Christmas Party Taking a Holiday Amid Downturn

This year, the Grinch may not have stolen Christmas, but he definitely took the Christmas party.

Across the nation, companies are canceling annual end-of-the-year holiday bashes to cut costs, or in some cases just to blend in with the rest of a world that’s too worried about money to feel like a party. The trend is having a ripple effect on caterers and event coordinators who say that calls canceling parties have spiked in the past few weeks.

Two annual holiday-party surveys back up anecdotal evidence that a record number of companies have dropped holiday parties this year—more even than in 2001 after the September 11 terrorist bombings—while others are scaling back how much they spend, what they serve or how many people they invite.

In its survey of 100 companies, outplacement consultant Challenger, Gray & Christmas Inc. found that 23 percent of companies elected not to host a holiday party this year, compared with only 10 percent in 2007. New York executive search firm Battalia Winston Amrop found in its survey of 108 firms that 19 percent will forgo a party this year, the highest percentage in the poll’s 20-year history.

And in a separate study of more than 1,200 executives by Towers Perrin, 58 percent of all organizations polled acknowledge they are somewhat or very likely to scale back this year’s holiday party and other employee events to save money.

“People are scared,” Battalia CEO Dale Winston said. “We do this survey because it’s a way of calibrating the mood of the country, and we’re just not in a celebratory mood.”

Investment banks and financial institutions rocked by the mortgage industry crisis were some of the first to cancel celebrations, including Barclays and Morgan Stanley.

Barclays will sponsor parties for employees’ children at several locations internationally, but it canceled other celebrations. Company executives issued a memo to employees stating that given the upheaval in the financial industry and in light of its Lehman Brothers acquisition, “it is not appropriate for us to do anything that might be seen as inappropriate by any of our stakeholders.”

Publishing, news and entertainment companies dealing with tanking revenues and earnings have put the kibosh on once-lavish celebrations, including Viacom, ABC News and Hearst.

Holiday parties at Viacom were the stuff of legend, but this year, the media conglomerate that owns cable TV networks MTV, VH1, BET and CMT canceled all year-end festivities. Instead, employees will get two extra paid vacation days between December 22 and January 1. Kelly McAndrew, a Viacom corporate communications vice president, wouldn’t discuss whether trading parties for time off will save the company money. McAndrew said only, “This is what we think is right for our company at this time.”

The celebratory downsizing doesn’t end with finance and media companies. Enterprise Rent-A-Car, hit with a triple whammy of credit, energy and auto industry woes, put the brakes on the year-end party it normally hosts for 2,000 St. Louis corporate headquarters employees and their spouses on a weekend night at a downtown hotel. After 200 corporate staff members were laid off in late October, having a party just didn’t seem right, said Ned Maniscalco, an Enterprise spokesman.

Adidas Group also canceled annual holiday parties at multiple locations internationally as part of broader cost-cutting measures that include a hiring freeze and less business travel. The Germany-based global sportswear giant did its partying earlier in the year, with a picnic for 1,000 employees and their families June 7 to kick off the Euro 2008 soccer championship and a two-day, all- expense-paid trip to the Summer Olympics in Beijing for 1,000 Chinese employees, said Anne Putz, a corporate spokeswoman.

As companies rein in party spending, it’s affecting caterers, hotels and event planners at what is typically the biggest party season of the year. At Tavern on the Green, the historic restaurant and banquet facility in New York’s Central Park, clients are postponing, cutting out luxuries such as seafood displays, or canceling altogether, including one longtime client that canceled a party for 1,000. In years past, the facility would have been booked solid for December. This year, “We have some holes we’d love to fill,” said spokeswoman Shelley Clark.

Even companies that aren’t in bad shape are forgoing extravagant affairs. Nobody wants to be the next American International Group, which was excoriated for sending executives to an opulent spa retreat days after receiving a federal bailout.

“If the company is laying off people, celebrating in some over-the-top way would be insane,” said John Challenger, CEO at Challenger, Gray & Christmas. It’s appropriate, however, to bring employees together in some fashion to thank them for their hard work and long hours, he said.

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