While it’s fairly obvious that UK outbound travel is likely to weaken there’s also a lot of potential for inbound traffic, as the currency markets have made the hotels a lot cheaper. That being the case, the net impact of currency devaluation is a modest positive for the UK market specifically, because it has become marginally cheaper, but at the detriment to the EU, as the uncertainty from Brexit pertains more to the financial sector and whether banks can continue to operate out of the UK to execute cross-border transactions.Here’s what Deutsche Bank analyst Ross Sandler mentioned in his recent note:Cheaper currencies may generate inbound demand from markets like the US but this would likely not offset overall weaker macro. Longer term, more difficult traveling around the EU could pose an additional risk. This article from Airwise suggests, perversely, that flight queries saw a big jump post Brexit, noting that KAYAK saw a 54% boost in US searches for fares to the UK, while searches from the UK to the US also rose 46%. One theory is that UK shoppers are looking for deals assuming prices would rise, while US travelers look to take advantage of a weaker GBP to plan a trip to the UK. We expect these activities may be short-lived but find them interesting nonetheless.That being the case, the implications for OTAs (online travel agencies) like Priceline and TripAdvisor is a little harder to read into. At least, if we refer back to macro econ class, currency devaluation tends to have an immediate impact on consumption especially in high elasticity industries like travel and lodging. So, if people can spend less for the same exact service, they’re more likely to take advantage of the value arbitrage. Furthermore, the UK is still a fairly compelling destination for traveling tourists, but even if the amount of activity were to increase with better occupancy rates, and more inbound traffic, the tourism won’t offset the decline in GDP, as the financial sector is heavily exposed, and generating investment bank underwriting/asset management fees is a lot more difficult due to the drop-off in liquidity and less compelling value dynamics for new equity issuances across European exchanges. So, the weakness in the environment already carries negative implications, but with massive asset devaluation due to asset flows exiting out of the Eurozone, we also have to weigh the possibility of declining consumer confidence in light of poor investment returns. So, there are potential winner and loser dynamics here. Priceline and Trip Advisor can do damage control here, because they’ve got plenty of inventory in UK, and even with UK outbound travel dropping, the inbound will also perform better. I believe the inbound traffic from a weaker GBP is net positive for UK’s tourism, but when you consider the negative impact from less outbound travel, the impact more or less nets itself out. Some win, other lose, but since PCLN and TRIP have exposure to both UK and EU countries, I think the impact is more neutral than net negative or positive. However, the currency adjustments could be a drag on revenue in the upcoming quarter/guidance for both companies, but the impact should be limited to roughly 0.4% to 1% negative impact on y/y revenue comps for the two companies… definitely manageable.