Once the hub of excitement, arts, and entertainment COVID-19 has quite literally sucked the very life out of our cities. Restaurants are boarded up, homelessness is on the rise, hotel occupancy rates are down all while prices continue to soar. Join us today as Financial Advisors Rob McClelland and Mike Connon discuss their recent travels abroad and what we need to do in order to save our cities.
Transcription
Rob (00:00):
Hello. This is Rob and Mike from The McClelland Financial Group of Assante Capital Management. And this is Think Smart with TMFG. Today on Think Smart with TMFG, Mike and I are going to be discussing Big cities are in trouble and things need to change.
Mike (00:22):
You got a little bit of travelling done in the last month or so, didn’t you?
Rob (00:25):
Certainly did. My wife, Ingrid, and myself. First of all, we flew out to Vancouver and spent a few days. We’ve got two kids out there. So we spent the weekend with them. And then on Monday, we started our adventure. And we headed down to… We couldn’t drive over the border to the US, because we had a rental car. We actually had to rent a car in the US. You couldn’t rent a car in Canada and drive. So we took a short flight to Seattle, and we started our journey down the West Coast of the United States. Our first stop was Seattle. And from there, we moved on to Portland. We then moved to San Francisco. We stopped in a small town called Chico. Then, we had time in Carmel, Santa Barbara, and eventually, LA. And it was really interesting when you got into some of the cities, and specifically, San Francisco, Portland, and Seattle.
Rob (01:29):
Typically, when you stay in a hotel, you often in the downtown core, because that’s where the action is, that’s where the restaurants are, that’s where the shops are, that’s where the theaters are, things like that, that you might see if you’re only in a place for a couple of days. I have to tell you it was not a good experience. Seattle, Portland, the downtown cores have been devastated. And obviously, this has been happening for a while, but COVID just changed the game. Stores are boarded up. Restaurants are closed. No one’s on the streets. The homeless population of both of those cities is huge. All the parks in the downtown core are filled with homeless tents.
Mike (02:18):
Yeah, it seems to be across the board. I always commented to someone on how much New York changed. I used to live there back in the ’80s. They said it got so nice in the ’90s and 2000s. It was a great, safe place to visit. And they said recently, it doesn’t feel that safe there anymore. They said there’s been a real change in how comfortable they are walking the streets at night.
Rob (02:37):
Well, it was interesting. You did not want to walk the streets at night. You’d be walking one street, and you’d take a right, and you’d go, “Okay, can’t go down that street.” And you were just scared. And maybe there was nothing to be scared of, but we always worry about getting mugged or something like that.
Mike (02:56):
Well, there’s safety in crowds. And once those crowds aren’t there, you lose your safety. Yeah, it’s becoming a huge problem. I mean, losing your downtown, that’s where things have been made up of the downtown core. And when you start to lose those in cities, it starts to fall off from there. What’s the reason for going to a city if there’s not a downtown core to go visit? It’s a place where all the enjoyable things can happen in a one kilometer square where you can do everything you want to do.
Mike (03:25):
And it’s great for vacationers and travelers, and even for people who live there, but what happens if that disappears? We kept on talking about the idea of the urban centers spreading out into the rural areas because of COVID. People are now working from home and not having to go in the city anymore. And traffic is lighter. I guess there’s that point of it. But at the end of the day, if you lose your downtown core, what’s left?
Rob (03:47):
Well, it was interesting. Just even things, like we stayed at a beautiful hotel in San Francisco. We stayed at the Fairmont, just a gorgeous old hotel. It was 10% full. The restaurants were empty. The restaurants were actually closed on Mondays. Both of them. The bars were closing at 10:00. In the one hotel, my wife loves to get coffee first thing in the morning. Well, the store down below didn’t open until seven. And there was no room service Monday to Friday. So she couldn’t actually get a coffee in a Fairmont hotel in San Francisco. And this is just in the last couple of weeks. This isn’t back in 2020.
