European Gudauri during the Soviet Union: History of the Resort & Marco Polo Hotel Gudauri

Every year, thousands of holidaymakers visit Gudauri, although only a few of them know about the European past of this resort. Today, we will tell you a story which began in 1980 and still continues with the new Gudauri ropeway, hotel Marco Polo and qualified local staff. We will tell you how Gudauri managed to become a European-standard resort in the Soviet era, how the construction and operation of one mountain skiing complex can reflect the socio-political, cultural and economic situation of the country, the "benefits" of the Soviet regime and, at the same time, the European character.

Unusually for the Soviet Union, an Austrian firm was given the opportunity to build a hotel in Gudauri and then run it. In this period, Gudauri found a new direction in mountain tourism: heli-skiing, which was only otherwise available in Canada, and for this and other reasons it became an attractive resort for Europeans.

The Soviet system, bureaucracy and high-ranking officials interested in misappropriating the business is just a small list of the obstacles that needed to be overcome in this period. But before we tell you more about the fight to develop Gudauri, we will focus on the 1990s when there was a state of war in the country.

“Even during the Civil War, visitors interested in heli-skiing used come from Europe. We had to pick them up at the old Tbilisi airport, illuminated by oil lamps. Armed guards would accompany the buses of guests from the airport to Gudauri. We used to carry coupons to buy food and other products in our backpacks. Although only during winter, hotel Marco Polo and the ropeways worked and survived,” says Vakhtang Mikeladze, director of Georgian-Austrian-Hungarian enterprise ‘Gudauri.’

A contract for the construction of a mountain skiing complex (a hotel with 240 beds, 4 ropeways and equipment for skiing trails) in Gudauri was signed in October 1985 between Austria and the Soviet Union. In March 1980, under the leadership of the initiator of the construction of the factory of Italian automobile company Fiat, Savoreti, a symposium dedicated to the development of winter ski resorts in Georgia was held in Bakuriani. Italian, Austrian, French and German firms participated in it. These were companies with great experience in the construction of hotels and ropeways, snow pressing equipment, skis, holders and skiing equipment. In September of the same year, Savoreti sent two professionals to plan the ski centers, Iling and Kanestrin, in Georgia. Surveys were conducted in Bakuriani, Tsikisjvari, Tabatskuri, Samsari ridge and Gudauri with the participation of Georgian specialists. The Italian specialists' conclusion was that Gudauri was the most promising place for the construction of a commercially profitable ski center.

In 1982-1985, management of the Gudauri mountain ski center was handed to Georgia’s “Tsekavshiri” (Central Union of Georgian Consumer Co-operatives) on the initiative of the former climber Soliko Khabeishvili, Secretary of the Communist Party at the time.

Tsekavshiri was not ruled by the Union structures. It had built a few small hotels, restaurants and two 2-seater ropeways manufactured in Russia.

In the spring of 1985, at the initiative of Tsekavshiri and Khabeishvili, the delegation of the Chamber of Commerce of the Federal Republic of Austria visited Georgia. Alongside other businessmen, the delegation consisted of the owner of the Vienna construction firm ABF, Leopold Bauzbek, and owner of ski lift manufacturing company Doppelmayr, Artur Doppelmayr. It was interesting for the delegation to examine the possibility of participating in the construction projects of Tsekavshiri, as well as the prospects of selling Tsekavshiri products in Austria. The Austrian delegation visited Gudauri. They saw the place where Tsekavshiri was going to build a large hotel and modern ropeways. As was characteristic for the period of the Soviet Union, this initiative had almost zero perspective.

However, in the summer of the same year, an unexpected thing happened: Mr. Bauzbek came to Tsekavshiri and stated that he was ready to lead the construction of a hotel and ropeways in Gudauri and that he had permission to allocate a loan from the Austrian Bank to do so. Consent was needed from the Foreign Trade Ministry in Moscow, which was no easy task. Soliko Khabeishvili took on this responsibility and in the autumn, Moscow agreed. “This was likely due to the favorable credit and the fact that, in Moscow’s opinion, in the end, Gudauri would be owned by the Union ‘Intourist’,” supposes Mikeladze.

Work on the contract and signing was managed by Saiuzstroiimport. A tender was announced, in which apart from the Austrian ABF, Italproject also participated. The announcement of the tender was merely a formality, as everyone knew that the Austrian side was the lender. The contract was prepared for signing. Nevertheless, all employees of Saiuzstroiimport were sure that the project, as in most cases, was doomed as Western construction firms had never built anything outside Russia within the Soviet Union.

