Budget amounts are sometimes hard to determine when configuring your travel policy:
- Each service might have a different maximum budget ✈️ 🏨 🚂 🚗
- Prices might also vary depending on the period you're looking at: some seasons are more expensive to travel than others ☀️ 🍂 ❄️ 🌱
- Each provider might also offer the same service for very different prices 📈 📉
So, how can we factor in these variables to better set our budgets?
Instead of only configuring a maximum budget per service, admins are now able to set up a percentage cap based on:
- the cheapest or the median option available for Flights;
- the median option available for Hotels.
Good to know: this functionality does not work for manual bookings made through Customer Care.
How do dynamic budgets work?
1. Dynamic budgets based on the cheapest option.
If the dynamic budget is configured with the cheapest option, it will use the price of the cheapest offer found in the search results to decide if the rest of the offers are in or out of policy.
For example: if we set a dynamic budget of 20% and the cheapest offer found costs €100, then all offers at or below €120 will be in policy. Any offer above that will be marked as out of policy.
2. Dynamic budget based on the median price.
If the dynamic budget is configured with the median price, it will use the price of the median offer found in a specific search result to decide if the rest of the offers are in or out of policy.
For example: if we set the dynamic budget to be maximum at 20% below the median price and the median price found on a search is €100, then all offers at or below €80 will be in policy. Any offer above that will be marked as out of policy.
How is the median price calculated?
When searching for available Hotel options, we take into account the parameters in the search (location, dates) and we pull a list of offers with their respective prices:
- Offer 1 → €50
- Offer 2 → €90
- Offer 3 → €80
- Offer 4 → €75
- Offer 5 → €120
To calculate the median price, we sort these offers per ascending price and pick the one that is in the middle:
- Offer 1 → 50€
- Offer 4 → 75€
- Offer 3 → 80€
- Offer 2 → 90€
- Offer 5 → 120€
The median price for these search results is €80. Depending on the percentage and the below or above the median price selection configured on the Dynamic budget section for Hotels, the offers will take this price to decide if the rest of the offers are in or out of policy.
How to decide what percentage to enter?
We have run some analysis on median prices for flights and hotels to help you set up dynamic budgets based on the median price:
- Restrictive → 20% below the median price
- Standard → 10% below the median price
- Flexible → 10% above the median price
Restrictive → 10% above the median price
Example: In London, that would mean a 3-star hotel a bit far from the city center
Standard → 20% above the median price
Example: In London, that would mean a 3-star hotel close to the city center
Flexible → 30% above the median price
Example: In London, that would mean a 4-star hotel close to the city center
IMPORTANT: if the maximum budget is configured, it will still apply to any search. So if any price is above the maximum, even if it is inside the allowed dynamic budget range, the offer will still be marked as out of policy. The same is true for long-haul and domestic or route exceptions.
How do I configure dynamic budgets?
You can configure them any time from the Travel policy page:
- Go to Company settings, then Travel policy.
- On the Flights section, press Edit.
- Enter a maximum percentage for the dynamic budget.
- Press Save changes.