatly increases the oversight and predictability of travel expenses while decreasing the burden on our finance team.”
– Marshall Thomason, Senior Accountant at FiscalNote
One thing FiscalNote discovered is that most online travel agencies like Kayak do not include sales tax on hotels making their fees appear lower. Once you account for the sales tax on the booking page, the actual costs were within single digit percentages from the predicted expense.
Making Predictive Budgets Fit Your Company Culture
Company administrators can customize the default settings to fit their company’s needs at any time. For example, one company we work with is in startup mode and they are happy to travel on a tighter budget to keep their cash flow going.
Employees typically book 2-star hotels, take flights with a layover and stick to a flat $50 per diem. By navigating to their company settings they were able to quickly adjust these benchmark options.