The bash is back

After a long period of contraction, the party business is showing signs of life, with 2003 Christmas bookings up.

Not all bosses have been as generous this Christmas as the motor chiefs who treated their staff to a reindeer chase across the snowy wilderness of Lapland. But more companies laid on special Christmas parties for their staff than did in 2002, with some event organisers claiming Yuletide bookings for venues and activities rose by ten to 30 per cent on the year.

Many corporate hospitality and event organisers are hoping that the strong 2003 festive season will have popped the cork on a sustained surge in corporate entertaining after three lean years. The catalogue of woes that has afflicted the world at the start of the millennium is well known, and corporate entertainment budgets have been among the first areas that companies have pared back.

According to Sam Gill, chairman of the Corporate Events Association and of professional party organiser Ultimate Experience, many companies postponed their summer parties until Christmas last year. “The Christmas market was very strong. That reflects the delay of staff events as a result of the Iraq war, when companies did not do summer events. A lot of boards decided they couldn’t send out invitations to a party at a time when they didn’t know what the toll of the war would be,” he says.

Pick a party

This year, Ultimate Experience organised 174 parties at its ten venues, up from 158 the previous year. Gill says this reflects a healthy rise in the proportion of companies choosing to use professional party organisers, rather than going it alone, though the increase in the amount companies spent per person on the entertainment was small. Particularly popular themed events, according to Ultimate, included Thirties “prohibition era” parties and “Heroes”, which featured acts based on top stars such as Elvis Presley.

Ultimate charges &£60 to &£150 a head, but Gill says most companies spend between &£70 and &£90, including the free bar. This beats paying &£4 for a bottle of beer and works out economically for his company, he says, because people are surprisingly abstemious in the amount they drink at office parties nowadays.

“It is amazing how little the average person drinks at a Christmas party. I sense there is a general move to drinking less, and a lot of today’s youth don’t drink at all,” he says.

The Christmas boost was aided by the Chancellor raising the tax threshold on spending on staff parties from &£75 per head to &£150 (though if the sum exceeds the limit, the whole amount is taxed, not just the excess). But the change, announced in spring last year, may have come too late to encourage companies to increase their spending on this year’s Christmas parties. This is fuelling hopes among organisers that staff could benefit from more extravagant corporate entertainment this Christmas.

Deductible debauchery

Wayne Moss, managing director of corporate event organiser Jarvis Woodhouse, says the tax change has had a limited impact: “Companies were saying they didn’t want to spend more than &£75 because they could not claim it back. We all thought the rise to &£150 might help the market and companies would spend more on their Christmas parties, but it doesn’t seem to have happened.”

Moss says that spend per head has stayed pretty much the same as last year, despite the tax change, although he confirms that more companies are hiring professional organisers for their Christmas parties. Where his company organised 20 corporate parties last year, this year it did about 30.

Many in the industry predict that 2004 will be a transitional year, and uncertainty is still widespread about what the future holds. The growth in spending on Christmas parties in 2003 has by no means made up for the steep falls after September 11, 2001, when many companies – particularly financial businesses in the City – felt that it would be in poor taste to be celebrating after so many of their colleagues had died in the attacks.

Since then, companies have rolled out a long stream of excuses for not providing more entertainment for their staff: fear of appearing profligate after the corporate scandals that emerged at the beginning of the millennium, terrorism, SARS, the economic downturn and so on. Some of this has begun to wear off – though the uncertain economic conditions are still thought to be holding back spending – and many events companies have noticed a loosening of restrictions on “soft” expenditure as economic confidence rises.

Even so, bosses have not opened their wallets very wide, and there is a feeling that spending on corporate events will not reach quite the heights of the late Nineties. Some think wining and dining clients is declining, while staff entertainment and incentives are on the rise.

Functional fun

Most observers believe that whatever happens, corporate events will become much more tightly focused, with fewer company-wide bashes and more small group activities. There will be increased monitoring and research, which may serve to make entertainment more effective from a marketing point of view. Yet, the danger is that this schematic approach could take the fun out of the process, making corporate entertainment increasingly formulaic.

Some companies have decided to merge the year’s staff entertainment into a single team-building opportunity, combining Christmas party, away-day and motivational workshop. ACF Hospitality marketing director Harlan Marriott cites this phenomenon as at least partially responsible for the upturn in spending this Christmas.

“If you go back three years, the Christmas market was very busy,” he says. “But in the past couple of years it has slackened off – in 2002, it was down about 12 per cent on the year before. We found that companies were looking to make savings and were trying to get more for their money. A lot of companies are starting to use the Christmas party as a team-building exercise.”

Commonly, companies devote a whole day to an event: the afternoon is given over to a team-building activity and in the evening is a more conventional party. Marriott admits this could take some of the innocent fun away from Christmas parties. “It is more corporate – there is more planning going into it,” he says.

ACF has seen turnover increase by ten per cent this year, although Marriott says a lot of companies are making extra efforts to get more for their money, and are demanding new types of entertainment. These include incentive Christmas trips, such as the one to Lapland, organised by ACF for a leading UK car company. Activities on the three-day trip included ice-fishing, sledging and drinking vodka. The company concerned is unwilling to be named, as its management does not want to earn a reputation for throwing money around.

Paul Southern, managing director for European Events at the Millennium Party Company, which recently won the contract to organise parties at the Honourable Artillery Company grounds near the City of London, says next Christmas will be good for parties. He has already had people making enquiries about booking events for summer and December, even though the year has only just begun.

Are you game?

The coming year is likely to be a boom time for sports hospitality, with the Olympics in Athens, the European Football Championships in Portugal and the afterglow of England winning the Rugby World Cup. Hospitality packages for the England-Ireland match at Twickenham in March – part of the Six Nations tournament – have already sold out and it is predicted that the England-Wales match two weeks later will go the same way.

This level of interest in rugby is unprecedented. Being able to offer a ticket to watch Jonny Wilkinson do his stuff is certainly a strong incentive to attract desired clients to hospitality – whether they are fans of the game or not.

The confluence of these sporting festivals in 2004, along with the Latin American football championships and the US presidential elections, is already being cited as a possible motor of recovery in marketing spending over the coming year.

Corporate entertainment organisers hope they will be able to benefit both from this increased spend and from the strong pull that sporting events exert on businesses which want to entertain clients. And with the optimism that all this creates, the corporate sector may well decide it’s time to start splashing out on its own staff once again.