A potentially catastrophic windstorm has Florida in its sights, and it could be disruptive to Central Florida's iconic theme parks. Disney (DIS -0.93%), Comcast's (CMCSA 0.15%) Universal, and SeaWorld Entertainment (SEAS -0.76%) are monitoring Tropical Storm Ian, given their large presence in the Sunshine State.
The storm is expected to strengthen into a hurricane by Monday. Tracking forecasts as of Saturday night had it making landfall in Florida later this week as a powerful Category 4 hurricane.
The parks themselves will weather the storm. Dealing with hurricanes comes with the territory of operating a theme park in a state that often lies in the paths of destructive windstorms. However, there will be operating disruptions as the publicly traded companies close out their potent summertime quarters later this week. Investors will want to keep an eye on Hurricane Ian.
Image source: Disney.
Buckling up for a wild ride
Central Florida is crucial for the leading theme park operators. Disney's Magic Kingdom in Florida is the world's most visited theme park. The other three Disney World parks are among the nine most visited on the planet. SeaWorld Orlando is that chain's most popular park, and nearly half of its gated attractions are located in Central Florida. Universal Studios Florida was second to Universal Japan in turnstile clicks for Comcast in the last pre-pandemic year, but the entire Universal Orlando resort is a vital component of its theme parks segment.
What's at stake? The silver lining for the companies is their location. Outside of SeaWorld's Busch Gardens Tampa, the tourist attractions are fairly inland within the state. Hurricanes tend to weaken once they make landfall, sheltering the Orlando parks from the hardest hits. Park closures are typically limited to no more than a day or two. But these storms do disrupt travel plans. Potential visitors may cancel their getaways entirely to avoid the uncertainty.
Disruptions in late September may not have been so detrimental in the past. This is a historically sleepy time of the year, with schools back in session after long summer breaks. However, Disney, Universal, and most recently SeaWorld have embraced hard-ticket Halloween events. Haunted scare maze events at Universal Studios Florida and SeaWorld Orlando, along with a more family friendly soiree at Disney's Magic Kingdom, make this a lucrative time for the theme parks. They are selling tickets to day guests, closing early, and selling tickets a second time for the nighttime visitors. That approach works, and even though we're still in September, Disney has completely sold out of its tickets for the rest of the season's Mickey's Not-So-Scary Halloween Party nights. Any park closures will be amplified if they fall on days where the Halloween events follow at night.
With travel and tourism stocks already facing a fair amount of uncertainty, given the thickening of the economic slump, the last thing Disney, Comcast, and SeaWorld need is possible interruption to their operations in Central Florida. Disney in particular has done a good job of improving monetization of its parks, increasing average revenue per guest dramatically on this side of the pandemic. Disney and its rivals are now tooled to thrive even when attendance levels dip, but it's a different matter entirely if parks have to temporarily close down for a hurricane.
