Capacity of Domestic Tourism in Georgia

The COVID-19 pandemic induced massive lockdowns all over the world, including in Georgia. According to the anti-crisis plan of GoG, which is discussed in details in our May update, until 15th of June, accommodation facilities could not operate due to the strict lockdown rules, and while the initial plan was to open up the borders for foreign visitors on July the 1st, due to the epidemiologic situation in potential partner countries (e.g. Israel), it was postponed to the nearest future, reportedly, to August the 1st.

This makes domestic tourism a major, if not the only source of revenues in tourism sector in 2020. The government has already started campaigns1 to promote domestic tourism. More importantly, according to the survey conducted by PMCG in June 20202, 63% of surveyed accommodation facilities and 50% of surveyed food facilities state that stimulating domestic tourism will have a either positive or partially positive impact on their business. However, the dependence of Georgian tourism sector on international visitors is very high: 45% of accommodation facilities report that the share of foreign visitors in their total visitors is in the range of 81-100%. While the dependence is not so pronounced in food sector, 51% of them state that the share of foreign visitors is more than 41%.

With the substantial share of international visitors in Georgian tourism sector, it is highly unlikely that domestic tourism will compensate for total revenues generated from tourism (both, domestic and international) completely. By looking at the dynamics of Georgian domestic tourism in the past, and by combining the analysis of the expenditures of Georgian visitors abroad, it is possible to estimate maximum capacity of domestic tourism to compensate for total revenues from tourism, with the assumption that every Georgian who spent their vacations abroad would opt for Georgia in 2020 and that they would spend the same amount of money here as they spent abroad. The second part of the assumption is quite optimistic, however, in combination with a more pessimistic assumption of no foreign visitors for the rest of 2020, it is still useful for the analysis.

A closer look at the indicator of maximum capacity in Q3 of 2020, which is of interest at the moment, reveals that if Georgian visitors (both, domestic and those who traveled abroad) replicate the pattern of 2019, just 33% of revenues from total tourism will be generated from domestic tourism, while in the case where they replicate the average pattern of past 5 years, the figure will again amount to 33%. A significant seasonal pattern of the indicator is also worth noting, as it has the lowest values in Q3, the season with the most international visitors, and the lowest in Q1.

Using three assumptions3, given that domestic tourism is fully utilized, anticipated revenues from tourism in 2020 is $1 730 mln, which is just 44.1% of total revenues from travel in 2019 ($3 922 mln). This figure further emphasizes the extent of Georgia's dependence on international tourism.