economic downturn, holiday parties, cancelling holiday parties

Economic Downturn Spoils Corporate Holiday Parties

December 01, 2008 06:58 AM
by Christopher Coats
Hoping to save funds and credibility, companies across the world are finding little reason to celebrate this holiday season.

The Economic Grinch Steals the Party

From Los Angeles to New York and beyond, this year’s economic downturn has sent holiday cheer into the doldrums, with the highest number of companies cancelling end-of-the-year festivities in 20 years.

Responding to a worsening economy and striving to avoid excess in a time of financial loss, companies large and small—from fashion designer Marc Jacobs to the town of Bend, Ore.—are drastically cutting back on holiday parties or cancelling them altogether.

In one extreme case, American Express, which cut 10 percent of its work force this year, announced they would not only cancel this year’s festivities, but next year’s as well.

With one in five companies making such cuts, this year’s abbreviated party schedule has created a party calendar more dour than even those following Sept. 11, 2001.

Surpassing earlier financial downturns, the number of companies hosting holiday parties has dropped to just 81 percent, with many more making drastic cutbacks.

Reflecting the companies hardest hit by this year’s economic troubles, the cancellations have fallen mostly in the banking, credit and media markets, with companies like Viacom, Hearst and Morgan Stanley all cancelling their holiday plans.

Impact: Further reaching

The holiday pinch on company parties will likely have further reaching consequences than a simple drop in workplace morale, however. Restaurants, catering companies and events planners are all bracing for the worst this holiday season, as one of their busiest times of the year could be a disaster.

Speaking to Fox News, Waldy Malouf, chef and part owner of New York’s Beacon Restaurant, said he faced a series of large cancellations or last minute reorganizations due to the economic downturn.

In response, Malouf said he and others have been forced to offer smaller, more modest productions, offering lower-cost alternatives to the high-end events that have come to characterize holiday celebrations for financial-sector companies.

Hoping to weather the downturn, other restaurants and services have explored alternatives such as lower-cost equipment, or in the case of Manhattan’s famed Plaza Hotel, events organized for multiple groups instead of private dinners.

For their part, companies have sought out alternatives, such as cutting back on alcohol served or pitching the idea of a potluck to ease the cost on the company itself.

In an effort to keep morale high, despite the cancellation of the holiday party, Viacom offered two extra days of vacation in lieu of the celebration.

Analysis: Saving money and "cred"

On the surface, most of these cancellations are a direct result of cost-saving measures in a dismal economy, but some have as much to do with salvaging a company’s business as cutting corners.

In a marketplace that has seen record jobless rates and repeated requests for federal financial help, most companies would like to avoid appearing ostentatious, with ice sculptures and open, flowing bars, in light of the recession.

“Even if they can afford it, nobody wants to be seen as being profligate,” New York restaurant magnate Danny Meyer told MSNBC.

An early example of what kind of public relations disaster could emerge from such free spending came with the case of insurance company AIG, who reportedly sent executives on a $440,000 spa retreat the same week it asked and received an emergency $85 billion loan.

Still others have gone beyond simply cancelling their events to show economic solidarity, and donated the funds they would have spent to various charities.

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