Royal families aren't necessarily known for their sensitivity to the economic plight of their subjects. Yet Queen Elizabeth II announced last month that she was canceling Buckingham Palace's biannual Christmas party. It would have seemed insensitive, given the deep cuts in social services now raining down on Britain, to spend $80,000 on a soiree in which 600 commoners are allowed to get wasted alongside royalty. When the Queen is calling off her Christmas party, it's a bad sign for everyone else.
The last few years have already been ugly for the holiday party. This December, only 79 percent of companies will throw one, according to international executive search firm Amrop Battalia Winston. It's the lowest number in the three decades that the company has conducted its poll. The figure is also down 2 percent from last year and 16 percent from 2002-04. Almost as bad, 27 percent of celebrating companies say their event will be more modest than last year's. Even the people who work at Playboy Enterprises are tightening their belts. The company—which used to hire a band, run a casino, and take over a nightclub—is holding a daytime get-together next month. Instead of being hosted by playmates at the Playboy Mansion, it will be held at the company's Los Angeles offices, with only normally dressed employees invited.
Even more disturbingly, Arlington (Va.)-based publishing company Bureau of National Affairs (BNA) claims that only 58 percent of company holiday parties will serve alcohol this year—down from an already startling 61 percent last year. In other words, some office parties are not parties at all. American Express OPEN Small Business Holiday Monitor, which conducts a similar poll, concluded that 69 percent of companies were throwing parties this season, while outplacement firm Challenger, Gray & Christmas is expected to publish an equally dire poll later this year. The only industry doing well enough for holiday parties may be the holiday survey business.
For companies hell-bent on showing some yuletide cheer, the decision to party like it's 2006 is full of downsides. "It's a fine line the employers walk," says Matthew Sottong, BNA's director of surveys and research. "It's hard to say, 'It's been hard times and maybe we had some layoffs, but let's have a party!' On the other hand, it's hard to say, 'After all this belt-tightening, we're not going to have a party!'" According to Amrop Battalia Winston Chairwoman and Chief Executive Officer Dale Winston, 50 percent of companies who are not having a party say they want to avoid "perception problems." The sensible approach is to make like the Queen and blame the lack of fun on people who are suffering.
For many employers, the most compelling reason to hold a party this year is simply to convince employees that they're not going out of business. ("It's one of the few barometers employees have as to how the company is doing," says Sottong.) After canceling its party for two years, Logic, a technology consulting firm based in Inver Grove Heights, Minn., has reinstated the event. The 144-person company is flying all its U.S. workers and their spouses into Minneapolis and hosting a dinner with an open bar and a $250 gift card as a party treat. "We want to show our appreciation," says Logic President Amber Naqvi, "and indicate that we are on solid financial footing."
As bad as things may be, some companies are still throwing pre-bust-style blowouts—and they want everybody to know it. "There's that old saying that misery loves company," says Go Daddy CEO Bob Parsons. "Well, we decided not to join them." Last year the Internet domain registry company spent more than $3 million on its holiday party, the biggest ever thrown in Chase Field, home of the Arizona Diamondbacks. (The company paid extra to install an ice rink.) More than 6,000 people will come to the stadium again this year, including Go Daddy Girls race car driver Danica Patrick, personal trainer Jillian Michaels, singer Ella Koon, and poker player Vanessa Rousso. The party has become a key part of the company's recruiting pitch.
This year's event will be even bigger. "Brother, it is going to rock," says Parsons. "We're going to put last year's to shame." Parsons has hired three major bands to perform, and even though he's keeping their identities a secret until that night, he assures his employees they are "the duck's nuts." There will be fireworks and the return of an annual ritual in which Parsons gives away massive amounts of cash at a raffle. "I'll give away a million bucks by pulling names out of a hat. And when I give money away, I pay the taxes on it," he says. "I don't want to be the richest guy in the graveyard." When throwing a party this good, spouses want to go. That cuts down on the chances of employees getting drunk and sleeping with each other. "Most of the guys bring their wives," Parsons says. "The single people—most of them will also bring somebody. So it's really not a hookup event."
It shouldn't be a surprise that many of the great remaining parties are given by Internet companies. Barry Diller's IAC still throws its bash in the giant lobby and courtyard of its Frank Gehry-designed Manhattan headquarters, which doubles as a high-end event space throughout the year. The party has about 1,000 guests and has included a photo booth, a deejay, and a beloved chocolate fountain. Yet even Internet companies are cutting back. The website College Humor used to invite monkeys to its annual party. After being bought by IAC, the simians were no longer welcome.
There is, however, one industry outside technology that's still feeling bold and rich: personal injury law. W. Mark Lanier, who runs the 45-attorney firm Lanier Law Firm, has booked Sting to play at his holiday party next month in Houston. Lanier expects 8,000 employees, clients, and friends to attend what could be an even better bash than his $650,000 party in 2004, when Bill Cosby warmed up the crowd for Al Green.
In Hollywood, most movie studios aren't closing off the lot anymore, but agencies still go all out during the holiday season. William Morris Endeavor's Los Angeles office is having 1,200 employees and their guests for dinner at The Bazaar, the only restaurant to get four stars from the Los Angeles Times in the last five years. (The chef, José Andrés, is a client.) In addition to foie gras wrapped in cotton candy, there will be a photo booth and movie karaoke, where employees must talk along with the scene's dialogue.
Even after the economy gets back to normal, it's likely that Christmas parties won't. Like liquor-soaked client lunches, the office holiday party may be a dying vestige of an earlier era. "Twenty years ago you had to decide which of your vendors' parties you'd have to go to," says Amrop Battalia Winston's Dale Winston. "It got to the point where people felt it was a chore. Consequently, why spend all that money obligating your clients to come to your party?" Perhaps when work became much more casual, you didn't need one day to let go. Or maybe when work is on your home computer and your cell phone, you don't want to spend your free time at an office. Or maybe people just don't know how to hold their liquor anymore.