August Dynamics of Hotel Prices in Adjara & Guria
The edition of July edition featured an overview of accommodation prices in Georgia overall, while in our August update, we focus our attention specifically on Adjara and Guria, two prominent seaside destinations of Georgia, and arguably two of the most in-demand regions in August. As regular flights are still restricted and the number of countries whose citizens can enter the country is still limited, Georgia hosted only 34,567 foreign tourists this year in August, a month which has otherwise boasted the highest number of visitors for more than a decade, registering 1.4 mln arrivals in 2019. Even though domestic tourism is not enough to compensate for such a high number, given that those Georgians who were planning to spend their summer abroad turned instead to Georgian resorts, the number of potential tourists is significant. In fact, our estimates suggest that the number of domestic visitors in Adjara in Q3 will amount to approximately 40-55% of the same figure in 2019. Thus, seaside hotels have faced substantial demand even in the face of the pandemic; however, as Georgians tend to have less purchasing power than foreigners, and as the number of visitors was not to be fully compensated by domestic tourists, hotels had to lower their prices in order to attract domestic visitors.
The analysis of the yearly Hotel Price Index implies that hotels in Guria (-32.1%) and Adjara (-21.7%) decreased their prices the most, followed by Samtskhe-Javakheti (-20.1%), Racha (-12.5%) and Mtskheta-Mtianeti (-12.2%). The YoY decline was even higher for 3, 4 and 5-star hotels compared to the decline in the prices of guesthouses: in Guria, the prices for 3, 4 and 5-star hotels declined by 39.4%, while the hotels decreased their prices by 30.1% in Samtskhe-Javakheti and by 28% in Adjara.
In addition to the Hotel Price Index, the average prices of accommodation in the two regions were analyzed in August 2020, 2019 and 2018. In Guria, the average prices for both guesthouses and 3-star hotels1 increased in 2019 compared to 2018, by 17% and 23% respectively. In August 2020, both types of accommodation suffered a major drop compared to 2019, with the average prices of guesthouses declining from GEL 161 to GEL 67 (-58%) and the average prices of 3-star hotels declining from 185 to 120 (-35%).
In Adjara, the average prices of 3-star hotels and guesthouses have been declining for past two years. The average price of guesthouses in August decreased by 11% in 2019 compared to 2018, and by 2% in 2020 compared to 2019, while the average price of 3-star hotels declined by 10% in 2019 compared to 2018, and by 20% in 2020 compared to 2019. In Batumi, the average prices of guesthouses decreased by 4% in August 2020 compared to 2019, while the corresponding figure for 3-star hotels was 24%, which is significantly larger decline than in Adjara overall.
The picture is quite different for 4 and 5-star hotels in Adjara2. The average prices of both grew in August 2019 compared to August 2018, by 8% and 17% respectively, and they both suffered a major drop in August 2020, compared to August 2019. The prices of the 4-star hotels declined the most in 2020 compared to 2019 (by 38% on average), while the prices for 5-star hotels declined by 25% on average. In Batumi, the average prices of 4-star hotels decreased by 34% in August 2020 compared to 2019, while the corresponding figure for 5-star hotels was 13%, which is a significantly smaller decline than in Adjara overall.
In August, Georgian seaside hotels adopted the strategy of lowering prices and kept their facilities relatively occupied, not stopping their activities. Whether this strategy pays off or not largely depends on the future of the pandemic.
1 https://www.interpressnews.ge/ka/article/617524-giorgi-kakaurize-8-tvis-monacemebit-turizmidan-migebuli-shemosavlebi-78-it-aris-shemcirebuli-rac-daaxloebit-18-miliard-dolarian-klebas-nishnavs/
2 Due to small sample size, 4 and 5-star hotels in Guria are excluded from this particular analysis