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Riyadh hotels see high occupancy in January since pandemic, thanks to domestic demand

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Hotels in Saudi Arabia’s capital Riyadh in January posted their best performance since the beginning of the COVID-19 pandemic, according to data provider STR, boosted by domestic demand.

Saudi Arabia saw a 4.1 percent economic contraction last year, according to preliminary government estimates, hurt by the twin shock of the coronavirus crisis and lower oil prices.

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Tourism, a pillar of Crown Prince Mohammed bin Salman’s reform strategy to reduce dependence on oil, suffered because of government measures to prevent the spread of the coronavirus.

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Tourism, a pillar of Crown Prince Mohammed bin Salman’s reform strategy to reduce dependence on oil, suffered because of government measures to prevent the spread of the coronavirus.

But domestic tourism has cushioned the blow, with reduced overseas travel giving a boost to local consumption.

Occupancy rates at Riyadh stood at 56.2 percent in January, according to STR preliminary data, with revenue per available room (RevPAR) at 327.56 riyals ($87.33).

“The absolute RevPAR level was the highest for any month in Riyadh since February,” the data provider said.

On a year on year basis, however, occupancy rates were still down, by nearly 24 percent.

Saudi Arabia last month extended a ban on travel for its citizens and delayed the reopening of its ports from March 31 to May 17. Earlier this month it suspended entry from 20 countries to help curb the spread of the virus.

“In January at the beginning of the month restrictions were a bit looser, and there was a bit more business travel as well, but the general trend since lockdowns started last year is that Saudis have been travelling less and spending more domestically, which has been a support factor for the domestic services sector,” said Monica Malik, chief economist at Abu Dhabi
Commercial Bank.

Economists expect Saudi Arabia’s recovery to stutter at the beginning of the year, as voluntary oil output reductions weigh on the oil sector and partly because of pandemic curbs.

“All told, we have penciled in a modest expansion of 2.3 percent this year followed by stronger growth of 6.3 percent in 2022,” London-based Capital Economics said this week. “Our forecasts imply that GDP will be 1.5 percent below its pre-virus trend by end-2022.”

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