Mike (04:30):
Yeah. And we were just talking about this. We’ve exclusively gone to conferences over years. And that was a big part of how we built the business and got our knowledge was going to different places and seeing interesting people. And it was always in great cities. And you’d enjoy the conference and the content was great. But also after you finished that, you’d go out in the city with a new type of life that you didn’t have at home. And you got to talk to people, get interesting perspectives on what life is like down there. It just gave us more global view rather than being put into just your own small town. We’re in Thornhill. There’s not that much exciting happening here.
Rob (05:09):
There’s not that much to see. And that’s the thing that I sort of realized. If the restaurants downtown weren’t busy, then it was tricky. Do I really want to go to the suburbs in these cities to find the restaurants? And you can do that, but it’s hit and miss, and you certainly have to. And sometimes you’d try and get in, and they were all booked up. So you were stuck having to go to the restaurants that no one was going to, that were empty. We were at one restaurant, and this was in Santa Barbara. And this was interesting. We arrive. What we decided to do, which was different than our normal process. Normally, Ingrid books the restaurants. So we know where we’re going and we’ve got a reservation. But lately, we’re just two, we’ll wing it. We’ll try and get in. There’s always a table for two.
Rob (05:56):
So we go to this one restaurant, really nice restaurant, had great reviews. We go and the place is about a third full. And we go in the door, and we say, “Table for two.” And they go, “Sorry, we’re full for the evening. You can wait at the bar.” Okay, we’ll wait at the bar. So we waited at the bar. And we were literally at that restaurant, service was slow for two and a half hours. It never got beyond 30% full. All those tables that said reserve, they had little reserve signs on them, were still empty at 9:00. And so, what’s happening there? They don’t have enough staff. They don’t have enough staff to serve the people that they have, so they have to basically close off sections, close off tables. And it was sort of frustrating, because here we are at the bar, and we ended up eating at the bar. We couldn’t sit in a table because they couldn’t serve the tables, whereas, the bartenders were the ones who ended up serving us.
Mike (06:50):
Yeah. I was talking to one person who was in the business, hotels and restaurants. And they run the large hotels and large restaurants. And they said the issue is they’re trying to hang onto their key staff. It’s hard to replace a chef. And when you’re doing banquets in these big conferences, when you have to feed four or 500 people, it’s not your average chef that can arrange a menu for 500 people. It takes a special person. And when you’re one of these big chains of one of the hotels, you need to keep that person on staff. And even when there’s no one there, they still have to make sure they have him for when they open up. And they’re trying to keep all the important people on staff. And losing money while doing it, just to get by. I mean, that’s the other thing. What are the financial consequence of these cities dying down?
Rob (07:36):
So I thought a little about that. And I think the one of the keys, Mike, is we have to get back to a little more normal. People have to get back to offices. And we’ve talked about that. Even in our own practice, we’ve got the staff coming in three days a week right now. And that’s probably got to change at some point, once we get through this current wave. The downtown core of cities thrives on offices. All those businesses down there thrive on the office worker coming in.
Rob (08:06):
Those things need to get back in place. Or else, we’re going to lose the downtowns of cities. And if you lose the downtowns of cities, things change. The criminal element always moves in. There’s a vacant space. I mean, it’s kind of like, remember back in March of 2020 when there are no cars on the street? We shut down completely, all the animals moved in. And I’m not saying that… But the criminal element will move into your city if it’s not busy.
Mike (08:35):
Yeah. You need energy. And when that energy level drops, you forget. We both watch sports. And there’s something about the home crowd. And there always has been. It gives that energy. We’ve been at Raptor games when the home crowd is cheering and it feels like you’re all one together. And that’s missing in a lot of right now. And it’s missing in a lot of the workplaces. I tell you, it’s hard to get a cheering section over a Zoom call. It just doesn’t feel the same. But when you’re working in the office together, and having lunch together, and sharing ideas, there’s a natural movement of ideas that just comes natural. You can’t get that through Zoom.
