Time & Money: The Stock Market, Inflation, and a Honeymoon at the Peabody 

Eleven years ago, my husband's aunt and uncle celebrated their 60th anniversary at The Peabody Hotel, where they spent their wedding night on August 5th, 1949. To remember their honeymoon many years in the future, the newlyweds had created a scrapbook that included the invoice for their two-night stay in 1949 — $8/night for a total of $16!

In their mid-80s during the summer of 2009, Uncle Joe and Aunt Jean set out on a road trip from their home in Sarasota, Florida, to Tennessee. They were determined to visit their childhood homes in West Tennessee one last time. With the yellowed invoice in hand, they made reservations at The Peabody for August 5, 2009 — 60 years to the day of their first visit.

click to enlarge Uncle Joe and Aunt Jean honeymooned at The Peabody, “the South’s Grand Hotel,” for a grand total of $16 for two nights.
  • Uncle Joe and Aunt Jean honeymooned at The Peabody, “the South’s Grand Hotel,” for a grand total of $16 for two nights.

It was a delight to celebrate such a long and happy marriage when they arrived. The family gathered in The Peabody lobby, sharing champagne and stories about those early days at "The Meeting Place of the South" and all that had changed since 1949. Today, now 71 years later, the cost of a stay at the hotel has changed, as well. How much?

To find the current rate for a standard room, I queried The Peabody's website. The rate as of July 2020 is $169/night plus tax of $32 and a resort fee of $13.95 for a total of $214.95.

In 1949, there were no taxes or resort fees charged, just a flat $8/night. Therefore, over the past 71 years, the total cost of a stay at The Peabody has increased 2,687 percent! Ouch! It's much easier to get a handle on this big number by calculating the average annual increase — 4.7 percent a year.

Let's compare the hotel cost increase with general inflation, as measured by the Consumer Price Index (CPI) tracked by the U.S. Bureau of Labor Statistics. Just for fun, we will also compare the growth of the U.S. stock market, as measured by the total return of the Standard & Poors 500 index.

Average Annual Increase Over 71 Years*

Peabody Hotel Standard Room Rates • 4.7 percent/year

Inflation (CPI) • 3.4 percent/year

S&P 500 Total Return Index • 11.5 percent/year

The Peabody is a premium luxury hotel whose cost grew at a faster pace than U.S. consumer inflation during this period. No surprise here. However, what if our newlyweds had invested some of their wedding cash in the stock market? At 11.5 percent/year compounded growth, $8 would have increased to $18,180. So today, Uncle Joe and Aunt Jean could pay for their room, dinner at Chez Phillippe, an expensive bottle of wine, and still have plenty left over!

You will be pleased to know that 11 years ago, The Peabody assisted in the Royer anniversary celebrations with a gracious room upgrade, champagne, and cake. It is no wonder that The Peabody continues to enjoy a worldwide reputation as a destination hotel.

* For average annual increase calculations, the past 71 years are measured from the beginning of 1949 through the end of 2019.

Carol Lee Royer, CFP, CFA, CDFA, is senior vice president and senior wealth strategist for Waddell & Associates.

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