Corporate travel managers on average expect their organizations’ travel budgets in 2024 to grow approximately 8 percent year over year as expectations for virtual meetings decrease, according to a new Morgan Stanley survey released Monday.

Morgan Stanley in October surveyed 135 corporate travel managers from organizations that collectively account for approximately $8 billion in global travel spend. Their travel budget expectations for 2024 “look promising,” according to Morgan Stanley. Overall, 78 percent of respondents project their travel budgets to increase in 2024 compared to the year prior, the highest such figure in the survey since 2011, the report noted.

Respondents also project hotel rates to rise, at increases “not dissimilar” to 2023, according to Morgan Stanley. 

Globally, respondent travel managers project room rates in 2024 to increase 5 percent year over year. Rates in the United States and U.K. are expected by respondents to increase 4 percent to 5 percent year over year, while rates in Greater China are projected to drop 1 percent.

Meanwhile, corporates have tapered their expectations for virtual meetings in 2024, and some are opting to trade down to lower lodging service tiers to save on costs.

Respondents projected that about 12 percent of their organizations’ events that would have been in-person prior to the pandemic would be virtual in 2024 and 2025. That figure decreased 5 percentage points from the 2022 survey.

“This suggests a degree of permanence in the shift to virtual, but the ongoing decline in expectations could provide a tailwind to spend,” report authors wrote. Virtual meetings have a larger presence in Europe, where they are expected to rise in 2025 year over year, according to the report. 

To mitigate potential “tailwind to spend,” more than one-third of respondents are trading down to lower-tier hotels, according to Morgan Stanley. Compared to 2022, this percentage has increased 11 percentage points. Approximately 62 percent of respondents said they are not swapping accommodations to cut costs, according to the report. 

Additionally, the use of alternative accommodations for corporate travel appears to be “stable,” according to the report.

“While 39 percent of respondents used alternative accommodation such as Airbnb in the last 12 months—up from 28 percent last year—32 percent expect to use alternative accommodation in the next 12 months, which is stable vs. last year, presenting a lessening competitive threat to traditional hotels,” according to Morgan Stanley.