In October, Austrian Chancellor Fred Zinovatsi arrived in the Soviet Union to sign the governmental agreement on economic cooperation. When he rebuked the Chairman of the Council of Ministers, Tikonov, that some projects such as Gudauri were not implemented for unclear reasons, Tikonov directly ordered the implementation of the contract. The Foreign Minister, Patolichev, was so against signing the contract that he pretended to be ill, but he was forced to execute Tikonov's order. On the last Sunday of October, Bauzbek hired the office of Finnish company Tomesto in Moscow, where a 600-page contract was printed in one day. On Monday, the "sick" Patolevich signed the contract.

The cost of the contract was 320 million Austrian Schilling, approximately $27 million. 5% of this amount, a little more than a million dollars, Tsekavshiri had to pay from its own funds. One million dollars was a huge amount of money for Tsekavshiri and it was decided that it would buy tea in Georgia and sell it abroad to make up the money. But it turned out that in the Soviet Union, no one had the right to sell tea except one Russian firm. Tsekavshiri was thus forced to purchase tea worth 1 million, register it as "tea waste" and sell it to the UK.

The construction process

The snow had not yet melted in Gudauri when in April 1986, to the surprise of many, foreign trucks with trailers appeared on the construction site carrying heavy construction equipment and a concrete factory. Upon arrival, bulldozers and excavators began preparing the area and installing the concrete factory. The construction company of Tsekavshiri, whose task it was to prepare the ground, was forced to support this unusual new construction rhythm.

The first foreign “invaders” were mainly from Sweden. At the time, Leopold Bauzbek's firm, located in Vienna, was a representative of large Swedish construction firm ABF in Austria. The Swedish firm was a construction giant which, apart from houses, built hydropower plants and sea ports worldwide. Therefore, the heads of the construction, the concrete factory and mechanisms operators were Swedes; the project managers and representatives of sub-lessee firms were Austrians, and the workers employed at the construction were Poles.

Opening the hotel

According to the contract, the construction was to be completed within 18 months. However, due to the 1987 snowfall, the process was interrupted. The constructors were taken from Gudauri to Tbilisi by helicopter. Two months later, construction was resumed and finished in early 1988. The construction of the 4-seater ropeway had been completed one year earlier, in 1987. The hotel complex was officially opened in April 1988.

For the preopening period of the hotel (purchasing hotel equipment and furniture, staff training, product supply, marketing research, etc.) and for the first period of work, the Gudauri complex needed working capital and credit in foreign currencies. Vneshekonombank was the only Soviet credit institution capable of allocating such funds. The bank refused. The Government of Georgia was told openly that the Gudauri complex would receive a credit only on the condition that it be subordinated to Moscow, in the hands of Intourist or Sputnik.

The hotel was built but could not function. In this difficult period, the solution was found by Leopold Bauzek. After completion of the construction, Buzbek's firm ABF was separated from the Swedish concern and became independent. At this moment, Buzbek's main task was to increase the firm's success, garnering experience in the Soviet Union, and to receive new orders. Therefore, it was important for him to make the first project, Gudauri, work perfectly.

This is when Gorbachev became the President of the Soviet Union and Eduard Shevardnadze the Foreign Minister. Perestroika was announced and in cooperation with foreign companies, joint enterprises were created. Despite the Perestroika, hotel management firms, Hilton, Sheraton, Haytt, and others did not rush to open in the Soviet Union. Everyone refused to manage the hotel in Gudauri. Only one company, Win-Inteneishen, agreed and held a training in the hotel, but they soon also changed their minds.

The situation was critical. The summer was passing; the hotel was empty, waiting for guests. The owner of the hotel at this time was Saqkurorti, a state organization that had no experience in the field other than the Tbilisi balneological resort and several Finnish cottages in Shovi. There was no hope that any foreign bank would allocate credit to such a company.

The Georgian-Austrian-Hungarian joint enterprise "Gudauri" was created on Bauzbek’s initiative. The founders were Saqkurorti, Austrian Firm "Austrian Tourism Consultant" and Hungarian Hungharhotel. A lease agreement for 20 years was signed between the joint enterprise and owner company Saqkurorti. The Austrian Bank, with the guarantee of the Austrian participant, allocated credit for purchasing working capital and opening the hotel. Hungarhotel was responsible for providing hotel management know-how.

During Gorbachev's rule, the number of enterprises founded jointly with foreigners was growing rapidly, but they were going bankrupt. The joint enterprise "Gudauri" was 70th among the registered entrants. After two years, it ended up being one of the few to survive the test of time. Foreign specialists arrived to work in the hotel. The management was led by the Austrians. Hungarians were working in the restaurant and in housekeeping. The majority of staff were Georgians. These were former employees of Intourist who had come from Tbilisi. But within a year, most of the Tbilisi residents were replaced by local staff. Working with foreigners was not easy, but the know-how they passed to local staff was invaluable. The complex was working, the service level was high, the number of guests was on the up and the joint enterprise could start paying back its debts.

