There is no shortage of stocks taking big hits today after the U.K.'s surprising vote to bow out of the European Union. Let's take a look at how this will sting Walt Disney's (NYSE:DIS) theme parks.
It won't be business as usual at the House of Mouse following Brexit. The pound's initial reaction was to take a dive against most global currencies. U.K.'s pound sterling plunged 7.5% relative to the dollar, and that may not seem like a big deal, but it will make a stateside vacation that much more expensive for potential visitors from across the pond.
The British are coming? Not quite.
Currents and currency
Tourism in Florida is a pretty big deal, and the state's biggest influx of international visitors last year came from Canada (3.9 million), the U.K. (1.7 million), and Brazil (1.5 million), according to data from Visit Florida. Canadian snowbirds, however, prefer to travel all the way down to South Florida. Central Florida is the place to be for British and Brazilian travelers, and this is where Brexit will leave a mark.
When it costs 8% more to purchase things in the U.S. -- overnight -- it does force folks to reconsider their vacation plans. Tack on the political and economic unrest that's bound to follow in the U.K. and suddenly that trip to Disney World becomes a staycation.
It also doesn't help that single-day tickets to Disney's theme parks cost 18% more this summer than a year earlier. The theme park giant switched to tiered demand-based pricing earlier this year. Multiday tickets are also more expensive this summer.
Boys from Brazil
The fallout could be more dramatic than just the overnight moves. Brazil overtook the U.K. in terms of visitors to Central Florida in 2013, according to the Visit Orlando tourism-marketing agency. Brazilian travel to Central Florida had exploded 900% over the prior decade at the point, fueled largely by affluent teen groups where a trip to Disney World, Universal, and SeaWorld (NYSE:SEAS) is considered a rite of passage.
However, that changed last year. Political and economic unrest has disrupted the flow of visitors from South American hotbeds. Visit Florida data shows that Brazil, Argentina, and Venezuela saw their visitor counts into the Sunshine State plummet 10%, 15%, and 34%, respectively in 2015.
Things haven't gotten any better so far in 2016. SeaWorld saw its park attendance climb at its parks in California, Virginia, and Texas during the first quarter, but that wasn't the case in Florida. SeaWorld blamed the shortfall on a sharp drop in Brazilian tourists, mentioning the country a whopping 21 times during its quarterly earnings call. International visitors account for a third of its turnstile clicks. One can only imagine how often Brexit will come up now.
Disney already experienced a rare year-over-year dip in attendance at its Florida theme parks during the March quarter, and with Brits now likely to join Brazilians in opting out of Central Florida, the impact of Brexit on Disney will be significant.