Morgan Stanley (NYSE: MS) conducted an online survey of 90 global corporate travel managers in mid -late May who are involved in hotel and/or airline carrier negotiations in the U.S., Europe and Asia.
Travel managers expect their budgets to be up about 11% versus 2022 in the first half of the year and up 9% versus 2022 in the second half of the year, on average.
2024 also appears to be strong, with budgets expected to be up nearly 8.5% Y/Y, signaling that there is still room for recovery and/or growth.
The analyst noted that 29% of respondents stated they have already returned to pre-COVID travel levels, which marks the highest level the survey has seen since the pandemic.
U.S. Airlines have continued to point to small and medium sized business (SMB) customers leading the recovery on corporate travel, with some management teams stating SMB customers are over 100% recovered versus 2019 levels.
42% of enterprises with less than $1 billion in revenue reported that they have returned to pre-COVID travel levels, whereas 26% of companies with $16 billion+ revenue stated the same.
The stagnancy in larger corporations could indicate there is more upside to come, noted the analyst.
The trend of corporate SMB's recovering faster than larger enterprises could favor low-cost carriers such as Southwest Airlines Company (NYSE: LUV) and Alaska Air Group Inc (NYSE: ALK), added the analyst.
While there is significant concern on the impact of a muted macro environment on corporate travel spend, the good news is that the survey is showing a trend of steady improvement.
The analyst continues to like Delta Air Lines, Inc. (NYSE: DAL) as possibly the most corporate-exposed carrier in the U.S., Southwest Airlines (as possibly the biggest incremental corporate gainer post-pandemic) as well as United Airlines Holdings, Inc. (NASDAQ: UAL), American Airlines Group Inc (NASDAQ: AAL), and Alaska Air among the U.S. Airlines.