A growing number of companies are facing a reckoning over how — and whether — to host a holiday party this year, as the effects of interest rate hikes and inflation have led to sector slowdowns and cost-cutting measures.
Many companies are ditching extravagant events and adopting team lunches or on-site events instead of champagne-and-tuxedo affairs.
Neil Forester, owner of Toronto-based events company The Substance Group, says they are on track to host about 20 holiday parties this year — a 50 per cent drop from last year. The slowdown in some sectors has led about a third of his corporate clients to cut budgets by 40 to 60 per cent, he says.
In the past, his real estate clients threw showy, six-figure events to impress. One company put on a party based on Netflix’s Selling Sunset, a hit series that follows realtors selling multi-million dollar homes in California. The bash featured top-shelf alcohol and premium catering at a rooftop venue.
Now, though, some companies are questioning costs for the first time since the early stages of the pandemic, he says.
Food costs alone have risen between 40 and 50 per cent since 2019, says Jonathan Leaman, vice president at Revol Events, a caterer and events company in Toronto that specializes in corporate events. “Prices have gone crazy,” he said.
Event planners say the high costs of holiday parties make these gatherings an easy line item to cut — while some companies never brought holiday parties back after the pandemic after seeing how much they were saving.
“These parties are $25,000, $50,000, $100,000 … nice, big numbers that people can save if they’re in a pinch,” said Leaman.
Leaman used to rent a 200,000-square-foot event venue in Toronto for six to eight weeks over the holidays to operate corporate events held for employees’ families. But this year, demand for those events is about a quarter of what it used to be.
“We’ve seen people eliminate that kind of spend,” Leaman said.
Plus ones
Rising tensions around the war in the Middle East might also be having an effect. After months of sales growth, Dawne Eisenberg, CEO of Pop! Events, saw a slowdown in inquiries after Hamas’ October 7 attack on Israel.
“Maybe people just don’t want to celebrate right now,” Eisenberg said, adding that events in her personal life, like birthday parties, have also been cancelled.
According to a poll by Challenger, Gray & Christmas, a career consultancy that tracks corporate holiday party plans, many US companies are cutting back on catering, open bars and booking venues compared to last year.
Two-thirds of companies surveyed also did not extend their holiday party invitations to plus ones this year, up from 54 per cent back in 2019, the survey showed.
Other companies are switching to daytime parties as they look to get the biggest bang for their buck, says André Rhoden, owner of Tasty Solutions, an event catering service in Ontario. He adds that half of the events he’s catering this year are lunches.
It’s part of a bigger shift away from big, alcohol-fuelled parties that take place off-site and after hours. Lynne Brown, founder of Toronto-based human resources advisory Brown Consulting Group, says companies were already starting to move towards daytime events before 2019.
“You’re just inviting bad behaviour,” she said, adding that events — when there are large amounts of alcohol involved — present risks for firms.
Brown says her clients are shifting towards smaller team events put on during business hours. “It’s just easier,” she says, noting the challenges around getting fully remote employees into the office for an evening event.
‘Mandatory fun’
Another factor dampening demand for holiday season festivities is that employee interest around in-person, after-hours events is waning in the post-pandemic world.
Fifty-five percent of people polled in a December LinkedIn survey said they will not attend their work holiday party this year. “Christmas parties, also known as ‘mandatory fun,’ are something I have avoided for years,” William Jones, a public affairs specialist in Nashville, Tennessee, wrote in the comments.
But for firms like Borden Ladner Gervais LLP, a prominent Canadian law firm, employees are still more than happy to participate in the mandatory fun.
As the firm celebrated its 200th anniversary, lawyers and staff showed up at well-attended parties across the country, held at glitzy venues like the Museum of History in Ottawa and the Fairmont Palliser in Montreal.
For Canadian tech companies like Hootsuite, a social media management platform, holiday events have fallen somewhere in between team lunches and ballroom blowouts — and are seen as a worthwhile investment to bring people together and celebrate the year, says Carol Waldmann, director of global facilities and real estate. “It gives morale a shot in the arm,” she said.
Hootsuite has moved to a more muted and regionalized approach in recent years, and now hosts parties for locally-based employees across all offices.
Lightspeed, a Montreal-based software company, takes a similar approach. Shirvani Mudaly, chief people officer, says the firm hosted a cozy-themed event at its headquarters. “There’s an energy to being in person,” she said.
“It’s important to have moments where our team can socialize beyond just their daily schedules,” she said. “And as a business, we have to have moments that celebrate all the hard work our team puts in over the year.”