The mountain tourism direction which was found by the enterprise’s partner company Austria Tourism Consultant, was heli-skiing: carrying skiers to the top of the mountain and landing them in snow. At that time, such mountain tourism was only available in Canada. Gudauri became competitive in this direction of tourism by being close to Europe, having a limitless number of ski slopes, and offering cheap helicopter flights. In order to launch heli-skiing, the joint enterprise hired a charter airplane with the route Vienna-Tbilisi-Vienna. In the beginning, heli-ski guides were Germans. Then a contract was signed with Swiss firm Alpine-Travel. There were thousands of German, Swiss, Austrian and Italian clients among the customers of this firm, and it provided marketing itself.

In addition to Gudauri, by 1990, Leopold Bausbek had already built a hotel in Novgorod and purchased a renovated hotel in Moscow. New hotels were built in St. Petersburg, Moscow and Alma-Ata. A chain of hotels was made, partly owned by ABF. It became necessary to find a managerial firm for the management of these hotels but none of the famous managerial firms expressed the desire to do so and the Soviet Union was on the verge of collapse. This circumstance forced Bausback to take care of the hotel management himself. He decided to purchase any firm experienced in hotel management and found such a firm in the Austrian city of Salzburg. The firm was called Marco Polo. It was well-known in the tourism industry and owned or managed several hotels in Antalya, Tunisia and the Austrian Alps. The firm’s specialization was recreational tourism, which completely satisfied ABF’s requirements.

Buzbek knew that the owner of Marco Polo, Harrer, was drowning in debt, but the reality was harder than he expected. As the Austrian press of that time reported, “Bausback suddenly discovered several skeletons in the Marco Polo closet.” This resulted in some court disputes. As a result, Bausback maintained part of Harrer’s hotels and the brand name Marco Polo, after which time his hotels operated under the name of Marco Polo. Gerd Labner, the representative and manager of Marco Polo, came to Gudauri.

In December 1991, the agreement of the independent states was signed in Belarus. The collapse of the Soviet Union became a reality. Georgia had adopted its independence and the Russian Federation became the successor of the Soviet Union. Accordingly, it had to pay the Austrian debt taken for construction of the Gudauri complex. The state organization Saqkurorti became the absolute owner of the Gudauri complex.

The 20-year lease agreement signed with the joint enterprise "Gudauri" in 1988 was still active. At this time, Hungarhotel was purchased by private individuals. The new owner did not have any interest in the Gudauri enterprise and so its share was purchased by ABF. The Gudauri complex was officially registered as ‘Ltd. Georgian-Austrian joint enterprise Gudauri,’ and officially the hotel maintained the name Marco-Polo, although for the local population it was known by the old name “Austrians.”

Thanks to the hotel management, even during the civil war in Tbilisi, the Gudauri ropeway and hotel Marco Polo still functioned. Georgia’s Military Road crossing Gudauri was the main artery of the criminal economy, used to import and export diesel, alcohol, weapons or drugs. The control of the road was a great source of income and a lot of corrupt civil servants and criminal gangs fought to own it. They did not have time for ropeways and a hotel facing bankruptcy. Perhaps thanks to this factor, Gudauri survived the civil war and the dark 90s.

According to Vakhtang Mikeladze, at this time, the government officials were using everything for their own benefit. They noticed Gudauri and started trying to bankrupt the complex. Tax inspection was carried out every year, and every year the joint enterprise had to pay the tax fines. The goal was clear: to abolish the lease agreement, sell the hotel complex to a private individual and then confiscate it.

According to Mikeladze, in 2008, after the expiration of the 20-year term of contract, the state ceased the lease agreement and sold the hotel and ropeways. Later, the government took back the ropeways and the hotel owner and staff changed. However, the know-how which was brought to Gudauri by Austrian and Hungarian specialists was not lost. The hotel's former, local staff went on to successfully launch their own businesses (family hotels, restaurants, ski renting, etc.) or continued working in other hotels. The personnel serving in Gudauri are among the most qualified in Georgia.

Today, Marco Polo is a 4-star hotel in the center of Gudauri resort which hosts about 40,000 guests annually. It is currently owned by Georgian businessman Ilia Kokaia. This year, after renovation works, the old, historical look will be returned to Marco Polo. As for the staff, according to the current administration of the hotel, Marco Polo still has more than 20 employees of the first generations, with decades of work experience in hospitality under their belts.