Corporate holiday parties are back in vogue, but with new twists

More holiday office parties are going remote.

As businesses have cut back on office space thanks to higher interest rates and pandemic-sparked hybrid work, year-end gatherings are shifting to space beyond the workplace.

In New York, the biggest U.S. commercial property market, evolving corporate gatherings are showing up in busy gatherings that can be glimpsed from restaurants, hotels and other hot-spot event venues from Cipriani 42nd Street to Bryant Park Grill. And executives for providers of event space say in interviews that business is picking up this season, though there's a shift underway in the most popular nights to hold a holiday party.

Nationwide, about 59% of companies reported they will use outside providers to host their holiday events, up from about 55% last year and up from 53% in 2019, the last year-end party season before the pandemic, according to a survey from outplacement firm Challenger, Gray & Christmas. Those that planned to host this year’s holiday parties on company premises dipped slightly, to under 32% this year from just over 32% last year — but down from about 39% in 2019.

“We know companies have eliminated or reduced their physical office space over the last two years,” Andy Challenger, senior vice president at Challenger, Gray & Christmas, told CoStar News. “The uptick in companies hosting celebrations off-site reflects both an effort to bring their remote teams together and the fact that their physical space is no longer adequate to host a celebration.”

Sixty-four percent of U.S. companies expected to host in-person holiday celebrations this year — the same percentage as last year, the Challenger survey said. The results of the past two surveys marked the highest rate of participation since 75% of companies said they would hold parties in the pre-pandemic world of 2019. In contrast, in 2021, only 27% said they were planning in-person holiday gatherings.

In another indicator of the return of the annual December bash, the number of companies reporting they've never held holiday events decreased to 6% this year, down from 8% in 2023, according to the survey.

As employers seek to bring more workers back to the office, with some installing stricter in-office mandates, celebrations are seen as a natural extension of the popular push for in-person collaboration and teamwork.

“Companies are bringing their teams together intentionally to meet more frequently,” Ryan Simonetti, co-founder and chief executive of event-hosting firm Convene, said in an interview. "We're just seeing continued increasing demand of all shapes and sizes, from small meetings to medium size to large.”

In New York alone, Convene booked almost double the holiday parties this year compared to 2023, a company spokesperson told CoStar News, adding that inbound inquiries for holiday parties also rose almost 50% this year from a year earlier. The average headcount of a holiday party at Convene, which has 38 locations globally including 14 in New York, is up 7.5% worldwide year over year, the spokesperson said.

Convene isn't the only New York party space provider that's busier.

"We are seeing a very slow and progressive increase of corporate holiday party bookings," Eduard Monteagudo, founder of New York-based event venue provider Cocoon Flex Spaces, told CoStar News. Cocoon has seen a 55% increase in holiday corporate- and private-related reservations this year from last year, even though the business is "still not at the same number" versus the pre-pandemic level in 2019, according to Monteagudo, who founded the business in 2019 in Brooklyn.

SL Green Realty, Manhattan’s largest office landlord that developed both the One Madison and One Vanderbilt trophy towers, recently hosted its holiday event at La Tête d’Or, which is doing on average five events a day just like at Café Boulud at Maison Barnes on Manhattan’s Upper East Side, according to Chief Executive Sebastien Silvestri of celebrity chef Daniel Boulud’s Dinex Group, in an email.

“We’ve experienced a record level of demand for holiday events across our entire portfolio,” especially at our rooftop event space Le Jardin sur Madison and newly opened steakhouse La Tête d’Or at One Madison and Le Pavillon French restaurant at One Vanderbilt, Silvestri said. Dinex recently started a catering company called Cuisine Boulud to focus on corporate events, workplace amenities and galas, he said.

In a telling sign of companies increasingly outsourcing their event functions instead of holding them in-house, Simonetti, who bills Convene as the largest private meeting and event brand and operator globally, said its large clients are signing multiyear contracts and committing to a minimum spend per year, which he said "the industry has never done ... before."

Not all companies are beefing up their holiday budgets. The Challenger survey found economic concerns are influencing holiday budgets, with 17% of companies planning to reduce party spending, up from 8% in 2023. Some 2% of organizations are skipping holiday celebrations entirely due to economic pressures, according to the study. In a sign of the pandemic's lingering impact, 4.5% of companies said they plan to host virtual holiday events, up slightly from 3.9% in 2023.

Some companies are gradually also opting to outsource event hosting functions because they no longer maintain full-time, in-house event staff, industry professionals said.

“People are cost-conscious,” Alfonso Munk, chief investment officer of the Americas at global developer Hines, said in an interview. “People are worried about the economy, making sure that they aren’t going to overspend on these things. It's become a lot more expensive, particularly in places like New York. … It's not just about the party. … The hotels are all full. They're all charging crazy rates. Inflation caught up to a lot of these events.”

Companies like Hines also have increasingly outsourced events to third-party providers because they have fewer “in-house” employees focusing on it, Munk said.

Amid increased consumer demand for so-called hands-on experiential offerings, corporate parties and events increasingly are no longer just about the familiar trappings of Big Apple gatherings with their high-end food and beverage offerings.

For instance, on the 32nd floor of 75 Rockefeller Plaza overlooking Manhattan’s iconic Rockefeller Center one recent evening, more than 200 guests from companies including beauty giant L'Oréal and credit-rating firm Moody’s Investors Service showed up for a Rockefeller Center Christmas tree lighting party Convene hosted.

Guests sipped champagne from a server in what's known as a strolling champagne dress and gulped fresh oysters from a roaming shucker to the beats of a live DJ. Some attendees had their portrait sketched or posed before a mirror that took their picture.

"This is a version of what we're doing for our clients," Simonetti said, adding demand for interactive activities is up.

As the pandemic has made hybrid work a new norm, and office use is higher between Tuesday and Thursdays, party timing also has evolved as a result.

"Friday or Monday, it's a harder sell," Eddie Travers, owner of lower Manhattan's famed Fraunces Tavern, billed as the oldest bar and restaurant in the city, and where George Washington in 1783 gave a farewell address to his officers, said in an interview.

"In the past, you would have, say, in the middle two weeks of December ... five nights booked out solid corporate every night where now, you're not. It's Tuesday through Thursday," he said.