Your plane takes off, soars upward through the cloud layer, and levels out in a clear sky somewhere above 30,000 feet. Finally, the captain gives an “all clear” and proclaims, “You are now free to move about the cabin.”
We who have felt imprisoned by stay-home mandates and government orders as to what we can or can’t do, long for the day when we’re free to move around our communities, state, country and world at large. So many events, so many get-togethers, so many trips, cancelled. What will the “new normal” look like?
In 1957, travel writer Arthur Frommer published his seminal guide book, “Europe on $5 a Day.” It was an interesting time to publish a travel book as the global economy took a nosedive in late 1957, a slump tagged the “Eisenhower Recession” as Ike was president at the time. It was a short, eight-month pullback, ending in May, 1958. The rebound was equally sharp, and rolling into 1959 and the early 1960s the American economy headed toward new high levels of employment and production. The dollar was strong against weaker European currencies, adding an attractive bargain element for tourists. Frommer’s book inspired legions of recent college graduates and other adventurous souls to head for Europe on a budget.
The woman I met in 1966 and who would become my wife, a 1961 Penn State graduate, and another teacher, in 1963 took off for Europe with Frommer’s book in hand. Using a Eurail Pass (introduced in 1959), they traveled Europe inexpensively. Staying in pensions and small guest houses, eating like locals in small restaurants or buying bread, “fixins,” and local wine for a picnic, each averaged about $7 a day in spending. She did splurge once, spending $15 for one night for a shared room and a meal at a more upscale accommodation in Pamplona, Spain, during the annual “running of the bulls” craziness.
Fast forward to today. It takes $40.93 in 2020 dollars to equal what $5 represented in 1957 in terms of buying power, or over $44 when converted to euros at current rates, even with the dollar strong and the euro somewhat weak on a historical basis. But it’s doubtful that you can do Europe on anywhere near $44 a day! Travel guru Rick Steves notes that a typical budget European double room averages about $110 a night. Says Steves, “You’ll pay about $80 at a pension in Madrid, $100 in a simple guesthouse in rural Germany or a B&B on the Croatian coast, and $150 for a 2-star hotel in Paris.”
You can pay more. The 5-star Four Seasons Hotel George V in Paris quotes rates starting at $1,168 a night checking in June 22, 2020.
Post-Covid-19, there will be bargains. But will people want to travel? It took almost four years before passenger air traveler numbers got back to where they were pre-9/11. We can’t say to what extent, but there will be outstanding buys and perks. Airlines, cruise lines, hotels and tour operators will tout incentives to get you “back out there.”
What might change? When it comes to retirement goals, many list “travel” as a highly desired priority, especially those with the time and money to do so. However, those north of age 65 fall into the so-called “high risk group” when it comes to pandemic plagues. Even routine seasonal flu is a risk. Will airlines use non-contact thermometers to deny boarding to those indicating a fever? Will cruise lines do the same? Who bears the cost of an aborted trip? Is trip insurance the answer?
As one ages, trip insurance gets increasingly costly, adding as much as 10 percent or more to the cost of the trip while excluding anything that can be linked to a “pre-existing condition.” Basic policies generally exclude pandemics or worries about getting sick, and “cancel for any reason” coverage is quite costly. Airlines, cruise lines and trip operators may have to come up with a less costly way to indemnify travelers from the risk of cancelled trip penalties. We know that people get on airplanes and cruise ships when they’re “not feeling so hot” since they don’t want to forfeit the costs of the trip.
Those with money are more likely to opt for first class, business class, or premium economy to avoid being squeezed into coach in closer proximity to others. Hopefully, many people will continue to exercise and spend more time walking and running outside so as to be in good physical shape, better to withstand any illness Mother Nature throws at them. Or maybe we’ll forget and go back to some of our bad habits of the past. Hopefully, no.
You will soon be free to roam about the world. Or not.
Lewis Walker, CFP®, is a financial life planning strategist at Capital Insight Group; 770-441-3553;firstname.lastname@example.org.
Securities & advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis is a registered representative and investment adviser representative of SFA, otherwise unaffiliated with Capital Insight Group. He’s a Gallup Certified Clifton Strengths Coach and Certified Exit Planning Advisor.