Hotels are seeing a subtle return of the company holiday party after a rash of cancellations a year ago. But don’t break out the eggnog and lobster just yet.
Even with signs of a rebounding economy, companies still are reluctant to throw the big holiday blowouts of the past, especially after a year of layoffs and pay freezes.
“We’re not doing a whole lot of steak and lobster tail,” said Benedict Vines, director of catering and conference services at Newport Beach-based Irvine Company’s The Resort at Pelican Hill in Newport Coast. “The parties are much more understated.”
Of course, any business is welcome at hotels, which have been among the hardest hit during the downturn amid a big falloff in corporate meetings.
At this time a year ago, many hotels saw company parties canceled in the wake of the Wall Street and larger economic meltdown that took hold in late 2008.
“Last year was a big year for cancellations,” said Peter Ho, director of catering at the Hyatt Regency Huntington Beach Resort and Spa.
Other companies ended up holding 2008 parties after they found cancelation fees would be too costly. But they ended up holding bare bones affairs.
“They were still using the space but spending was down from two or three years ago,” said Will Wiest, director of group sales at the Ritz-Carlton, Laguna Niguel in Dana Point.
This year, spending on holiday parties is expected to be down, even from last year’s scaled back levels, according to hotel executives.
“We’re probably going to see at least a 20% to 25% drop in year-over-year business,” said Dane Gorup, director of catering at the Hilton Anaheim, the county’s largest hotel at 1,500 rooms.
Businesses looking to hold parties include real estate and construction companies as well as manufacturers and law and other professional services firms, according to hotel executives.
Those forgoing parties again this year include automotive and financial companies, they said.
Cancellations still are a factor.
Some companies that scheduled holiday parties this year for the Hilton Anaheim have tried to cancel contracts or spend less than in previous years, according to Gorup.
“We were definitely challenged this year to work with our clients,” he said.
Trend
Nationally, about 80% of companies plan to hold a holiday party this year, according to New York-based executive search firm Battalia Winston International.
More than half of those said they planned to cut back, whether having a party during lunch or hosting them at their own facilities.
Some are opting for parties at restaurants to keep costs down.
“Companies still feel they have to recognize the efforts of their employees during the course of the year,” Pelican Hill’s Vines said. “A kind of ‘we made it through the year’ party.”
For others, it’s hard to justify the expense of a party.
“It’s tough to hold a holiday party when you have laid off people who might have been able to stay on at the expense of the party,” said Brad Logsdon, director of sales and marketing at the Hilton Anaheim.
Holiday party bookings usually happen six months to a year beforehand. They’ve been slow this year, despite hotels offering deals to longtime customers and new ones.
“(Booking) is definitely softer this year than last year,” Ho said.
But there’s business to be had out there, according to some.
“We are seeing some new companies with 200- to 250-person holiday parties interested in hotels like ours,” Hilton Anaheim’s Gorup said.
Pelican Hill saw an average of 25 calls per week so far this year from businesses looking to plan holiday events this year, according to Vines.
The resort has booked about 15 parties ranging from 15 to 250 people, she said. Companies include manufacturers and insurance businesses.
Pelican Hill, which opened a year ago during the worst part of the recession, was cautious last year and limited the number of events it hosted.
“We wanted to make sure we did things right last year, limiting to one event a day because we were so new,” Vines said. “That’s no longer the case.”
AIG Effect
A challenge for Pelican Hill and other upscale resorts: Many companies want to avoid the stigma of lavish parties after last year’s disastrous American International Group Inc. event at the St. Regis Resort Monarch Beach in Dana Point.
“They want to make sure that attendees and attendees’ guests don’t think the company is throwing a bunch of money around,” Pelican Hill’s Vines said.
Others are gaining business from what has become known as the AIG effect.
“There have been handfuls of companies that were at a different luxury tier hotel that have opted to go with us instead,” Hilton’s Gorup said.
Some companies are banding together for a big party. The Ritz-Carlton is hosting a large holiday party for a group of small businesses that buy tables at the event.
“It’s the perfect opportunity for a doctor’s office or small business to buy into a larger party atmosphere,” Ritz-Carlton’s Wiest said.
