NEW YORK -- With Thanksgiving and the start of the holiday season weeks away, many small business owners are planning holiday parties for employees and clients despite the shaky economy. But the celebrations are expected to be low-key, frugal and, some say, much more fun.

Even owners whose businesses are doing better say they're sticking to simpler events this year.

"We could afford to have a catered event, something fancy, but it's not in our DNA" given the events of the past year, said Ginny Pitcher, president of Kel & Partners, a marketing and public relations firm based in Boston.

"In the past we always have had a holiday celebration and we've always either gone out to a restaurant with workers and spouses or we hosted a party at our house and have it catered," Ms. Pitcher said. "Last year, we decided it just wasn't the right thing to do to have a catered affair, so we decided to have a potluck. We found it was the best holiday party we've had to date.

"People were there till the wee hours of morning, talking and getting to know each other better."

Ms. Pitcher said the company has been affected by the recession, although "we've managed the last 18 months very well."

Now, she said, "we're seeing things turning a corner and we're very confident about the next 18 months," but that doesn't mean it's back to the days of a big party.

Tom Lee has had a similar experience with at his Boston-based marketing firm, 451 Marketing. Two years ago, the company rented out an entire restaurant, brought in a DJ and had 250 people including employees and their families, clients and friends. Mr. Lee, who called the event "a really elaborate party," estimates it cost between $10,000 and $12,000.

"Last year, like everyone else, we were feeling the recession for sure," he said. So the firm held a party for about 100 people at its offices, the DJ was replaced by an iPod, and the tab came to about $1,500.

And everyone had a much better time.

This year, the company is in better shape and could go back to the big affair, but Mr. Lee and his partners asked the staff what they wanted to do.

"Everyone decided that the smaller event that we did last year was more fun," he said.

Even when companies decide to hold their parties in restaurants or catering halls, they're going for simpler and cheaper. Restaurant owners and caterers say companies are booking at off-peak times, such as lunch rather than dinner, or Monday and Tuesday instead of Wednesday-Friday. And while they're looking for good food, they also want less expensive menus.

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