Melco Resorts & Entertainment (MLCO 5.01%), the casino resort operator whose stock has really taken it on the chin this year, had an uncharacteristically excellent day on Thursday. Thanks to some good news regarding its major market, the company's shares climbed by a robust 11%.
An article published that day on regional casino industry website Inside Asian Gaming reported that the number of visitors to Macao grew by over 43% week over week in the Aug. 18 to Aug. 24 stretch. The article cited data from the casino-heavy enclave's Public Security Police Force as the source of that figure.
Although the jump was welcomed with great relief, especially by Melco investors, it wasn't entirely a surprise. At the beginning of the month, a requirement mandating travelers from Macao to mainland China crossing via a key border post to quarantine for seven days was rescinded.
A big improvement in visitor numbers is not only beneficial to Melco and its peers that operate resorts in Macao; it is vital. The strict coronavirus lockdowns and travel curbs imposed by the Chinese authorities have had an extremely deleterious effect on their business, as it is very reliant on regional tourism.
Melco has been particularly exposed to this, as the bulk of its property portfolio is located in Macao, and it is therefore highly dependent on visitor traffic to the enclave.
The new figures don't indicate a full recovery. Macao visitor numbers remain sharply down from their pre-pandemic levels in 2019, and companies like Melco continue to suffer because of this. Yet this is a hopeful sign that one of the corners of the world worst hit by the pandemic might finally be getting past the health crisis, with companies like Melco benefiting directly from the bounce.