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Data provider STR said hotels in the Saudi capital Riyadh had their best performance in January since the start of the COVID-19 pandemic, driven by local demand.
Early government estimates indicated that Saudi Arabia experienced an economic contraction of 4.1% last year, affected by the double shock caused by the Corona virus crisis and falling oil prices.
Tourism is one of the pillars of Crown Prince Mohammed bin Salman’s reform strategy to reduce dependence on oil.
However, domestic tourism has cushioned the blow as it supports local consumption due to the reduction in global tourism activity.
Preliminary data from STR shows that occupancy rates in Riyadh were 56.2% in January and the revenue per available room was 327.56 riyals ($ 87.33).
“The absolute level of revenue per room was the highest monthly in Riyadh since February,” the data provider said.
On an annual basis, however, occupancy rates are still down by around 24%.
Saudi Arabia last month extended a travel ban for its citizens and postponed the reopening of its ports from March 31 to May 17. Earlier this month, he banned 20 countries from entering to help curb the spread of the virus.
Against this background, Monica Malik, Chief Economist of Abu Dhabi Commercial Bank, said: “In January, the restrictions at the start of the month were a little lighter, and there was also a little more business travel, But the general trend since the start of the shutdown measures last year is that Saudis travel is decreasing and spending is increasing locally, which is a supporting factor for the local service sector. “
Economists expect the recovery in Saudi Arabia to slow earlier in the year, with voluntary cuts in crude production putting pressure on the oil sector, among other reasons, from restrictions linked to the pandemic.
For its part, Capital Economics in London said this week: “In light of all this data, we are looking at modest growth of 2.3% this year, followed by stronger growth of 6.3% in 2022. -virus 1.5% path by the end of 2022 “.
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