Rob (09:15):
So here’s some interesting statistics that I got. US air travel passengers is at 87% of pre-COVID levels. So people are flying again. And I’m going to talk about that in a couple of minutes. US box office. So people going to movies is only at 60% of 2019 levels. So people are at home streaming. They’re not going to the movie theater yet. Offices, at 30% occupancy. Sorry, 38% occupancy. So 62% of office workers are working from home. Subways. And this is true in Toronto, true in New York City. New York City subway ridership at 56% of pre-COVID levels. So about almost 45% of those who used to take transit are not taking transit anymore.
Rob (10:10):
Some things that have gone up, NFL attendance, still positive, still up 1% over 2019. So some of the metrics say that things are starting to change, but the ones that are really lagging is this hotel occupancy. Let me touch on travel. And let’s specifically travel end COVID. So during the trip, we were gone for… It was supposed to be 19 days. My wife got COVID early on. So that made life a lot more complicated for us. Say, we had to quarantine for part of our trip. Then, when we were out and about, we had to eat in outdoor restaurants and so on. So some of the nights were a little chilly, to say the least, until we got down into lower California.
Rob (10:57):
But the one thing I noticed is travel is still difficult, whether it’s filling out the ArriveCAN App when you’re down in the US and all the documents that you need and need to upload. I noticed price gouging is really common, especially by the airlines. So we had booked a business class flight back from LA. Ingrid, and I hadn’t traveled together in a long time, so we decided to travel business class. We had to change our flight by three days because of COVID. How much do you think they wanted for us to do the change, Mike, in our business class ticket?
Mike (11:36):
Was it more than $50?
Rob (11:38):
$3,800. That’s on top of the large amount of money we paid for the business class. They wanted $3,800 in additional money to make the change. Now, I can’t think of any other business in the world that can do that sort of thing. A hotel certainly wouldn’t do that. I can’t think of any other business in the world that would charge you that kind of money to make a three-day change.
Mike (12:06):
Well, on top of all the price gouge, everything goes on. The stress of travel is just… I was down trying to get back from Florida. And with COVID test and everything, I went and got my test. It’s very tricky because you have the one which you can do 72 hours before. Or you can do 48 hours before, you have 72 hours to use it. That takes 48 hours to get your result. And then, you have another one where you can get the result in 24 hours, but it has to be used in 24 hours. So there’s no unstressful way to travel. And I went and did the longer test.
Mike (12:40):
And I’m in the airport waiting for my test results to come in. And when they come in, I tried to download the app. And the app could only be used on a US-based phone. So my sons then trying to change my Apple ID to a US Apple ID, so I can get the app that I can look at my results on. It’s just the level of stress created by this is just through the roof. And I wouldn’t call myself technically savvy, but I’m better than the average person. I couldn’t imagine someone who’s a senior trying to do this. It’s impossible.
Rob (13:11):
Even just the whole COVID testing thing. Even though the last time we were down at the states, we had found a way around the expensive COVID test. This time we were back paying expensive COVID test. Ingrid had to do a test at the airport that was $300 Canadian.
Mike (13:27):
Yeah. Again, it’s just price gouging. We know how much it cost, and that’s not it.
Rob (13:31):
And it’s the same little swab in your nose, but they’re suddenly now charging $300 Canadian on it. So airline traffic, I think it’s important people get back and start to do things. And we’re starting to see that pick up again, but it does have its issues. Long story short. I am worried about the cities. I hope that people start to get back to the office. I think it was great that everyone could work from home for a couple of years. And I think, there’ll be more of that, but we need to protect our downtown cores.
Rob (14:02):
I had someone just the other day say one of their relatives is not coming to Toronto because they were here last year. And they found that there was no excitement in the city. What they used to find exciting in the city had disappeared over the last couple of years. That brings us to the end of another week. This is Rob and Mike with Think Smart from The McClelland Financial Group of Assante Capital Management.
Assante Capital Management (14:24):
You’ve been listening to The McClelland Financial Group of Assante Capital Management Limited. Assante Capital Management Limited is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Incorporated. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources. However, no warranty can be made as to its accuracy or completeness. Before acting on any of the previous information, please make sure to see a professional advisor for individual financial advice based on your personal circumstances. The opinions expressed are those of the authors and not necessarily those of Assante Capital Management Limited.
